Last month, the Florida Court of Appeals for the Fourth District weakened assignment-of-benefits claims after it held that an insurer may require all insureds and mortgagees to provide written consent prior to executing an assignment of benefits agreement.

In Restoration 1 of Port St. Lucie v. Ark Royal Ins. Co., Liza and John Squitieri’s home suffered water damage. The Squitieris were insured under a homeowners’ insurance policy issued by Ark Royal Insurance Company. Ms. Squitieri entered into a contract with Restoration 1, including an assignment-of-benefits agreement, in order to receive emergency cleanup services. She did not obtain written consent from her husband or from her mortgage company.

The Ark Royal policy, however, contained a provision forbidding insureds from assigning benefits under the policy:

No 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 this policy.

Ark Royal denied Restoration’s claim for benefits on the basis of this anti-assignment provision. The trial court granted Ark Royal’s motion to dismiss, finding that the assignment-of-benefit agreement did not comply with the unambiguous anti-assignment provision, which required the written consent of Mr. Squitieri and the mortgage company.

Assignment of benefits in Florida

Assignment-of-benefits agreements are common for companies that offer emergency-restoration services, as they allow homeowners to obtain immediate repairs without paying the restoration company directly. Upon completion of the work, the restoration company seeks reimbursement from the homeowners’ insurer.

The Ark Royal court upheld the trial court’s decision, holding that that the anti-assignment provision unambiguously required that every insured and mortgagee provide written consent prior to the execution of the assignment-of-benefits agreement. The Ark Royal opinion contradicts One Call Property Services, Inc. v. Security First Ins. Co., another recent opinion by the Court of Appeals for the Fourth District. In One Call, a homeowner entered into a contract for emergency water-removal services, which included an assignment-of-benefits agreement. The One Call court held that the anti-assignment provision was invalid under Florida law, which clearly prohibits the restriction of a homeowner’s right to assign claims after a loss.

The Ark Royal decision also directly contradicts the recent decision by the Court of Appeals for the Fifth District in Security First Ins. Co. v. Florida Office of Insurance Regulation. In Security First, Florida’s Office of Insurance Regulation disapproved the insurer’s request to amend its policy language to include an anti-assignment provision, which is nearly identical to the provision in the Ark Royal Policy. The Security First court agreed with the regulator’s decision, holding that the anti-assignment provision contradicted well established law, as originally laid out in the 1917 case of West Florida Grocery Co. v. Teutonia Fire Ins. Co. In West Florida Grocery, the Florida Supreme Court held that an anti-assignment provision requiring an insurer’s consent for assignment of benefits after a loss was unenforceable. The Ark Royal court considered the arguments addressed in the Security First case, but it determined that the court had misquoted and, thus, inflated the holding of West Florida Grocery, which applied to anti-assignment provisions requiring an insurer’s consent, not provisions requiring the consent of all insureds and mortgagees. The Ark Royal court concluded that the Florida Legislature, not the court, should ultimately make a public-policy determination regarding whether anti-assignment provision may require the consent of all insureds and mortgagees.

What does this mean for policyholders?

The Ark Royal court’s decision is a loss for policyholders and emergency-restoration companies in counties within the Fourth District, which includes Broward, Indian River, Martin, Okeechobee, Palm Beach, and St. Lucie. In these counties, policyholders will be forced to pay out-of-pocket for emergency repairs when mortgage companies inevitably refuse to provide consent. Emergency-restoration companies will also be harmed because many homeowners will be unable to pay the substantial cost of service up-front.

Policyholders and emergency-restoration companies in counties in the Fifth District, which includes Brevard, Citrus, Flagler, Hernando, Lake, Marion, Orange, Osceola, Putnam, Seminole, St. Johns, Sumter and Volusia, as well as those in other Districts, are less likely to face the same challenges because there is controlling case law supporting the position that these anti-assignment provisions are invalid. Until the Florida Supreme Court rules on the issue, there will be continued uncertainty as to the validity of anti-assignment provisions.

The opinion linked to this article was reprinted from WestlawNext with permission of Thomson Reuters. If you wish to check the currency of this case by using KeyCite on WestlawNext, please visit