AOB Invalid Since All Insureds and Mortgagee Did Not Sign AOB Contract

Jan 5, 2022

By Amy Koltnow, Shareholder

A mitigation company provided emergency water removal services to insured property following a loss. The insurer covered the loss but did not pay the water mitigation invoice. The policy contained a provision requiring all insureds and mortgagees consent in writing to any post-loss assignment of benefits. Only one insured signed the AOB contract. The AOB filed suit and the insurer responded with a motion to dismiss based on lack of standing. The trial court dismissed the complaint because the AOB was not signed by all insureds and the mortgagee. The Third District upheld the dismissal relying on prior decisions in both the Third and Fourth Districts. General Contractors of Central Florida v. Heritage Prop. & Cas. Ins. Co. (3d DCA, Dec. 1, 2021).

Tips & Lessons

  • The Second, Third and Fourth Districts have enforced policy restrictions that require all insureds and mortgagees consent in writing to post-loss assignment of insurance benefits. The Fifth District, however, refused to enforce an identical policy restriction.
  • The Fourth District previously certified conflict with the Fifth District in The Kidwell Group v. Geovera Specialty Ins. Co., which is pending the Florida Supreme Court’s acceptance of the case. This is an issue to watch in 2022!

Whether Notice to Insurer 7 Days After Discovering Mold was “Prompt” is for Jury to Decide—and, Insured Had No Obligation to “Show” Insurer Broken Plumbing Part 

The homeowner discovered mold in his bathroom and contacted a loss consultant, who then called a mitigation company to perform mitigation services. The mitigation company repaired a water supply line, opened a hole in the wall, and removed baseboards. Seven days later, after all mitigation work was performed, the homeowner reported the loss to the insurer. The homeowner also discarded the damaged plumbing part. The insurer denied coverage for the damage based on the homeowner’s late notice of the loss and failure to “show” the damaged property. The homeowner filed suit and the insurer sought summary judgment of no coverage. The homeowner argued notice was not untimely, and he had a duty under the policy to mitigate further loss. He also argued the policy did not expressly require he retain broken plumbing parts. The trial court granted summary judgment in favor of the insurer. The appellate court reversed and held whether an insured has given prompt notice is generally a question of fact for the jury. The appellate court also held that an insured’s post-loss obligation to show the “damaged property” does not include the broken plumbing part. Guzman v. Southern Fidelity Ins. Co. (2d DCA, Dec. 10. 2021).

Tips & Lessons

  • Whether a “late-notice” defense can be resolved by summary judgment depends on the facts and circumstances surrounding the loss.
  • The appellate court distinguished those cases holding notice was untimely as a matter of law stating they typically involved the passage of time “far greater than one week”.

Appraisal Provision Applies Regardless of Whether the Work is Already Completed

The homeowner suffered a water damage loss. The mitigation company performed repairs and issued an invoice to the insurer for $6,259.16. The insurer paid $949.73 and demanded appraisal to resolve the parties’ disagreement regarding the amount of the covered loss. The mitigation company filed suit and argued the appraisal provision only applied to property damage not yet repaired and did not apply to mitigation services already completed. The trial court entered judgment in favor of the insurer finding that appraisal applied to the loss. The appellate court agreed and held the clear and unambiguous terms of the policy provided that all disputes regarding the amount of a covered loss are subject to resolution by appraisal, regardless of whether the loss has been repaired or not. First Call 24/7, Inc. v. Citizens Prop. Ins. Corp. (4th DCA, Nov. 10, 2021).

Tips & Lessons

  • Appraisal can be an efficient way to resolve insurance disputes.
  • Insurers may want to consider invoking the appraisal provision in the payment letter if paying less than the amount invoiced by emergency remediation companies.


Florida Insurance Matters is a monthly update on Florida insurance-related legal developments by the Colodny Fass Insurance Litigation Practice, recently recognized as the Insurance Litigation Department of the Year in South Florida by the Daily Business Review.


Amy L. Koltnow, a Colodny Fass Shareholder, focuses her practice on representing insurance companies in complex insurance litigation and counseling insurers on claims resolution. She has represented insurers in connection with property damage and first-party coverage litigation, claims of “bad faith,” high-risk exposures, class actions and multi-district litigation.

For more information about Ms. Koltnow, click here.