Restoration Companies and Assignment of Rights to Homeowner’s Insurance Claims in Florida

As Miami-Dade homeowner’s insurance claims attorneys we have encountered numerous cases involving issues pertaining to assignment of rights of benefits. Of course, we must first explain what an assignment of rights is. An assignment of rights is when a person transfers his benefits to another. In this instance, we are talking about contractual or rights under an insurance policy.

For example, an individual in South Florida has a water loss at his home. The loss is substantial and this individual has no means to pay for this loss. This individual hears of a restoration company who will make repairs to his home in exchange for benefits under a homeowner’s policy. This individual then assigns his benefits over to the restoration company. The individual’s home is fixed and the restoration company then proceeds to make an insurance claim against the homeowner’s policy. The restoration company then gets paid by the insurance company.

All worked out well in the above example. Nonetheless, as South Florida insurance claims attorney we understand that many wrinkles can come into play when dealing with assignment of benefits of homeowner’s insurance policies. Assignment language may look something like this:

Restoration Company (“RC”) shall bill all charges and/or costs to owner and a copy of these invoices shall be sent to the insurance carrier and/or public adjuster. It is fully understood and agreed to by [o]wner that all charges are due upon completion of work and the [o]wner is personally responsible for any and all charges and/or costs not paid by insurance to RC. Any and all charges for services not paid by insurance carrier are the sole responsibility of the [o]wner and are to be paid upon completion of work.

Providing the owner had valid effective insurance coverage for all or part of the services to be performed by RC, the owner further authorizes and directs their insurance carrier, mortgage company and/or public adjuster to make direct payments to RC for work performed. Owner, INTENDING TO BE LEGALLY BOUND HEREBY, further agrees to assign, promises to assign, and does assign to RC all of his/her/its rights and benefits under the insurance policy to the extent necessary to pay RC all of the sums due for work performed by RC, as set forth in RC’s invoice.

The troubling language here relates to when an insurance company does not pay. Indeed, the owner remains responsible for the cost of the repairs. Many of our previous blogs relay the many mechanisms an insurance company could use to deny, delay, or undervalue a claim. Therefore, there is a strong likelihood that work will be performed and completed without any guarantee that homeowner’s policy will respond. This risk must be understood by both insured’s and restoration companies. A restoration company makes a big investment when it repairs a home. Therefore, it is wise to have a profound understanding of the homeowner’s policy before commencing work. Of course, the same applies to the homeowner. Otherwise, the homeowner may be personally responsible for the costs of repairs to his property. For a restoration company it is also important to make sure the homeowner is up to date with his mortgage payments. Otherwise, a restoration company may find it difficult to get compensation for their work.

This is a subject we will keep expanding on in the future. If you are a homeowner or a restoration company and have any questions, then please do not hesitate to contact us at 305.764.9907 or 1.888.413.8353. Our Florida restoration insurance claims attorneys are here to assist you.