TALLAHASSEE, Fla. (CAPITOL NEWS SERVICE) - Florida homeowners may see their insurance rates go down now that the Governor has signed reforms to a common practice called assignment of benefits (AOB) into law.
Florida Governor Ron DeSantis signed a reform to assignment of benefits into law on Thursday. (MGN)
The legislation was one of the most heavily lobbied bills of the 2019 session.
Homeowners can sign away their rights to sue their insurance company by signing an AOB. Michael Peltier with Citizens Property Insurance said it's commonly required by contractors for emergency repairs.
“Often times when an assignment of benefit is signed over, it's kind of a panicky situation. There's water coming out of the pipes in your house,” said Peltier.
Insurers have said abuse of the system resulted in rising insurance rates. AOBs gave contractors the same rights to have their attorneys' fees paid for by insurance companies.
“And often times it can lead to an excessive amount of litigation, which really drives up rates for consumers at the end of the day,” said David Altmaier, Florida Insurence Commissioner, in February.
Under the new law, attorneys' fees could be paid by the insurance company, the contractor, or both. It will depend on which provides the best faith estimate for the cost of repairs.
“It provides incentives for both insurers and contractors and restoration companies to come to the table with reasonable offers of settlement,“ said Peltier.
The law also gives homeowners at least 14 days to opt out of an AOB agreement and requires contractors to give insurers 10 days notice before filing suit.
“What we've seen in the past is a lot of the times we're getting notices for lawsuits even before we've had a chance to see the claim and I think that this bill will help to alleviate a lot of those issues,” said Peltier.
Citizens Property Insurance said prior to the new law they expected 3% of customers to see rate decreases, but now expect the number to be much higher.
Groups representing contractors are opposed to the new law. They’ve argued it will make it easier for insurance companies to make lowball offers.