Sunshine on my roof makes me happy: Roofing, AOBs & Florida
An assignment of benefits permits a third party to go after the insurer for payment, but homeowners don’t always realize what signing an AOB means.
Florida is nicknamed The Sunshine State, but exactly how bright that sun shines may depend on who you ask.
For home insurers, Florida is not exactly a hospitable environment. Hurricanes aside, there is the added threat of litigation not only from homeowners, but also from roofing contractors who have secured an “assignment of benefits” (AOB) from a policyholder.
An AOB permits a third party, like a roofer, to “stand in the insured’s shoes” and go after the insurer for direct payment. Unfortunately, homeowners don’t always realize what, precisely, signing an AOB does: It takes away their right to communicate with the insurer about the claim and allows the third-party assignee to negotiate and accept claim payments from or even file suit against the insurer without requiring the insured’s knowledge or consent.
For example, an insured might be perfectly happy to settle a claim with their insurer, but roofing companies are rarely, if ever, so willing. If the insured has signed an AOB, the roofing company has the right to pursue litigation even if the insured prefers a settlement.
Earlier this year, Austin Flickstein and Hope Zelinger of Bressler, Amery & Ross’s insurance practice successfully defended American Traditions Insurance Company (ATIC) against a roofing company with an AOB. The Insurance Coverage Law Center spoke with them about the current state of roofing and insurance in Florida. Outlined and summarized below are some key takeaways from that conversation.
1. The relationship between roofing companies, AOBs and the general public was tenuous at best before the 2019 AOB reform bill; is it still sour?
While steps have been taken to curb the actions of roofers who prey on vulnerable homeowners seeking to rebuild after a hurricane, there has been no meaningful progress. The reform bill, according to Flickstein, who is a principal with the firm, provided little clarity concerning how to send notice of the intent to file suit, making the requirement that much harder to enforce.
Roofers with an AOB might file claims several years after the alleged damage took place, and the issue of whether the insurer received notice often devolved into a battle of credibility concerning when the notice was sent, if at all. What might have been a single suit between the insurer and the insured turns into a frenzy of lawsuits with water mitigation companies, plumbers and other companies providing similar services.
In summer 2022, Florida Senate Bill 2 revised Fla. Stat. §627.428 so that no person except a named or omnibus insured or a named beneficiary could acquire attorney’s fees, in any manner, as part of a suit related to a residential or commercial property policy. This amendment, however, has been challenged in Florida courts.
“There is no statutory route for them [roofers] to get attorney fees now,” said Flickstein, who expects the amended statute to be upheld. “There is not a right to get those fees. Legislation can take it away.”
Flickstein said the amended statute has generally alleviated the number of AOB-based lawsuits and certainly curbed situations where an insurer might have to defend multiple lawsuits at the same time.
2. A large part of the problem is roofers acting as unlicensed public adjusters.
Public adjusters are the ones who help an insured gather the information needed or requested by the insurance company’s adjuster. They then work out the amount of the insured’s loss, based on a number of factors, and present the amount for settlement. At no time do they offer to file the claim on the insured’s behalf or refer an insured to their company attorney.
Some roofers, however, take a less scrupulous approach. Rather than waiting for homeowners to call them, they will take it upon themselves to initiate contact and claim they can get an entirely new roof at a low cost or even for free, even going so far as to offer to file the claim on the insured’s behalf. If the insurer denies the claim, a roofer will make another offer: To put the insured in touch with an attorney, who may be in on the scheme or even on the roofer’s payroll. While insurance industry professionals would see these practices as red flags, a distraught homeowner might be more than willing to sign away these duties.
“It is always the insured who files the claim,” Flickstein said. “[We] need to keep roofers from communicating on the insured’s behalf to the carrier.”
On the plus side, more homeowners are beginning to pay attention to the man behind the curtain. This trend, bolstered by Flickstein and Zelinger’s victory for ATIC, is due in part to increased coverage in the media, including recent legislative sessions appearing in the news.
“Homeowners are just now starting to understand there’s something fishy about something too good to be true,” Flickstein said. “The next time someone knocks on the door with an offer, they will realize it’s shady.”
3. Homeowners need to be held accountable for their role in the process.
All of that said, homeowners are not automatically off the hook for a roofer’s shady dealings. Even if the roofer is the one who files a fraudulent insurance claim, the insured is still a part of it; they might, or even should, have reason to know whether a roofer inflated the claim or whether it was otherwise inaccurate.
“Homeowners need to be more responsible for fraud and material misrepresentation during the claims process,” said Flickstein. “Right now, there is a lot of leeway for a homeowner to say they aren’t an expert. If it were codified in law that homeowners are responsible if they let the roofer submit something inflated or inaccurate, it would cut down on [fraudulent claims].”
Two recent cases prove his point. In Mezadieu v. SafePoint Ins. Co., a loss consultant prepared an estimate for a homeowner based on a water leak. The estimate included more than $10,000 for cabinet damage that had been caused by a separate and unrelated water leak. The homeowner submitted the claim and sued her insurer after the claim was denied.
In the homeowner’s deposition, she admitted the cabinets had been damaged by a separate leak, but she also stood by the loss consultant’s original estimate of her damages. When the homeowner claimed her reliance on the false estimate was unintentional, the court pointed to her deposition testimony. The insurer’s motion for summary judgment was granted.
Then, in Anchor Prop. & Cas. Ins. Co. v. Trif, the Florida District Court of Appeal said an insurance carrier seeking recourse for an insured’s allegedly fraudulent claim had to prove the insured acted with fraudulent intent in submitting the claim. Though the insured repeatedly testified that the abnormally high estimate had been created by a professional, rather than himself, and the court ultimately found that there was no fraudulent intent, the evidence on the record was “conflicting,” meaning it would not necessarily have been unreasonable if the jury had found fraudulent intent.
Another fly in the ointment, as demonstrated in Zelinger and Flickstein’s defense of ATIC, is timing. The longer the time between an occurrence and the claim for it, the more suspicion it arouses. Some roofers find damage from normal wear-and-tear but present it as hurricane damage, sometimes more than a year after the hurricane. It doesn’t add up, for instance, if a post-hurricane damage estimate includes damages for missing roof tiles but not missing or broken gutters.
“This is the type of case that illustrates the predatory nature of many roofing contractors,” Zelinger, managing principal of Bressler, Amery & Ross’s insurance practice, said. “At trial, we argued that the claimed damages were not from Hurricane Irma, but instead from improper installation, foot traffic, and thermal expansion and contraction. We contended that our client, ATIC, was prejudiced by the late reporting of the claim and the installation of solar panels before the carrier could inspect the roof. The jury agreed.”
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