Insurance Law Alert

On April 7, 2021, Florida’s Third District Court of Appeal issued a per curiam opinion that affirmed summary judgment in favor of People’s Trust Insurance Company and against the water mitigation company, All Insurance Restoration Services, Inc. (“AIRS”) in All Insurance Restoration Services, Inc. a/a/o Alfonso Torres and Jacinta Torres v. People’s Trust Insurance Company, 2019-000312-AP-01. This decision will benefit insurance carriers moving forward, as the Court enforced a homeowner’s insurance policy’s Preferred Contractor Endorsement that set a flat rate for mitigation services. Moreover, the decision provides some clarification regarding the standard of proof to create a genuine dispute of material fact under the summary judgment standard. Specifically, the Court affirmed the trial court’s finding that AIRS’ summary judgment evidence regarding the scope of services performed was inconsequential to the issue of whether the policy endorsement applied to the subject invoice. This decision emphasizes the importance of flat-service agreements for carriers, the enforceability of preferred contractor policy endorsements, and the necessity for material evidence to survive a summary judgment filed on behalf of insurance carriers.

This case involved an assignment of benefits (“AOB”) in favor of AIRS for services related to mitigating a plumbing leak at the Insured’s property. The Insured waited nearly five months after the purported loss to execute the AOB for mitigation services, which were performed prior to reporting the claim to People’s Trust. In fact, People’s Trust was wholly unaware that the claim existed prior to receiving the AOB and AIRS’ invoice in the amount of $4,754.83.

Unbeknownst to AIRS however, and comprising the crux of this litigation, the Insured had chosen to have a $66.00 annual credit applied to his Policy premium in exchange for the inclusion of a Preferred Contractor Endorsement. The exact Policy language is as follows:

In consideration of the premium credit shown on “your” Declarations Page, “you” agree to the following:


“You” agree that in the event of a covered loss to “your” dwelling or other structures on the “residence premises,” other than a sinkhole loss “we” at our option may select Rapid Response Team, LLCTM to repair “your’ damaged property as provided by the policy and its endorsements.

If “you” do not notify “us” prior to authorizing or commencing the Reasonable Repairs as described in SECTION I – PROPERTY COVERAGE E, Additional Coverages, or the repairs or services as described in the SECTION I – CONDITIONS – D. Loss Settlement and allow “us” at our option to select Rapid Response Team, LLCTM for such Reasonable Repairs, or such repairs or services, “our” obligation for the Reasonable Repairs, or the repairs or services is limited to the lesser of the following:

a. The reasonable cost “you” incur for necessary Reasonable Repairs, or for repairs or services; or

b. The amount “we” would have paid to Rapid Response Team, LLCTM selected by “us” for necessary Reasonable Repairs, repairs or services.

Simply put, the Policy expressly provided People’s Trust with the right to send its preferred mitigation company, Rapid Response Team (“Rapid Response”) to perform services for the Insured in relation to any loss at the home. Even if the Insured chose to retain their own vendor, the endorsement expressly limits the amount paid to that vendor to what Rapid Response would have charged for the same services. In turn, People’s Trust and Rapid Response entered into a Flat-Fee Services Agreement in which Rapid Response agreed to perform all mitigation jobs assigned by People’s Trust for one flat rate of $2,000 per job and set forth a particular scope of work to be included within the $2,000 flat-rate agreement. Thus, the plain language of the policy limited any recovery for mitigation services at this property to $2,000 per loss.

Pursuant to the endorsement, People’s Trust covered the cost of AIRS’ services at the Insured’s property for the $2,000 that Rapid Response would have charged and declined to pay the remainder of the invoice. AIRS accepted the payment and deposited in its corporate account before filing suit on the unpaid portion of the invoice. The parties quickly went through initial discovery and depositions and People’s Trust moved for summary judgment based on the plain language of the policy.

In support of its motion for summary judgment, People’s Trust presented two affidavits. The first affidavit was that of a People’s Trust representative, who authenticated the policy and the service agreement with Rapid Response, and confirmed the $2,000 agreed-upon flat fee. The second affidavit was that of a Rapid Response representative who confirmed that Rapid Response would have performed the same exact work for $2,000. In response, AIRS filed an affidavit of its own operations manager, which stated that the company’s services included both mold remediation and water mitigation; therefore, the charges were divided into two groups. In addition, AIRS attached the deposition testimony of Rapid Response’s representative, Carlos Castillo, which was considered as summary judgment evidence. Mr. Castillo testified that the line items in AIRS’ invoice fell within the categories delineated in People’s Trust and Rapid Response’s Flat-Rate Services Agreement. Significantly, Mr. Castillo testified that, regardless of the label AIRS gave to certain services, none of those items would have qualified as mold work. At the hearing, the trial court judge heard arguments from both sides explaining the respective affidavits, policy language, and deposition testimony. Ultimately, the judge entered an unelaborated order granting summary judgment.

On Appeal, People’s Trust emphasized that the subject policy endorsement limits reimbursement for the repairs to the amount People’s Trust would have paid Rapid Response. Further, People’s Trust argued that there was no dispute as to the relevant affidavits because only one addressed the material issue, which was what Rapid Response would have charged to perform the same work. AIRS argued various issues, but focused on the fact that the policy endorsement was not raised as an affirmative defense. AIRS did not raise this issue at the trial court level and it is likely that the appellate court considered that issue to be waived. The Third District Court of Appeal ultimately agreed with People’s Trust and the trial court, but did not elaborate on its findings and entered a per curiam opinion.

This case illustrates the power of special endorsements regarding preferred vendors, which will help prevent mitigation companies like AIRS from circumventing policies and over-charging for services that were likely not necessary in the first place or mislabeling services in an attempt to collect more on invoices. In approving the lower court’s decision, the Third District Court of Appeal not only enforced a Preferred Vendor Endorsement that was negotiated between the carrier and the insured, it also enforced the validity of the flat-fee agreement the carrier and its preferred vendor negotiated separately. This may be the start of a trend toward limiting recovery for unnecessary and overpriced services, and plan to comb through all policies and endorsements to find similar ways to challenge AOB companies.


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