October 6, 2022

The Crazy After The Storm

After loss or damage hits your home–typically, all you want to do is have your life go back to the way it was. For most, this is without broken windows, leaking roofs and knocked over trees. Contractors are well aware of this and some will take advantage of you during this time by offering sky high repair costs, which typically require you to sign a contract including an AOB (Assignment of Benefits) clause.

Upon first glance you might not think much about this clause. However, by signing you inadvertently are reassigning control of your claim to your contractor, which means you may no longer be eligible to receive a claims check. Although, this clause can lead to you losing more than just these insurance funds–it can also include your home as well.

What is an Assignment of Benefits (AOB) Contract?

An AOB is an agreement that, once signed, transfers the insurance claims rights or benefits of your insurance policy to a third party. An AOB gives the third party authority to file a claim, make repair decisions and collect insurance payments without your involvement. Unethical contractors might pressure unsuspecting homeowners into signing contracts that include Assignment of Benefits (AB) clauses – with words to the effect of “I transfer any and all insurance rights, benefits, and causes of action under my property insurance policy to the contractor.”

What Can You Lose When Signing This Contract?

Once an AOB is signed, the contractor has control. The contractor is able to bill your insurance company for work they have not done. They could take the money and run – leaving you without repairs or reimbursement. The contractor could even place a lien on your home, which can be enforced by foreclosure in the state of Florida. AOB fraud is far from a victimless crime.

How to Prevent Falling Victim To AOBs

• Following a loss, call your homeowners insurance company immediately.
  They can refer you to a licensed, experienced, and reputable contractor.
• Never partner with a contractor who requires you to sign an AOB document.
• Always ask contractors for proof of liability insurance.
• Never sign documents you don’t fully understand. When in doubt, call your
  homeowners insurance company for help.

Have questions about a recent claim? Looking to insure your property? Our principal agent Colleen Pacheco can help you out! You can reach her via email at colleen@securedinsurancegrp.com or by phone at 407-559-2200.