On February 6, 2019, the Iowa Court of Appeals published its decision in 33 Carpenters Construction, Inc., v. The Cincinnati Insurance Company, No. 17-1979, a case involving a post-loss assignment of a property damage claim to the insured’s contractor. The case has important implications for both insureds and contractors performing insurance restoration work with an assignment of benefits (sometimes also referred to as an “assignment of claim.”)

The policyholder in this case assigned his claim to his contractor in exchange for the contractor’s promise to perform repairs. After entering the agreement, the contractor contacted the insurance company directly to work on resolving the claim. The parties were unable to agree upon the amount of loss, and the contractor sued the insurance company directly pursuant to its rights as the assignee of the claim.

The insurance company argued that the contractor asserting rights under the assignment was the equivalent of unlicensed public adjusting. The Court of Appeals agreed and found the assignment unenforceable. Under the rule of law set forth in this case, virtually no assignment of benefits from a policyholder to a contractor would be enforceable if the contractor negotiated the claim directly with the insurance company.