What is Assignment of Benefits?
Assignment of Benefits (AOB) is a contract that transfers the rights of an insurance policy to a contractor which includes plumbers, roofers, water mitigation companies and/or general contractors.
It is an agreement that, once signed, transfers the insurance claims rights or benefits of the policy to a third party. An AOB gives the third-party authority to file a claim, make repair decisions and collect insurance payments without the involvement of the homeowner.
When you sign an AOB document from a contractor, you are handing over all your rights under the policy to recover costs to the contractor. An unlicensed or unscrupulous contractor may ask you to sign an Assignment of Benefits document, citing that it will make the claims process much easier if you do. With the help of unethical attorneys, these contractors take advantage of loopholes which allow them to inflate the cost of the repairs and request excessive claim amounts from insurers. This practice can trigger a chain of events that may result in a tremendous amount of hardship for the homeowner.
Insurers are well-educated on the cost of repairs and will deny payment when presented with these ridiculous claim amounts from the contractor. The contractor gets together with their lawyer and files suit against the insurance company. For the homeowner who will likely be named as a party in the lawsuit, this could mean hours spent on depositions and other court-related activities. And, you could be sued for any remaining unpaid repair costs, or find that a lien has been put on your house in an attempt to collect. All homeowners throughout the state can expect premium costs to increase when insurance companies are tied up with unnecessary litigation.
Currently, there is a push for assignment of benefits (AOB) reform in the 2019 Florida legislative session, and the insurance industry and consumer advocates have pulled out all the stops to emphasize their contention that abuse of a policyholder benefit has led to a full-blown insurance crisis in the state.
The state’s legal environment has encouraged vendors and their attorneys to solicit unwarranted AOBs from tens of thousands of Floridians, conduct unnecessary or unnecessarily expensive work, then file tens of thousands of lawsuits against insurance companies that deny or dispute the claims. This mini-industry has cost consumers billions of dollars as they are forced to pay higher premiums to cover needless repairs and excessive legal fees. And consumers often do not even know that their claims are driving these cost increases.
Florida insurance customers can protect themselves several ways. One way is to contact your insurer before signing any kind of Assignment of Benefits forms. Another path would be to talk to an attorney you trust, and a third would be to choose an insurer whose claims process is simple enough so that the hassle isn’t a factor when a contractor tries to have you sign an AOB.
If you have questions about Assignment of Benefits, we can help explain. Contact us at 813- 963-2500 or visit www.jaffetilchin.com.