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March 28, 2019

Florida’s Highest Court Mulls Chance to Address Assignment of Benefits Abuse

The Florida Supreme Court is currently weighing whether insurers can implement policy provisions to restrict abusive assignment of benefits (AOB) practices. Under AOB, insureds can sign over the rights to insurance compensation to contractors, who in turn will frequently perform excessive repairs, then team up with plaintiffs’ lawyers to sue the insurance company for a bigger payout.

Depending on the Court’s decision in the case in question, Restoration 1 of Port St. Lucie v. Ark Royal Insurance Co, insurers in the Sunshine State may be able to require all insureds and mortgage lenders to sign off on any potential AOB agreement before benefits can be assigned to third parties. Attorneys who represent insurers believe such a requirement would be a step in the right direction to minimize abuses, according to Law360.

The Court’s deliberations are taking place in the context of a broad push to fix AOB. Gov. Ron DeSantis called AOB in Florida a “racket” in his State of the State address, and lawmakers have proposed legislation to reform the practice. Action is increasingly necessary as AOB lawsuits continue to proliferate; according to the Florida Justice Reform Institute, the filing rate has increased 900 percent over the last decade, and AOB lawsuits made up more than half of all litigation against insurers statewide for the eighth year in a row in 2018.

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