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Appellate Court Rules that Post Loss Assignment of Benefits are Permissible

court houseA Florida appellate court ruled that post loss assignment of benefits are permissible.  The 4th District Court of Appeal of Florida was tasked with deciding whether or not payment must be due under the loss payment provision before an insured may assign a post-loss claim under the policy. This ruling will have an impact on contractors and homeowners dealing with their insurance company.

In One Call Property Services, Inc. v. Security First Insurance Company, One Call performed emergency water removal services to an insured homeowner. The insured homeowner assigned their rights to insurance proceeds to One Call as payment.

One Call then filed a complaint for breach of contract against the insurer Security First who refused to reimburse One Call for its services. Security First reasoned that the assignment was invalid pursuant to the policy’s anti assignment and loss payment clauses, and thus the insured sought to assign unaccrued rights under the policy.

While the trial court dismissed the complaint, the appeals court reversed. The appeals court maintained that in ruling on a motion to dismiss, a trial court is limited to the four corners of the complaint and its incorporated attachments, not other cases.

On the merits of the issue, the appeals court found that even when an insurance policy contains an anti-assignment clause, an insured may assign a post-loss claim. The court based this ruling upon well settled case law.

Moreover, the court held that a standard loss payment provision in an insurance policy does not preclude an assignment of a post-loss claim even when payment is due. The appeals court followed the opinion of the Second District and maintained that the language did not create a contractual bar to assignment. Standard loss payment provisions merely address the timing of the payment and in fact contemplate a lawsuit before payment is due.

However, the appeals court declined to decide on whether the post-loss assignment violated the public adjuster statute, the statute governing insurable interests, or whether partial assignment needed the consent of the insurer.

This ruling reaffirms well settled case law that an anti assignment clause nor a loss payment clause will bar assignment of a post-loss insurance claim.  In short, as long as the insured complies with all policy conditions, a third-party assignee may recover benefits on a covered loss.

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