REFERENCE TITLE: insurance claims;
assignments; payments; requirements |
State of
Arizona House of
Representatives Fifty-fourth
Legislature Second Regular
Session 2020 |
HB 2441 |
|
Introduced by Representative Allen J |
AN ACT
amending title
20, chapter 5, article 1, Arizona Revised Statutes, by adding sections 20‑1122.01
and 20-1122.02; relating to insurance contracts.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 20, chapter 5, article 1, Arizona Revised Statutes, is amended by adding sections 20-1122.01 and 20-1122.02, to read:
20-1122.01. Valid assignment
of property claims; void agreements; assignment for direct payment of property
claims; notification; damages; conflicts
A. After a property loss occurs in
which the loss is estimated to be less than $1,500, an assignment of a property
loss claim is valid only if all of the following conditions are met:
1. The insured files a claim for
coverage with the insurer before the claim is assigned.
2. The proposed assignee of the claim
provides a form of assignment agreement to the insured that discloses the key
provisions of the agreement, including the following provisions that must be in
at least twelve‑point type:
(a) Whether the
insured remains liable for any costs that are not covered by the insurance
policy.
(b) the interest
rate, if any, that the assignee will charge the insured if the insured delays
payment to the assignee after receiving payment from the insurer.
(c) That the
assignment agreement does not require the insured to indemnify the assignee
against any claims arising out of services or repairs that the assignee
provides.
(d) Whether the
assignment agreement authorizes the assignee to sue the insurer on the
insured's behalf.
(e) That the
insured may rescind the assignment agreement within three business days after
the insured signs the assignment agreement.
3. After the insured files a claim,
the assignee notifies the insurer of the assignment of claim within three days
after the insured signs the assignment agreement and provides the insurer with
a copy of the assignment agreement, a description or summary of the services or
repairs to be provided and an estimate of the services or repairs to be
provided.
4. The assignee, insured and
assignment agreement comply with any requirements, limits and sublimits in the
insurance policy, including proof of loss, duties after loss, inspection,
cooperation, investigation, appraisal and arbitration provisions.
5. The assignee follows any
procedures or requirements prescribed in the insurance policy to exercise any rights
the insured assigns, including any required notification periods before
initiating litigation. If the assignment
agreement allows the assignee to sue the insurer, the assignee must provide
notice to the insured and insurer at least fifteen days before commencing
litigation against the insurer, unless the insurance policy contains a
different time frame. The notice must
include all of the following information:
(a) the damages
in dispute.
(b) The amount
claimed.
(c) A detailed
estimate or invoice of the services provided, including itemized information on
equipment, materials and supplies.
(d) The number
of labor hours spent performing the services.
(e) Proof that
any work performed was performed according to accepted industry standards.
6. The assignment agreement does not
prevent or inhibit the insurer from communicating with the insured, lienholder
or mortgagee listed on the declarations page of the insurance policy that is
the subject of the assignment.
7. The assignee does not charge interest
on an unpaid balance for services or repairs covered by the insurance policy
during any period of time in which a dispute exists concerning the materials or
workmanship the assignee provided or the amount of compensation the assignee is
entitled to receive under the assignment agreement for the services or repairs
that the assignee provided.
8. A potential assignee does not
offer, direct, pay, promise, allow or provide the insured or any other party
with, and the insured or other party does not accept, any compensation, gift or
other valuable consideration, including a waiver or reduction of the applicable
deductible, as an inducement to sign an assignment agreement.
B. If a property claim that
originally was estimated to be less than $1,500, that is assigned pursuant to
this section and that later is determined to be valued at $1,500 or more, in
order for the assignment agreement to remain valid and enforceable the assignee
shall have the insured execute a new assignment agreement that complies with and
is subject to the requirements of section 20‑1122.02, including requiring
the assignee to provide a copy of the assignment agreement to the insurer
within three business days after the insured executes the new assignment
agreement.
C. An assignment agreement that does
not comply with this section is void and relieves the insured of any obligation
under the voided assignment agreement and any related work order.
D. This section does not prohibit or
limit an insured from assigning a direct payment to a third party for services
or repairs that are provided in connection with a property or casualty claim if
the insured notifies the insurer of the proposed assignment of direct payment.
E. The amount of damages an assignee
may recover in litigation against an insurer is the fair market value of the
services or repairs performed that are covered by the insurance policy.
F. If an insurer enters into a contract with a
service provider to provide services or repairs arising out of a property claim
and a conflict exists between the contract and the requirements prescribed in
this section, the terms of the contract between the insurer and the service
provider control.
G. This section does not establish any new private right or cause of action or extinguish or limit any existing common law cause of action.
20-1122.02. Valid assignment
of higher dollar property claims; rescission; waiver; assignment for direct payment
of property or casualty claims
A. After a property loss occurs in
which the loss is estimated to be $1,500 or more, an assignment of a property
loss claim is valid only if all of the following conditions are met:
1. The insured files a claim for coverage
with the insurer before the claim is assigned.
2. The proposed assignee of the claim
provides a form of assignment agreement to the insured that discloses the key
provisions of the agreement, including the following provisions that, except as
prescribed in subdivision (d) of this paragraph, must be
in at least twelve‑point type:
(a) Whether the
insured remains liable for any costs that are not covered by the insurance
policy.
(b) The
interest rate, if any, that the assignee will charge the insured if the insured
delays payment to the assignee after receiving payment from the insurer.
(c) That the
assignment agreement does not require the insured to indemnify the assignee
against any claims arising out of services or repairs that the assignee
provides.
(d) Whether the
assignment agreement authorizes the assignee to sue the insurer on the
insured's behalf. If the assignment agreement authorizes the
assignee to sue the insurer, the assignment agreement must include the
following notice in capital letters and at least fourteen‑point type:
YOU ARE AGREEING TO GIVE UP CERTAIN RIGHTS YOU
HAVE UNDER YOUR INSURANCE POLICY TO A THIRD PARTY, WHICH MAY RESULT IN
LITIGATION AGAINST YOUR INSURER. PLEASE READ AND UNDERSTAND THIS
DOCUMENT BEFORE SIGNING IT. YOU HAVE THE RIGHT TO CANCEL THIS
AGREEMENT WITHOUT PENALTY WITHIN 14 DAYS AFTER THE DATE THIS AGREEMENT IS
EXECUTED. HOWEVER, YOU MAY BE OBLIGATED
TO PAY FOR ANY CONTRACTED WORK THAT WAS PERFORMED BEFORE THE AGREEMENT IS
RESCINDED. THIS AGREEMENT DOES NOT CHANGE YOUR OBLIGATION TO PERFORM
THE DUTIES THAT ARE REQUIRED UNDER YOUR PROPERTY INSURANCE POLICY.
(e) That the
insured assignor has a right of rescission without incurring a fee or penalty
if the insured assignor provides a written notice of rescission to the assignee
either:
(i) Within
fourteen days after the execution of the assignment agreement.
(ii) At least
thirty days after the date the work on the property is scheduled to begin, if
the assignee has not substantially performed the services or repairs.
(iii) At least
thirty days after the execution of the assignment agreement, if the assignment
agreement does not contain a commencement date and the assignee has not begun
substantial work on the property.
3. After the insured files a claim,
the assignee notifies the insurer of the assignment of claim and provides the
insurer with a copy of the signed assignment agreement within three business
days after executing the assignment agreement or the date on which the services
or repairs begin, whichever is earlier, a description or summary of the
services or repairs to be provided and an estimate of the services or repairs
to be provided.
4. The assignee, insured and
assignment agreement comply with any requirements, limits and sublimits in the insurance
policy, including proof of loss, duties after loss, inspection, cooperation,
investigation, appraisal and arbitration provisions.
5. The assignee follows any
procedures or requirements prescribed in the insurance policy to exercise any
rights the insured assigns, including any required notification periods before
initiating litigation. If the assignment
agreement allows the assignee to sue the insurer, the assignee must provide
notice to the insured and insurer at least fifteen days before commencing
litigation against the insurer, unless the insurance policy contains a
different time frame. The notice must
include all of the following information:
(a) the damages
in dispute.
(b) The amount
claimed.
(c) A detailed
estimate or invoice of the services provided, including itemized information on
equipment, materials and supplies.
(d) The number
of labor hours spent performing the services.
(e) Proof that
any work performed was performed according to accepted industry standards.
6. The assignment agreement does not
prevent or inhibit the insurer from communicating with the insured, lienholder
or mortgagee listed on the declarations page of the insurance policy that is
the subject of the assignment.
7. The assignee does not charge
interest on an unpaid balance for services or repairs covered by the insurance
policy during any period of time in which a dispute exists concerning the
materials or workmanship the assignee provided or the amount of compensation
the assignee is entitled to receive under the assignment agreement for the
services or repairs that the assignee provided.
8. A potential assignee does not
offer, direct, pay, promise, allow or provide the insured or any other party
with, and the insured or other party does not accept, any compensation, gift or
other valuable consideration, including a waiver or reduction of the applicable
deductible, as an inducement to sign an assignment agreement.
9. If an insured assignor acts
pursuant to an urgent or emergency circumstance by protecting, repairing,
restoring or replacing property or mitigating further damage to the property,
an assignee may not receive an assignment of post‑loss benefits under a
residential property insurance policy that is more than the greater of $5,000
or one percent of the coverage limit under the property insurance policy. For the purposes of this paragraph,
"urgent or emergency circumstance" means a situation in which a loss
to property, if not addressed immediately, will result in additional damage
until measures are completed to prevent that damage.
B. An assignment agreement that does
not comply with this section is void and relieves the insured of any obligation
under the voided assignment agreement and any related work order.
C. Notwithstanding any other law, an
assignee's acceptance of an assignment agreement constitutes a waiver by the
assignee and the assignee's subcontractors of claims against the insured
assignor for payments that arise from the assignment agreement and that are
more than the insured assignor's deductible or other cost sharing requirements
under the insurance policy or charges for services or repairs requested by the
insured assignor that are beyond the scope of the necessary services or
repairs. The assignee and the assignee's
subcontractors may not collect or attempt to collect any amount from, maintain
any action at law against or claim a lien on the real property of an insured
assignor, or report an insured assignor to a credit agency, for payments that
arise from the assignment agreement and that are more than the insured
assignor's deductible or other cost sharing requirement under the insurance
policy or charges for services or repairs requested by the insured assignor
that are beyond the scope of the necessary services or repairs. The waiver remains valid and in effect after
the assignment agreement is rescinded by the insured assignor or after a
determination that the assignment agreement is invalid.
D. This section does not prohibit or
limit an insured from assigning a direct payment to a third party for services
or repairs that are provided in connection with a property or casualty claim if
the insured notifies the insurer of the proposed assignment of direct payment.
E. The amount of damages an assignee
may recover in litigation against an insurer is the fair market value of the
services or repairs performed that are covered by the insurance policy.
F. If an insurer enters into a
contract with a service provider to provide services or repairs arising out of
a property claim and a conflict exists between the contract and the
requirements prescribed in this section, the terms of the contract between the
insurer and the service provider control.
G. This section does not establish
any new private right or cause of action or extinguish or limit any existing
common law cause of action.