Insurance policies

South Florida court clarifies rules for assignees on insurance policies

Once the owner notified People’s Trust of the damage and they inspected, the insurer informed the owner that coverage existed for the claim. The company also said it would use its preferred contractor to carry out the repairs. But the owner called on the respondent First Call 24/7 Inc. to carry out the repairs. (Credit: Felix Mizioznikov/Shutterstock.com)

A decision from the Florida Fourth District Court of Appeals reiterates a key principle.

The Appeals Panel overturned the lower court’s decision to award damages under an insurance policy to the assignee of the insured Michele Baoberg, since the owner failed to comply with the endorsement of preferred contractor in the insurance policy.

Baoberg suffered water damage at her home. His insurance policy with the appellant People’s Trust Insurance Co. allegedly contained a preferred contractor endorsement, according to the ruling.

Once the owner notified People’s Trust of the damage and they inspected, the insurer informed the owner that coverage existed for the claim. The company also said it would use its preferred contractor to carry out the repairs.

But the owner called on the respondent First Call 24/7 Inc. to carry out the repairs.

People’s Trust reportedly paid First Call $6,800 for emergency services. People’s Trust has asked the owner to complete a work permit for the remaining repairs, so his preferred contractor can begin the restoration.

“The owner never authorized the work and People’s Trust told her that she was in breach of the insurance contract”, according to the judgment.

First Call submitted an invoice to People’s Trust for $19,863.96 for restoration services. People’s Trust did not pay, so First Call sued as the owner’s assignee, according to the ruling.

Both parties filed motions for summary judgment. The trial court denied the insurer’s motion and granted First Call’s, entering judgment for $10,988.02.

The panel cited the Tr of the people. Ins. Co. vs. Tosar decision, where the Florida Court of Appeals for the Third District found that People’s Trust was not at fault because it notified the owner of the repairs in a timely manner and chose to use its preferred contractor to make the repairs, as permitted by policy.

Because the landlord in the latest case failed to perform the work permit despite three requests from People’s Trust, the court found this to be a material breach of policy, the ruling said.

People’s Trust’s liability only arises where the insured fails to notify People’s Trust before authorizing the work and such failure to notify acts to bar the company from the repair process.

Judge Robert Gross of the Fourth District Court of Appeals.  Photo: Melanie Bell/ALM. Judge Robert Gross of the Fourth District Court of Appeals. Photo: Melanie Bell/ALM.

Like with TosarFourth DCA Judge Robert Gross, Chief Justice Burton C. Conner and Judge Melanie G. May found that First Call did not allege or provide evidence that People’s Trust improperly exercised the right to repair or that the endorsement was otherwise invalid.

Instead, the owner violated the policy by not giving the authorization form and circumvented the explicit terms of the policy by hiring First Call to perform the non-emergency repairs.

Accordingly, the court set aside the money judgment in favor of First Call and remanded for entry of final judgment in favor of People’s Trust.

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