November 6th, 2015
By, Justin M. Thomas, Esq.
Recently, Security First Insurance Company sought administrative review of the Florida Office of Insurance Regulation’s (“OIR”) denial of requested changes to their homeowner’s insurance policies issued in Florida, which operated to prohibit post-lost assignments without the company’s approval. Security First Ins. Co. v. State of Florida Office of Ins. Reg. 2015 WL 36446925 (Fla. 1st DCA June 22, 2015). The Court affirmed the decision of the OIR relying primarily on the storied history of Florida jurisprudence that approved of the exact conduct Security First sought to eliminate.
On rehearing, Security urged the First District Court of Appeal to certify conflict to the Florida Supreme Court. Security First Ins. Co. v. State of Florida Office of Ins. Reg. 2015 WL 36446925 (Fla. 1st DCA October 26, 2015). The court declined this request based on Florida’s existing authority that permits assignment of post-loss rights. In doing so, however, the court acknowledged the existence of a narrow statutorily imposed exception to this general rule with regard to health insurance claims. In the healthcare context, both Florida Courts and Legislature have acknowledged the existence of significant public policy considerations require a prohibition on the assignment of health care claims. The Security First Court, however, recognized the distinction and elected not to extend the exception beyond the health insurance arena.
The Security First holding is consistent with the recent Fifth District Court of Appeal of Accident Cleaners, Inc. v. Universal Ins. Co. 2015 WL 1609973 (Fla. 5th DCA April 10, 2015), which also recognized approved of the assignability of post loss claims. However, the Accident Cleaners Court went further in acknowledging that assignees are not required to have an insurable interest at the time of loss in order to sue the insurer. In doing so, the Accident Cleaners Court pronounced Florida’s long history in approving post loss assignments of insurance rights and the entitlement of the assignee to enforce the same:
[d]ating back to 1917, the Florida Supreme Court recognized that provisions in insurance contracts requiring consent to assignment of the policy do not apply to assignment after loss. W. Fla. Grocery Co. v. Teutonia Fire Ins. Co., 74 Fla. 220, 77 So. 209, 210–11 (1917); see Cont’l Cas. Co. v. Ryan Inc. E., 974 So. 2d 368, 377 n. 7 (Fla. 2008) (reaffirming the principle from W. Fla. Grocery Co. that the law is well-settled that anti-assignment provisions do not apply after loss); Lexington Ins. Co. v. Simkins Indus., Inc., 704 So. 2d 1384, 1386 n. 3 (Fla.1998) (“[A]n insured may assign insurance proceeds to a third party after a loss, even without the consent of the insurer.” (citing Better Constr., Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, 651 So.2d 141, 142 (Fla. 3d DCA 1995)). Furthermore, the right to sue for a breach of contract to enforce assigned rights was recognized early in Florida history. See Nationwide Mut. Fire Ins. Co. v. Pinnacle Med., Inc., 753 So.2d 55, 57 (Fla.2000) (“The right of an assignee to sue for breach of contract to enforce assigned rights predates the Florida Constitution.” (citing Robinson v. Nix, 22 Fla. 321 (1886)).
Id. at 2. Interestingly, the utility of a policyholder’s post-loss assignment of policy rights hinges on the ability to enforce those acquired rights. This importance is highlighted when an insured suffers a sudden loss from a covered peril, such as damage to an insured home from a severe storm, and in turn is able to use an assignment of rights under the policy to assign those rights to a contractor, that will assist the policyholder in repairing the loss.
In closing, Florida policyholders in accord with the decisions in Security First and Accident Cleaners, may still employ the assignment of post-loss rights under their insurance policies as an effective method to resolve and recover from an insured loss. Further, the foregoing decisions should provide comfort to assignees with respect to the validity and enforceability of assigned post-loss policy rights. Lastly, it should be noted that the Court in Security First, unequivocally stated that the Florida Legislature should consider, and if necessary address, the public policy arguments raised by insurers—not the judiciary. . Only time will tell if Florida’s Lawmakers accept the invitation.