A Better Way to Deal with Insurance Claims Disputes
A Better Way to Deal with Insurance Claims Disputes
The following scenario is all too common: a homeowner's home is damaged extensively, a contractor performs the repairs, and the insurance company decides to pay the contractor whatever it wants - shortchanging the contractor in the process, often by thousands of dollars.
For example, it's not unusual for a water damage or sewage backup claim to cost $10,000. Nor is it unusual for the insurance company to pay half that amount to the contractor. "We've even seen cases where the insurance company sends a check to the homeowner and the homeowner keeps the money."
Whether the homeowner's aware of the contractor's plight or not, the contractor has little recourse other than taking the insurance company to court. Unfortunately, legal fees quickly add up, potentially wiping out any recovery if the contractor prevails. If the insurance company prevails, the contractor is out even more money because, now, the attorney needs to be paid. Many contractors do not pursue legal action because it's simply not worth it. Others discuss their options with attorneys only to find out that legal fees would cost more than the case is potentially worth.
However, there is a better way to dispute insurance claims, and it's provided for within Florida law. First, the contractor can sue the insurance company after the client has signed an "assignment of benefits" form. Once benefits have been assigned to the contractor by the client, the contractor then sues the insurance company. If the contractor prevails, the insurance company must pay all attorneys fees under Florida's Fee Shifting Statute 627.428, which allows law firms to keep their fees and costs separate from client funds. Because the attorney is paid by the insurance company and client funds are kept separate, the contractor receives the full award amount granted by the court.
The assignment of benefits is a legal document that allows the contractor to "stand in the shoes" of the insured. It assigns the insurance policy's benefits for a specific claim to the named entity. Once assigned, the insurance company has to deal with the named entity as opposed to the policyholder.
Florida's fee shifting statute allows attorneys to keep legal fees and client funds separate. If the contractor prevails, the insurance company must pay the attorney's fees. This ensures that the full amount of the award goes directly to the contractor.
As with most legal cases, there's more involved than these two bullet points, making it crucial to work with an attorney experienced in these matters.
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