Citizens Seeks to Help Defend Insurance Law

Property Insurance

By Jim Turner

The state-backed Citizens Property Insurance Corp. is seeking to help defend part of a new property-insurance law aimed at curbing litigation costs.

Citizens filed a motion on July 2 to intervene in a lawsuit challenging the law’s constitutionality, which the Legislature passed during a May special session.

The Restoration Association of Florida and Air Quality Assessors, LLC, an Orlando firm that does work such as mold testing and leak detection, filed the lawsuit on May 31 in Leon County circuit court.

The challenge focuses on the part of the law dealing with what is known as the “assignment of benefits.”

In the assignment of benefits, homeowners sign over their insurance claims to contractors, who then seek payment from insurance companies — often spurring lawsuits about claims and payments.

Contractors in the past have recovered their attorney fees from insurers if they are successful in the lawsuits, a concept known as “prevailing party fees.”

But the new law stripped contractors of the ability to recover prevailing-party fees when they are assigned benefits. Homeowners can still recover prevailing-party fees if they file lawsuits directly against insurers, but the contractors cannot.

The lawsuit alleges that the change violates equal protection and due-process rights and denies contractors access to courts.

In the motion to intervene in the case, Citizens said invalidation “of the provision would have a significant impact on Citizens.” The motion said it could affect premiums paid by Citizens customers and could affect other policyholders across the state, who face the possibility of paying surcharges to help cover potential Citizens deficits.

The lawsuit named as defendants Melanie Griffin, secretary of the state Department of Business and Professional Regulation, and Donald Shaw, executive director of the State Construction Industry Licensing Board.

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News Service of Florida Staff
News Service of Florida Staff
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