HB2441 - 542R

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:

START_STATUTE20-1122.01. 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. END_STATUTE

START_STATUTE20-1122.02. 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.

(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.

(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.

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.

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.

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. END_STATUTE