A recent Florida Third District Court of Appeal decision reiterates the level of detail required in a written, itemized, per-unit cost estimate that must be provided when using an assignment of benefits. While the use of assignments of benefits for disaster recovery work has essentially been eliminated for future policies, there are still many claims out there arising under previously issued policies and many assignments of benefits still in place.
Total Care Restoration, LLC v. Citizens Property Insurance Corporation arises from a claim for water-damage-restoration work performed in July 2021. At that time, a disaster recovery contractor and a property owner entered into a contract for the contractor to remedy water damage at the owner’s property, which contained an assignment of the owner’s benefits under his insurance policy. Attached to the assignment was a document entitled “Itemized per-Unit Cost Estimate,” which included a list of available emergency and non-emergency services, together with a unit price for each. A picture of this list is below (click to show full image):
The contractor filed a claim under the insurance policy for $16,066.32 for the work performed. The insurance carrier denied the claim, and the contractor filed a lawsuit against the carrier. The carrier moved to dismiss the lawsuit, claiming that the assignment of benefits failed to comply with section 627.7152(2)(a)4., Florida Statutes (2021), which requires an itemized, per-unit cost estimate of the services to be performed by the contractor to be attached to the assignment agreement. The trial court granted the motion to dismiss.
The contractor appealed, arguing that the above-shown list satisfied the requirements of the statute. The Third District Court of Appeal did not agree, starting out its analysis by referring to the above-shown list as “nothing more than a generic menu of available services offered by [contractor], listing the cost of each available service.” (emphasis in original). The court also found that the attached price list was not an estimate at all, stating:
Indeed, this document is not an “estimate” at all, because it fails to set forth: the specific services being performed by[contractor[ on [owner’s] property; whether those services are being performed on an emergency or non-emergency basis; and the estimated cost for each of the services being performed on the property based on the number of “units” (e.g., number of hours/days needed for each service and/or number of square feet involved for each specific service being performed on the insured's property).
In reaching this conclusion, the Third District Court of Appeal expressly adopted the rationales set forth in two other Florida appellate cases on similar issues — Air Quality Experts Corp. v. Fam. Sec. Ins. Co., 351 So. 3d 32 (Fla. 4th DCA 2022) and Kidwell Grp., LLC v. ASI Preferred Ins. Corp., 351 So. 3d 1176 (Fla. 5th DCA 2022).
There are two key takeaways from this opinion. First, if you’re a contractor with assignments of benefits from prior work, or you’re using them on projects where work was done under a policy issued before January 1, 2023, to the extent you can make sure your “itemized cost estimate” is truly a job-specific estimate, you have to. If you do not, your actions against any insurance carrier for payment are highly likely to fail.
The second key takeaway is that the law on this point is finally starting to come together on a set decision. The Third District Court of Appeal expressly adopted and approved of similar decisions issued by two other courts. With now 50% of Florida’s District Courts of Appeal reaching a consensus on this issue, it is becoming more and more unlikely that another court would reach a contrary decision. Contractor’s counting on prior estimates or assignments of benefits should consult with an attorney to see what, if any, other options exist to which they could shift.