Insurance Law Hawaii

Hawaii Intermediate Court of Appeals Reverses Lower Court's Dismissal of Insureds' Claims Arising from Work-Related Death

    The court reversed dismissal of all claims against the insurers for a work-related death after determining that policy exclusions conflicted with statutory mandates on coverage. Waiau, et al. v. Hawaii Employers' Mut. Ins. Co,  Inc., et al., 2024 Haw. App, LEXIS 583 (Haw. Ct. App., Dec. 31, 2014).

    Amos K. Agliam, an employee of C&F Trucking, was killed when the brakes in the truck he was driving careened off the road. C&F Trucking was not an entity but a "dba" and a trade name registered by Frank M. Lawrence (Frank). A claim was made for workers' compensation benefits and Angliam's estate received such benefits. 

    In a separate suit, the Waiau heirs sued Frank, fellow employees, and C&F Trucking (together, Assignors) alleging that each Assignor was managing and/or supervisory employees and/or officers and/or directors of C&F Trucking, and that Agliam's death was caused by the wilful and wanton misconduct of each of the Assignors.

    The Assignors notified C&F's workers compensation carrier, Hawaii Employers' Mutual Insurance Company (HEMIC), its primary carrier, First Insurance and one of its excess carriers, North American Capacity Insurance Company (NACIC), but perhaps failed to notify another excess carriers, General Star Indemnity Company, of the underlying lawsuit. Each insurer declined to defend or indemnify for any of the Assignors' claims. The Assignors hired defense counsel and eventually entered into an agreement with the Waiau heirs to stipulate to a single count for negligence, wilful and/or wanton misconduct, and to go to binding arbitration to determine damages to the Waiau heirs. The parties further agreed that the Assignors would assign their rights and claims against the Assignors' insurers to the Waiau heirs and that the Waiau heirs would give the insurers notice of the binding arbitration and an opportunity to appear and dispute the damages. None of the insurers participated in the arbitration. Special and general damages amounting to $2,607,528.60 were awarded the the Waiau heirs and a final judgment reflecting this amount was entered.

    First Insurance issued a Business Auto Policy to C&F Trucking Frank Lawrence DBA with limits of $300,000 per person and $600,000 per accident. First Insurance denied coverage under an exclusion for damages resulting from bodily injury to the insured's employee. The policy had a severability-of-interest provision stating that the insurance applied "separately to each insured who is seeking coverage or against whom a claim is made or suit is brought."

    Frank dba C&F Trhucking also had an excess automobile policy with General Star. The policy stated that except for its own express provisions, "the policy will follow the terms, conditions, agreements, definitions, exclusions and limitations of the [First Insurance Policy]."  The policy further stated that General Star had no obligation to defend.

    NACIC issued a Commercial Following Form Excess Liability Policy to Frank dba C&F Trucking. The policy also stated there was no duty to defend. 

    The Waiau heirs filed suit against HEMIC, First Insurance, General Star, and NACIC, seeking (among other things) declaratory relief, and special, general and punitive damages. The complaint included counts for: Declaratory Relief (Count I); Breach of Contract and/or Contractual Warranties (Count II); Bad Faith (Count III); and Punitive Damages (Count IV).

    NACIC and General Star filed motions for summary judgment arguing they had no duty to defend or indemnify because the underlying policy issued by First Insurance had not exhausted. First Insurance filed a substantive joinder, arguing that its policy excluded coverage to an employee or fellow employee of the insured. The trial court granted summary judgment to General Star and NACIC. 

    On appeal, the insurers argued that the First Insurance policy excluded coverage for bodily injury to Agliam as either an employee of Frank DBA C&F Trucking or fellow employees of Frank, or assuming they were insured under the policy, the other Assignors. Under the Hawaii workers' compensation statute, an injured employee gave up the right to recover damages from an employer "in exchange for the certainty of a statutory award for all work-connected injuries."  Under Haw. Rev. Stat. 386-8, a fellow employee of the injured party was immune from suit for simple negligence, but not for wilful and wanton misconduct of the co-employee. Thus, while Frank's liability as Agliam's employer was prohibited by the workers' compensation statute, the Waiau heirs' fellow employee claims against the Assignors were not otherwise barred by the statute. Accordingly, the First Insurance policy exclusions, if enforced, denied coverage for bodily injury claims that were not subject to liability protections under the workers' compensation statute. 

    The Waiau heirs argued Frank was a co-employee of Agliam and pursuant to the severability-of-interests clause contained in the First Insurance policy, the exclusions were unenforceable. They contended that Frank wore many hats and was sued wearing his co-employee hat, not his employer hat, and therefore the First Insurance Business Auto Policy exclusions did not apply to Frank. The allegations in Count I of the underlying complaint stated that Frank's wilful and wanton conduct as a supervisory employee of C&F Trucking caused Agliam's death. However, it was possible that Frank's adjudicated breach of his duties to Agliam could be found to have occurred in a capacity as a fellow employee and possibly that the claim would be found to be covered under the policies. On the other hand, the First Insurance policy did not insure "officers and directors'"of C&F Trucking. Frank did business as C&F Trucking, which was not a separate legal entity. Frank was the employer and only insured person. There was no separate, severable coverage for Frank, who was Agliam's employer. In other words, the Severability-of-interests clause worked only when there was a separate, non-employer insured. Here, there was no such separate coverage at issue because there was only a single insured, Frank dba C&F Trucking. Therefore, the Waiau heirs' arguments that the exclusions in the First Insurance policy were unenforceable based on the severability-of-interests clause was without merit. 

    The Waiau heirs further argued that the fellow employee exclusion contravened Hawaii public policy because it would allow First Insurance to provide a policy not in compliance with Hawaii statutes requiring that all policies covering motor vehicles must provide insurance, to pay on behalf of the owner, sums which the owner may be obligated to pay for injury or death arising out of the ownership, operation, maintenance or use of the motor vehicle, including liability coverage of not less than the statutory minimums. 

    The conflict of interest provision in the First Insurance policy read,

In the event that there is a conflict between the provisions of this policy or endorsements attached and the Hawaii Motor Vehicle Insurance law, such law shall take precedence over the provisions of the policy or endorsements.

If the employee and fellow employee exclusions in the First Insurance policy were enforced, the policy would not provide the coverage mandated by statute. This constituted a conflict between the policy exclusions and the statute. Therefore, under the terms of the policy, the statute took precedence over the employee and fellow employee exclusions. It was unclear, however, what it meant for the statute to "take precedence" over the conflicting exclusions, i.e., what the remedy was if there was a conflict. The court found that the conflict of interest provisions term was ambiguous with respect as to how it would be applied when a conflict arose because it was reasonably susceptible to more than none interpretation. It was reasonable for the layperson insured to expect that if the policy exclusions were unenforceable with respect to the statutorily-mandated coverage, the liability coverage would be in the amount stated in the policy. This was the amount of liability coverage that was offered by the insurer, not the statutory minimum, which was referenced nowhere in the First Insurance policy. 

    Therefore, First Insurance had a duty to defend Frank, as well as provide liability coverage, absent the exclusions, which were unenforceable due to the conflict with the statute. Accordingly, the lower court erred in granting summary judgment in favor of First Insurance.

    Because the First Insurance policy had not exhausted, the lower court did not err in granting summary judgment to General Star for th duty to defend on Count I (Declaratory Relief) and Count II (Breach of Contract. However, a declaratory ruling that General Star has no duty arising out of Agliam's death to pay on behalf of Frank was premature. Thus, the entry of summary judgment in favor of General Star on Count I and Count II was vacated to the extent that it barred any duties that might arise under the General Star excess policy. Further, General Star presented no evidence concerning the reasonableness of its conduct. Therefore, it was unclear whether the Waiau heirs would be unable to carry their burden on Count III (Bad Faith) or Count IV (Punitive Damages), so it was also err to dismiss these counts. The court also found that the Waiau heirs should have been granted a continuance under Haw. R. Civ. P. 56 (f) to complete discovery related to its bad faith claims.

    Similarly, the lower court did not err in granting summary judgment to NACIC. Its policy also required exhaustion of the First Insurance policy, so granting summary judgment to NACIC on Counts I and II with respect to any obligation to defend the Assignors was proper. The employee and fellow employee exclusions in the First Insurance policy, however, did not operate to bar excess liability coverage under the NACIC policy. Further, the court could not conclude that NACIC demonstrated that the Waiau heirs would be unable to carry their burden at trial with respect to the bad faith claims. Finally, the Waiau heirs should have been granted a continuance under Rule 56 (f) to complete discovery related to the bad faith claims, including whether NACIC unreasonably interpreted its policy or otherwise acted in bad faith. 

    The case was remanded to the lower court for further proceedings.

    Thanks to my colleague, Mark Murakami, for the heads up on this case. 

    

    

    

    

Ninth Circuit Narrows Scope of Coverage for "Damages Because of 'Bodily Injury'"

    The Ninth Circuit, applying Oregon law, limited the scope of the insuring agreement for "damages because of 'bodily injury'" and found there was no duty to defend. Bliss Sequoia Ins. & Risk Advisors, Inc. v. Allied Prop. & Cas. Ins. Co., 2022 U.S. App. LEXIS 29905 (9th Cir. Oct. 27, 2022). 

    In 2014, the operator of the water park sought professional risk-management advice from Bliss Sequoia Insurance and Risk Advisors, Inc. regarding coverage sufficient to insure the water park. Bliss procured coverage with an overall limit of $5 million. 

    One year later, a six-year-old was seriously injured in a near-drowning incident at the water park, allegedly due to the park's insufficient staffing of lifeguards. The boy's family sued the park, which ultimately settled for $49 million. The water park's liability coverage was $44 million short.

    As part of the settlement agreement with the injured boy's family, the water park assigned its claims against Bliss to the family. The family sued Bliss, who tendered to its general liability insurer, Allied Property and Casualty Insurance, to defend and indemnify against the professional negligence claims. Bliss argued that the insuring agreement promising to pay sums that Bliss "becomes legally obligated to pay as damages because of 'bodily injury'" triggered coverage. Allied denied coverage, however, and Bliss filed suit in the District of Oregon.The district court granted summary judgment to Allied, concluding that the claims against Bliss did not arise "because of bodily injury,"

    Bliss appealed and asserted that the claims against it for professional negligence arose "because of" the child's bodily injury. If "because of" was understood in its broadest possible sense, Bliss had a point. The child's injury caused his family to sue the water park, which in turn caused the park to sue Bliss for professional negligence.

    This went too far, however. While Bliss's liability would not have been incurred but for the child's injury, it was equally true that it would not have been incurred but for the construction of the water park years before. Bliss's professional-negligence claims did not involve damages "because of bodily injury."

    The phrase "because of bodily injury" included only damages that reasonably or foreseeably resulted from bodily injury - not just any that may arise in a chain of lawsuits connected in some way to someone's injury. The family's personal injury suit against the water park arose "because of bodily injury," but the claims of professional negligence did not. Allied had no duty to defend or indemnify Bliss. 

Disagreeing with Hawaii Supreme Court, South Carolina Holds Post-Lost Assignment Valid

    The South Carolina Supreme Court held that a post-loss assignment of rights under the policy was valid even though consent of the insurer was not requested. PCS Nitrogen, Inc. v. Cont'l Cas. Co., 2022 S.C. LEIXS 54 (S.C. April 13, 2022).

    In 1966, Columbia Nitrogen Corporation (Old CNC) began operating a fertilizer manufacture site. The insurers issued primary and excess liability policies to Old CNC with policy periods ranging form 1966 to 1985. The policies included an anti-assignment clause which read,"Assignment of interest under this policy shall not bind the company until its consent is endorsed hereon."

    Old CNC ceased all fertilizer production at the site in 1972 and sold the site in 1985. In 1986, Old CNC sold assets related to its fertiliser production business to CNC Corp. (New CNC). New CNC assumed some of Old CNC's liability, including those related to Old CNC's fertilizer production business. Old CNC dissolved. In 1997, New CNC became PCS Nitrogen (PCS) through mergers. 

    In 2005, Ashley II of Charleston, LLC, then owner of the site, filed a declaratory judgment action against PCS alleging PCS was liable under CERCLA for environmental remediation at the site. Ashley II alleged Old CNC contaminated the site and that PCS was liable for remediation. The federal district court found PCS liable under CERCLA.

    In this case, PCS sought a declaration that the insurers were obligated to provide coverage for its defense costs and environmental liabilities stemming from the CERCLA litigation. PCS contended that the insurers' consent to the assignment was not required because the assignment took place after the loss occurred. The circuit court granted summary judgment to the insurers, ruling the assignment was unenforceable as a matter of law because Old CNC did not secure the insurers' consent. The circuit court ruled that the assigment was not a post-loss assignment because, at the time of the assignment, no judgment had been entered against Old CNC. 

    On appeal, the Supreme Court noted that the majority rule was that such a provision did not bar an assignment made after a loss. The insurers relied upon decisions from Oregon and Hawaii (Del Monte Fresh Produce (Hawaii), Inc. v. Fireman's Fund Ins. Co., 117 Haw. 357 (2007). The South Carolina court refused to follow Hawaii and Oregon, and adopted the post-loss exception. Insurer consent was not required for an assignment of liability insurance coverage rights made after a loss. 

    The court next considered when the loss occurred and whether it was post-assignment. Again, the court followed the majority of jurisdictional and held the "loss" in the context of the post-loss exception, was synonymous with the "occurrence." In this case, the loss occurred before Old CNC executed the assignment in 1986.

    The court also agreed with PCS's public policy argument that relieving the insurers of their contractual duty to provide coverage would give the insurers a windfall. 

Insurer Not Responsible for Insured's Assignment of Policy Benefits

    The Florida Court of Appeals affirmed the lower court's granting summary judgment to the insurer after failing to abide by an assignment to which it was not a party. Expert Inspections, LLC v. United Property & Cas. Ins. Co., 2022 Fla. App. LEXIS 88 (Fla. Ct. App. Jan. 5, 2022). 

    The insured's property sustained damage from Hurricane Irma resulting in a covered loss. The insured retained Expert Inspections to perform mold-related services. As payment, the insured assigned her policy benefits pursuant to an assignment of benefits agreement. Under the agreement, the insured agreed to cooperate with the assignee to ensure that payments were made by the insurer upon completion of work. The insured gave authority to the assignee to endorse any checks with her name listed on the check. 

    Expert submitted a claim to the insurer with a copy of the assignment agreement and an invoice for $1,995.00. The insurer issued a check for the invoice payable to both Expert and the insured, sending the check to the insured's home address. A year later, Expert filed suit for breach of contract against the insurer. 

    The insurer deposited the fund with the clerk of court. The insurer also noted that it offered to re-issued the check in exchange for Expert's dismissal of the lawsuit. The insurer then answered the complaint with affirmative defenses that Expert was not entitled to attorneys fees because Expert was not forced to initiate litigation.

    The parties filed competing motions for summary judgment. The court granted the insurer's motion for summary judgment and denied Expert's motion. Because there was no dispute as to Expert's entitlement to the $1,995.00, the court found that Expert was entitled to the funds in the court registry. 

    On appeal, Expert argued there was a breach of the insurance policy because the insurer did not abide by the instructions listed in the assignment. The court rejected this argument because the insurer could not reach an agreement to which it had no privity. While the assignment granted Expert the right to enforce the policy, it did not grant Expert the right to enforce against the insurer terms from the assignment that were extraneous to the policy itself. The insured's failure to either forward the check to Expert or to notify the insurer of the insured's disagreement with the manner of payment could not be attributed to the insurer who was not put on notice by its insured of any disagreement regarding the manner of payment.

    Therefore, the trial court was affirmed for property granting summary judgment to the insurer.
    

Insurer Motion to Intervene in Underlying Case Denied

    The Colorado Supreme Court determined that the insurer defending under a reservation of rights could not intervene in the underlying case after the insured assigned its rights to any bad faith claim against the insurer. Auto-Owners Ins. Co. v. Bolt Factory Lofts Owners Ass'n, Inc., 2021 Colo. LEXIS 365 (Colo. May 24, 2021).

    Bolt Factory initiated a construction defects lawsuit against various contractors. Several defendants filed third-party complaints against subcontractors, including Sierra Glass Company. Auto-Owners agreed to defend its insured, Sierra Glass, under a reservation of rights. Auto-Owners declined to settle with Bolt Factory for $1.9 million, within policy limits. Sierra Glass then retains independent counsel and entered into a settlement with Bolt Factory. The settlement allowed Sierra Glass to assign its bad faith claims to Bolt Factory in exchange for the right to pursue the insurer for payment of the excess judgment rather than Sierra Glass. Instead of entering into a stipulated judgment, Bolt Factory and Sierra Glass proceeded to an abbreviated trial.

    The parties submitted proposed findings of fact and conclusions of law. Sierra Glass did not present a defense. Auto-Owners sought to intervene to protect its interest in the non-adversarial trial. The lower court denied Auto-Owner's motion. The court entered judgment in favor of Bolt Factory and against Sierra Glass in the amount of $2.4 million. The court of appeals affirmed. The Supreme Court granted Auto-Owners' petition for certiorari review.

    The Colorado Supreme Court found that the agreement between Sierra Glass and Bolt Factory was permissible under Colorado law. Faced with Auto-Owners' refusal to settle within policy limits, Sierra Glass took steps to protect itself by entering into an agreement with Bolt Factory - an agreement that included both an assignment of claims and a covenant not to execute. The lower court had discretion of requiring the parties to agree to a stipulated judgment or proceed to an uncontested trial where the court itself determines damages.

   Auto-Owners was not allowed to intervene because its interests in the litigation were not impaired. Auto-Owners could sufficiently protect its interests in a subsequent declaratory judgment action regarding coverage. Auto-Owners could also raise its claims and defenses in any bad faith action that Bolt Factory might bring against Auto-Owners pursuant to the assignment of claims.

    The judgment of the court of appeals was affirmed. 

    Thanks to Margie Arnovitz of Dale Barton Agency in Salt Lake City for sending me this case.

 

Oklahoma Finds Policy Can Be Assigned Post-Loss

    Oklahoma joined the majority of court in finding that after a loss occurs, the insured can assign the policy to another. Johnson v. CSAA Gen. Ins. Co., 2020 Okla LEXIS 118 (Okla. Dec. 15, 2020).

    Johnson's property was damaged in a storm. She filed a claim with her insurer. She also executed an assignment of her claim in order to repair the property with the execution of assignment to Triple Diamond Construction LLC. An appraiser retained by Triple Diamond determined the storm damage was $36,346.06. The insurer paid only $21,725.36 for the loss.

    Johnson and Triple Diamond sued the insurer for breach of contract, seeking $14,620.70, not inclusive of interest, attorneys' fees and costs. The insurer filed a motion to dismiss, or an alternative motion for summary judgment to dismiss Triple Diamond as a party. The insurer argued that both the policy and an Oklahoma statute barred the assignment. The district court granted the insurer's motion.

    After review of Oklahoma law and cases across the country on assignments of a policy post-loss, the Supreme Court reversed. Distinguishing between an assignment of a policy and an assignment of a post-loss chose in action which did not increase the insurer's risk was recognised by the majority of courts as implementing an important public policy. An assignment by an insured possessing an insurable interest when the subject of the assignment was a post-loss chose in action was valid in Oklahoma. The district court's dismissal of Triple Diamond was reversed. 

 

Assignment of Claims to Contractor Barred under Iowa Law

    The Iowa Supreme Court affirmed the lower court's denial of the policy holder's assignment to his contractor of claims under his homeowners policy. 33 Carpenters Construction, Inc v. Cincinnati Ins. Co.,2020 Iowa Sup. LEXIS 15 (Iowa Feb. 14, 2020). 

    The insured's home suffered damage from a hailstorm and windstorm. He entered an agreement with 33 Carpenters under which 33 Carpenters would repair the storm damage to the home in exchange for the insured's proceeds from the homeowners policy with Cincinnati. The assignment stated that the Assignor (homeowner) sold and transferred to the Assignee (33 Carpenters) any and all claims which the homeowner had against Cincinnati. 

    A representative from 33 Carpenters called Cincinnati to report the storm damage to the siding and roof of the home. The homeowner submitted his claim. Cincinnati investigated the home, prepared an estimate for the cost of repairs, and made payment to the homeowner.

    Thereafter, 33 Carpenters contacted Cincinnati to dispute the insurer's estimate of the repair cost and requested a new estimate that would include the cost of replacing all of the home's siding and gutters. Cincinnati responded that it would address any differences directly with its insured rather than 33 Carpenters. 

    33 Carpenters then filed suit against Cincinnati, claiming it had breached the homeowner's policy by "failing to pay 33 Carpenters all benefits due and owing under the policy," that had been assigned to it. Cincinnati's answer denied the claims. Cincinnati also filed a counterclaim for declaratory judgment against Cincinnati arguing the assignment was invalid because it effectively allowed 33 Carpenters to act as an unlicensed pubic adjuster in violation of an Iowa statute. Cincinnati file a motion for summary judgment. 33 Carpenters argued that it had entered a valid post loss assignment with the policy holder. The lower granted the motion for summary judgment to Cincinnati. 

    On appeal, the court of appeals affirmed. 33 Carpenters was operating as an unlicensed pubic adjuster in violation of the statute.

    The Iowa Supreme Court affirmed. An assignment contract entered into by a residential contractor acting as an unlicensed public adjuster was void under the statute. 

Requiring Approval of All Insureds and Mortgagees To Assign Policy Upheld by Florida Court

    The Florida Court of Appeal upheld an assignment of benefits provision that required signatures of all insureds and mortgagees. Restoration 1 of Port St. Lucie v. Ark Royal Ins. Co., 2018 Fla. App. LEXIS 12633 (Fla. Ct. App. Sept. 5, 2018). 

    Ark Royal issued a homeowner's policy to the insureds. The policy stated that "[n]o assignment of claim benefits, regardless of whether made before a loss or after a loss, shall be valid without the written consent of the insureds, and all mortgagee(s) named in this policy." 

    The insureds' home suffered water damage. The insureds contacted Restoration 1 to provide cleanup services and signed an agreement assigning to Restoration 1 "any and all insurance rights, benefits, proceeds and any cause of action under any applicable insurance policies." The cleanup was completed by Restoration 1 and it submitted a claim to Ark Royal for $20,305.74. Ark Royal refused to pay the full amount of the claim, stating it was unable to recognize the assignment because it did not have all of the required signatures. 

    Restoration 1 sued Royal Ark for breach of contract and sought a declaratory judgment determining that a clause requiring the signatures of all insureds and mortgagees for an assignment contravened Florida public policy. Ark Royal moved to dismiss. The trial court granted the motion because the assignment failed to comply with the policy's requirements. 

    On appeal, the appellate court recognized that the consent to assignment provision in policies did not apply to an assignment after loss. But a significant difference existed between requiring the insurer's consent and requiring the consent of the insureds and mortgagees. The contract here did not prohibit assignment. It imposed a condition, requiring the approval of all insureds and the mortgagee. This restriction did not conflict with the public interest. Therefore, the trial court's granting of the motion to dismiss was affirmed. 

Arizona Upholds Assignment of Post-Loss Benefits

    The Arizona Court of Appeals upheld the insured's assignment of benefits despite the policy's anti-assignment provision. Farmers Ins. Exchange v. Honorable David Udall, 2018 Ariz. Ct. App. LEXIS 94 (Ariz. June 12, 2018).

    Farmers issued homeowners' policies to four homeowners who later required water damage mitigation and restoration services. Each of the policies included an anti-assignment provision stating that the insured's "interest in this policy may not be transferred o another person without [Farmers'] written consent." Each insured, however, signed a "Work Order Agreement & Assignment of Benefits" authorizing the remediation company, EcoDry Restoration of Arizona, LLC, to perform emergency water mitigation services and then assign insurance rights under the policies to EcoDry. The assignment authorized and instructed the insurance company to pay directly to EcoDry the amount shown in the final billing for work done by EcoDry.

    Farmers did not consent to any of the assignments. Although Farmers made payment to EcoDry, it was an amount less than the invoice total. EcoDry then filed suit alleging the insured had assigned to EcoDry their "post-loss rights" under the policies and that Farmers breached the policies by refusing to pay the amount charged to the insureds. Farmers moved to dismiss the complaint arguing EcoDry did not have a contractual relationship with Farmers nor a valid assignment of the insureds' rights under the policies. The superior court denied the motion and Farmers petitioned the Court of Appeals for special action review. 

    On appeal, the court noted that Arizona law recognized that contractual provisions prohibiting assignment without consent could be enforceable. The general rule was that an indemnity insurance policy could not be assigned, especially where an assignment was expressly prohibited by the terms of the policy, unless the insurer consented. An assignment made after a loss occurred, however, was not of the policy itself, but a claim under, or a right of action on, the policy. 

    Here, the insureds executed the assignments after water damaged their homes, giving rise to their claims under the policies. The insureds did not assign their policies to EcoDry, but rather they assigned a claim under and a right of action on the policies. Therefore, the assignments were valid post-loss assignments of benefits under the policies. As the recipient of a post-loss assignment of benefits, EcoDry stood in the shoes of the insureds and had standing to enforce the policy against Farmers.

Assignment Endorsement Requiring Consent of All Insureds, Additional Insureds and Mortgagees Struck Down in Florida

    Security First Insurance Company's endorsement restricting the ability of policyholders to assign post-loss benefits was struck down by the Florida District  Court of Appeal. Security First Ins. Co. v. Florida Office of Ins. Regulation, 2017 Fla. App. LEXIS 18083 (Fla. Ct. App. Dec. 1, 2017).

    The Department of Insurance, Office of Insurance Regulation (OIR), disapproved Security First's request to amend its policy language to restrict the ability of policyholders to assign post-loss benefits. The endorsement restricted the assignment of post-loss benefits absent the consent of all insureds, all additional insureds, and all mortgagees named in their policies. OIR found that the forms violated Florida statutes because it included language restricting the assignment of post-loss claim benefits. Secruity First appealed the OIR ruling.

    Security First concedes that Florida case law held that an endorsement requiring an insurer's consent for a post-loss assignment of benefits was not enforceable. But it argued that such case law only applied to provisions requiring the insurer's consent. The court disagreed. Prior decisions held that the right to recover under an insurance policy was freely assignable after loss. The OIR properly construed this case law. Therefore, the court affirmed the final administrative order.