Our homeowners insurance claims lawyers know the assignment of benefits by an insured person to a third-party contractor remains one of the most litigated homeowner’s insurance issues in Florida. In these cases, the typical scenario usually begins with an insured homeowner suffering damage to her home. That homeowner then contacts a third-party contractor, such as a plumber or water mitigation firm (for water damage), who asks that she assign insurance benefits to them before they begin any repairs. Such an assignment of benefit may come with unintended consequences that are detrimental for a homeowner. This case illustrates one of those consequences.
In Damage Control, Inc. v. State Farm Florida Insurance Company, a homeowner who experienced water damage hired Damage Control, Inc., a contractor, to perform remediation of the home. At the contractor’s request, the homeowner executed an assignment of benefits, which assigned the homeowner’s insurance benefits with State Farm Florida Insurance Company to Damage Control. After completing its work on the home, Damage Control provided an invoice to State Farm for the amount of the repairs. However, State Farm issued a check for less than half of the sum due on the bill. State Farm notified the homeowner that it wanted to dispute the amount of the repairs and invoked a clause in the insurance policy stating that if the parties failed to agree on the amount of the loss, either can make a written demand for an appraisal of the amount of the loss. Under this clause, both parties must each select a competent appraiser and notify the other party of that appraiser’s identity. Both appraisers will then choose an impartial umpire, and if any two of them agree in writing, that agreement will set the amount of the loss.
Damage Control then asked to participate in the appraisal as the assignee of the homeowner, but State Farm refused to take part in any appraisal with Damage Control. Damage Control filed a lawsuit against State Farm to recover the remaining amount on its invoice, but State Farm asked the court to stay the lawsuit pending an appraisal with the homeowner. The trial court granted that request for a stay. However, the homeowner did not participate in the appraisal, and State Farm asked for summary judgment in its favor for the homeowner’s failure to participate. The trial court ruled for State Farm and granted summary judgment, which State Farm appealed.
On appeal, the Ninth Circuit Court of Florida considered whether Damage Control may step into the shoes of the homeowner to complete an appraisal where the insurance policy requires such appraisal before the company can file a lawsuit. The court found that the appraisal clause provided a two-way process that either the homeowner or the insurance company may initiate and that it has the characteristics of both a benefit and a duty under the policy. Therefore, a homeowner may assign the right to another party like Damage Control. Additionally, the court found no reason to require homeowners to be part of an appraisal of they have transferred their benefits under an insurance policy to a third party because the appraisal is a right uniquely tied to the amount that may be payable in a claim. It is the party to whom the benefits have been assigned, such as Damage control, who is seeking payment, not the homeowner. A homeowner does not stand to gain anything in participating in an appraisal. Therefore, the court found that Damage Control is entitled to take part in the appraisal initiated by State Farm.
If you are facing a complex assignment of benefits issue as it relates to a homeowner’s insurance policy, the Miami homeowner’s insurance lawyers at Greenberg, Stone & Urbano offer the assistance you need to obtain the results you desire. With over 130 combined years of experience representing homeowner’s insurance clients across South Florida, our firm provides legal representation of unmatched excellence. Contact our firm as soon as possible to start on the road to protecting your legal rights. Our firm received an AV rating from Martindale-Hubbell and was ranked as a top firm in South Florida by the Miami Herald. Put our exceptional personal injury attorneys to work on your case. Call us at (888) 499-9700 or (305) 595-2400 or you can visit our website to schedule your initial consultation.