Florida Court of Appeals Permits Post-Loss Assignment of Benefits to Third Party

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In Accident Cleaners, Inc. v. Universal Insurance Co., 2015 SL 1609973 (Fla. Ct.App. April 10, 2015) the Florida Court of Appeals, Fifth District held the assignee of benefits under an insurance policy was not required to have an insurable interest in the insured property at the time of loss. The court further held that so long as the assignor had an insurable interest in the insured property at the time of the loss, such insurable interest is imputed to the assignee.

The assignee was hired by the named insured on a homeowners policy to clean and repair the named insured’s home, which suffered damage from a decomposing body. In lieu of paying for the services, the insured assigned its rights under the policy to the assignee. When the insurer refused to pay, the assignee sued. The trial court dismissed the lawsuit pursuant to section 627.405 of the Florida Statutes, which provides as follows:

(1)  No contract of insurance of property or of any interest in property or arising from property shall be enforceable as to the insurance except for the benefit of persons having an insurable interest in the things insured as at the time of the loss…

In the insurer’s view, the assignee did not obtain an insurable interest until after the time of the loss. Thus, pursuant to the statute, the trial court ruled that the assignee could not enforce the benefits of the insurance policy which it was assigned. The Appellate Court reversed the decision and stated that the insurer’s argument “ignores that the right to recover is freely assignable after loss and that an assignee has a common-law right to sue on a breach of contract claim.” Section 627.405 did not change this well-settled rule.

The Appellate Court clarified that section 627.405 requires only that that the policyholder have an insurable interest in the property at the time of the loss. Thereafter, the benefits of the policy are freely assignable and the policyholder’s insurable interest is transferred to the assignee.

This case will preclude insurers from denying benefits to assignees on grounds that they do not hold insurable interests. So long as the policyholder had an insurable interest at the time of the loss, the assignee’s claim is enforceable.