Florida's Fourth District Court of Appeal (DCA) ruled on Sept. 5, 2018, that an insurer's anti-assignment provision was not prohibited.1 The Court disagreed with the Fifth DCA's decision in December 2017 prohibiting any such conditions and certified a conflict which is likely to head to the Florida Supreme Court. The Fourth DCA found that a homeowner's insurance policy may contain a restriction requiring the consent of all of the insured and the mortgagees before a valid assignment of benefits.
The policyholders were husband and wife homeowners who contracted with a water restoration company to fix water damage to their insured home. The home also had a mortgage. The wife, without the consent of her husband or the mortgagee, also agreed to "an assignment of benefits agreement assigning 'any and all insurance rights, benefits, proceeds and any cause of action under any applicable insurance policies' " to the water restoration company.
The policy at issue in this case contained a condition that "[n]o assignment of claim benefits, regardless of whether made before a loss or after a loss, shall be valid without the written consent of all 'insureds,' all additional insureds, and all mortgagee(s) named in the policy."
The water restoration company subsequently made a claim to the insurer under the assignment. The insurer refused to pay the full amount of the claim as a result of the anti-assignment provision in the policy. The water restoration company sued the insurer for breach of contract and declaratory relief.
The trial court granted the insurer's motion to dismiss as a result of the anti-assignment provision in the contract. The Fourth DCA agreed with the trial court and found that prior case law from the Florida Supreme Court prevented the insurance company from conditioning an assignment of benefits upon the insurer's consent, but not the other insureds' or mortgagee's consent.
The Fourth DCA noted and disagreed with the Fifth DCA's recent decision finding any restriction of an assignment of rights in an insurance contract was prohibited. The Fourth DCA also noted that, unlike in the Fifth DCA's decision, the anti-assignment provision had been informationally filed with the Florida Office of Insurance Regulation and had never been disapproved by the office.
The Fourth DCA ruled that the prior case law merely prohibited assignment of benefit restrictions based on the insurer's consent. It found that an assignment restriction was not prohibited if it required the consent of all the insureds and all of the mortgagees named in the policy, stating that the insureds and mortgagees have a vested interest that a reputable, legitimate third-party contractor perform repairs on the home.