A hailstorm hits your neighborhood.  The next day someone knocks on your door and says all your neighbors have sustained roof damage.  He’d be happy to assess your roof and make any necessary repairs.  And don’t worry; he’ll take care of the hassle of filing a claim.  You don’t have to do a thing – just sign a form.  Most consumers would be surprised to learn that they have just assigned all homeowner policy rights to the helpful contractor.  This is known as Assignment of Benefits, or AOB, and it’s extremely common in Florida, especially with water damage or roof claims.

Although the use of AOB is permissible, most consumers do not fully understand its meaning.  It gives the Contractor all legal rights to the insurance policy, including any claim proceeds and payments.  It means the insurance carrier can no longer communicate with you – all correspondence must go to the contractor (or their attorneys) since the contractor now holds the legal rights to your policy.

Potential Negative Consequences

In many cases, companies using Assignment of Benefits charge an amount which far exceeds the pricing of local market conditions.  If the inflated charges are challenged, the contractor can file a lien on your home. 

If a repairman fails to finish the work or goes out of business before the job is done, you have no recourse with the insurance company because you have assigned the policy to someone else (the failed contractor).  You may have to use your own funds to pay another contractor for the unfinished repairs.

Insurance premiums are rising for homeowner policies across the State as the result of inflated repair charges arising from AOB.

Many carriers are no longer writing business in areas where AOB is rampant, forcing consumers back into Citizens, the taxpayer-backed market of last resort.

Red Flags

•             Plumber receives compensation for a referral to a particular water mitigation company
•             Contractor offers to file the claim for the homeowner
•             Contractors going door-to-door in your neighborhood
•             Any contract with language that includes “Assignment of Benefits” and/or “I assign any and all insurance rights” 

What You Can Do

Contact your Insurance Advisor BEFORE you sign!!  Once the AOB is signed, you cannot renege.  A quick call to your Advisor (or insurance company) can save money, endless hours of stress and aggravation, not to mention your rights as a policyholder.