The Sailer Report: Law aims at insurance fraud in home repairs

Bill adds measures in effort to curb “assignment of benefits” abuse.

State Sen. Aaron Bean said the “assignment of benefits” legislation will curb lawsuits and lower insurance premiums “so everybody can afford a house.”
State Sen. Aaron Bean said the “assignment of benefits” legislation will curb lawsuits and lower insurance premiums “so everybody can afford a house.”
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State Sen. Aaron Bean told the Northeast Florida Association of Realtors on Friday that the No. 1 priority bill affecting real estate that passed the Florida Legislature this year was one that targets insurance fraud.

Bean said House Bill 7065 limits “assignment of benefits” abuse to reduce fraud and insurance costs. 

He gave an example of a victim.

A property owner testified to a legislative committee that he called a repair company to fix a water leak.

“We can fix this, just sign this form,” the repair company told the owner, who unknowingly signed away his benefits.

When the owner called the insurance company regarding other issues resulting from the water leak, such as carpet replacement, he was told that he didn’t own the policy and the company couldn’t talk to him.

An assignment of benefits is a legal contract, but prior to the legislation there was no right of rescission.

The bill provides a 14-day rescission period, and 30 days if the vendor does not make the repairs, to homeowners who signed away their benefits.

The bill’s provisions include:

• Define “assignment agreement” and requirements for the execution of the agreement.

• Insurer can provide a policy prohibiting assignment, with conditions.

• Change the one-way attorney fee Florida statute to include an attorney fee structure for setting the amount of fees awarded in suits by an assignee against an insurer.

• Transfer specific obligations under the insurance contract to the assignee and putting the burden on the assignee to prove failure to perform those obligations was not limited the insurer’s means to execute under the contract.

• Insurer must report specific data on claims paid in the previous year under assignment agreements by the end of January 2022 and each following year.

• Bar specific fees and changing policy provisions related to repairs in an assignment agreement.

• Require contractors to provide the insurer and the consumer prior written notice of no more than 10 business days before submitting a lawsuit on a claim.

Bean said there were more than 153,000 assignment of benefits lawsuits in 2018, up from none in 2000.

“We are going to end third-party vendor lawsuits by not having insurance companies pay attorney fees. This will reduce the lawsuits and also lower premiums, so everybody can afford a house,” he said.

Bean, a Republican, represents District 4, which includes Nassau County and part of Duval County. He also talked about other legislation that affects real estate.

House Bill 409 allows online remote notaries, with some rules and certifications.

House Bill 447 provides flexibility in real estate contract closings that are delayed because of expired and open permits.

Under the bill, local government can close the permits six years after they were issued, as long as health and safety hazards are not present.

House Bill 7123 was passed dealing with multiple areas of taxation, included a further rollback of the business rent tax by 0.2 percentage points, lowering the tax on commercial leases to 5.5%. It is estimated to save Florida business $64.5 million each year.

Bean also said the Legislature allocated $500,000 to prosecute unlicensed real estate activity and $200 million for affordable housing initiatives, with $115 million of it set aside for Hurricane Michael damages to residents of the Panhandle. 

Of the 3,500 bills filed this year, 197 passed.

Bean said the Legislature will continue to address real estate-related issues that did not pass this session.

Short-term vacation rentals will continue to be a hot topic, he said.

He said the Legislature seeks a balance between what private owners are allowed to do with their homes and how neighbors want to enjoy their own residences.

“You build a house and don’t want to live next to a hotel,” he said.

Other real estate topics include impact fees, the abuse of privileges for emotional support animals, and water quality improvements addressing problems created by failing septic tanks.

The 2020 legislative session starts in January.