A Florida appeals court decision regarding a homeowner’s insurance assignment of benefits (AOB) lawsuit could have ramifications in the state’s auto insurance industry and affect how collision repairers represent their customers in the future.

On appeal from the County Court for Marion County, Florida’s Fifth District Court of Appeal heard a case in which Holding Insurance Companies Accountable (HICA) sued American Integrity Insurance Company of Florida as an assignee of post-loss insurance benefits on behalf of an American Integrity policyholder.

HICA argued that American Integrity breached its contract with Leonard Caruso. The trial court ruled that HICA lacked standing to sue because the assignment that it relied on did not follow a state governing statute with which the appeals court agreed, according to the court’s Jan. 3 opinion disposition.

AOB allows third parties, such as a repair shop, to file an insurance claim, make repair decisions, and directly bill a carrier for the policyholder. As a third party, AOB allows shops to pursue insurers to collect charges that carriers refuse and otherwise owe to the policyholder.

Insurance NewsNet reports that the case is “one of the first milestone victories” of Gov. Rick DeSantis’ insurance reform to prohibit assignment of benefits (AOB) for residential and commercial property insurance policies issued after Jan. 1, 2023. The bill went into effect on Dec. 16, 2022.

The court’s decision “only further emphasizes lawmakers’ attempts to end years of excessive litigation, while at the same time hoping to keep insurance costs down,” the article states. “The bill’s [Senate Bill 2-A] goal was to avoid third parties suing insurers just to make a profit — a practice that’s been common in Florida over the past decades.”

In May 2023, DeSantis signed a similar bill into law specific to auto glass that eliminated AOB on insurance claims.

Chapter 2023-136  prohibits shops or their employees from “offering anything of value to a customer in exchange for making an insurance claim for motor vehicle glass replacement or repair.” It also prohibits insurance carriers and auto glass shops from steering customers to certain businesses.

The recent homeowner’s insurance case is an example of what could be decided about auto insurance claims using AOB in court.

“After receiving American Integrity’s valuation of his claim, Caruso signed an ‘assignment of benefits contract’ with HICA in 2020,” the document states. “HICA is a business that purports to help homeowners enforce their insurance rights. The document indicated that HICA would not provide ‘any services to protect, repair, restore, or replace [Caruso’s] property or to mitigate against further damage to [Caruso’s] property, as contemplated by’ section 627.7152, Florida Statutes.

“However, it stated that ‘[a]ny payments shall be made in accordance with any direction of payment relative to’ Caruso’s claim. Caruso also signed an ‘insured acknowledgment form’ in which he attested, ‘I want HICA to hold my insurance company accountable for their obligation(s) under the policy of insurance and also to ensure that the direction to pay that I signed with a separate company is honored.’ HICA — as Caruso’s assignee — sued American Integrity for breach of contract, alleging that American Integrity failed to pay the full value of Caruso’s claim.”

American Integrity then argued lack of standing and that the assignment was invalid and/or void then later, on the same basis, moved for summary judgment. HICA opposed summary judgment by arguing the assignment was beyond the scope of Florida Statute Section 627.7152, meaning it stood as valid.

The lower court, then the appeals court, sided with American Integrity and granted summary judgment because both parties agreed HICA didn’t comply with Section 627.7152 and that its involvement was to ensure payment to Noland’s Roofing.

“HICA and American Integrity agree that if an assignment is governed by Section 627.7152, it must comply with that statute to be valid,” the appeals court opinion states. “They also agree that the assignment here does not comply with the statute. Their disagreement is over the threshold question of whether the assignment falls under the statute in the first place.

“The assignment HICA relies on is an ‘assignment agreement’ under Section 627.7152. The legislature has mandated that such assignments comply with all other provisions of that statute. Because the assignment here did not do so, it is ‘invalid and unenforceable.’ [per] § 627.7152(2)(d), Fla. And without a valid assignment, HICA has no standing to sue American Integrity for its alleged breach of Caruso’s insurance policy… The trial court was right to enter a summary judgment for American Integrity.”

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