Insurance Company Not Allowed to Insert Term Prohibiting Assignment of Benefits in Policy

In Security First Insurance Company v. State of Florida, Office of Insurance Regulation, 40 FLW D1449a (Fa. 1st DCA June 22, 2015), Security First sought to amend its insurance policy form to prohibit post-loss assignment of benefits without the insurer’s prior approval.  Security First submitted its proposed policy form change to the Florida Office of Insurance Regulation.  The OIR rejected the change because it would

violate the intent and meaning of Sections 627.411(1)(a), 627.411(1)(b), and 627.411(1)(e), Florida Statutes[, and] contain[ed] language prohibiting the assignment of a post loss claim under the policy, which is contrary to Florida law.

Security First then requested an informal hearing before a hearing office.  The hearing office upheld OIR’s decision, finding a

restriction on assignments of post-loss rights in an insurance policy would be misleading as it would lead the policyholder to believe that the validity of such assignment was contingent upon the written consent of the insurer, contrary to Florida law.

Security First then appealed to the 1st DCA.

The 1st District Court of Appeal affirmed OIR’s rejection of the proposed change finding that the

gist of this dispute is whether policyholders might be misled by the proposed change to the policy language, believing that Security First’s consent was required for assignment of their post-loss rights, when Florida law holds to the contrary. On this point we find an unbroken string of Florida cases over the past century holding that policyholders have the right to assign such claims without insurer consent…. Affirmance of its order is required.

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