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Assignment Of Benefits Abuse Rapidly Growing In Florida


An assignment of benefits is common in many types of policies, as the insured can sign documents authorizing their service provider submit charges to an insurer for payment. The service provider is required to provide information to support the claim and receive benefits directly from the insurer on the insured’s behalf.

Assignment of Benefits is commonly used in an emergency situation where repairs or medical treatment must be performed right away, but the insured may not have the money to pay until their claim with the insurer is settled.

Unfortunately, abuse of the assignment of benefits system has rapidly grown over the last five years, to the point where it now seriously disrupts Florida’s insurance market.

Where Does The Abuse Come From?

Much of the assignment of benefits abuse stems from water loss claims, evolving into a costly problem in the state. Florida AOB lawsuits have increased 90,000 percent since 2000. However, it is not until recently that the abuse has gained traction, and reform has gained support. Attention was drawn to the issue when Citizen Property Insurance Corp highlighted the problem in its 2016 rate filing and requested a rate increase of 3.2 percent for all personal-line policyholders. The rate hikes were blamed solely on water losses. Citizen Property has since urged lawmakers to pass solutions to the problem, and have stated that they have not had any issues in any other states they operate in.

A Rise In Fraudulent Activity

Highly litigious groups of trial firms, as well as certain types of contractors, have been taking advantage of the AOB provision in homeowners’ insurance policies. The contractors inflate the cost of repair work, and then turn around and sue insurance companies if a claim is denied or not paid in full. However, many of these contractors are unlicensed water extractors.

As a result, insurance companies are forced to determine if it’s worth it to fight the suit or inflated claim; the insurance company won’t take measures of defense unless they are certain the claim is incorrect. Insurance companies would like to settle and keep costs low.

Some blame can also be placed on policyholders. Many policyholders are unware what they are signing over, and don’t understand the repercussions if a repair company decides to sue their insurer.

Attempts To Solve The Problem

The Florida Office of Insurance Regulation issued a data call in October as a way to evaluate the impact that assignment of benefits is having on property claims, and is currently working on analyzing the results of the call.

The Florida Chamber of Commerce, working with other prominent business leaders and contractors, have formed the Consumer Protection Coalition, seeking to protect consumers by ensuring homeowners maintain control of their insurance policies.

Two bills have also been introduced by Florida legislators – one in the house, and one in the Senate. These bills seek to tackle the assignment of benefits abuse problems, including requirements for post-loss assignment of claims or policy provisions not related to liability coverage.

At the very least, awareness has been brought to an issue that some have gone as far as to call a crisis. Hopefully with more awareness and attention, measures can be put in place that will limit the assignment of benefits abuse currently running rampant throughout the state.

Attorney David Goldman has a strong belief that everyone should be treated fairly and those with the means should do what they can to bring justice in all areas of our society. That belief has led him to help Florida's injured from being taken advantage of by corporations and insurance companies. Since 1989 David Goldman has been fighting for the rights of Floridians both as an attorney and by personally supporting our community.

Assignment Of Benefits Abuse Rapidly Growing In Florida

Goldman Babboni Fernandez
Murphy & Walsh




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