By BreAnn Stephenson
What is an Assignment of Benefits or “AOB”?
The Florida Office of Insurance Regulation provides a simple explanation:
“An AOB 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.”
AOB’s are often used by restoration companies and contractors and can help the homeowner navigate the claims process, but if misused can also lead to harmful consequences to the homeowner. AOB’s are legal contracts with no “right of rescission” or “cooling off period.” If you choose to enter into an AOB, it is wise to seek legal advice prior to signing the contract as most often, the only way out of one is through the court of law.
It should be noted that you do not need to sign an AOB to get an insurance claim processed or your property repaired though you may feel pressured by the contractor or salesman.
The Florida Department of Financial Services created this short video to help explain how AOB’s work, their benefits and risks:
Assignment of Benefits Red Flag Checklist
Florida’s Chief Financial Officer Jimmy Patronis has developed a list of red flags for consumers to watch out for regarding Assignment of Benefits contracts. These may help you recognize if someone is trying to mislead you by having you sign an AOB.
Red Flags to Look For:
- You feel pressured to sign a contract or other documents.
- You are asked to sign over your benefits in order to initiate the repair process.
- The language in the contract/document is similar to a power of attorney for the handling of the claim – this power gives the company the right to negotiate and endorse checks and/or hire an attorney or public adjuster on your behalf.
- The language requires that all claim proceeds be made payable to an entity or individual other than you (the policyholder) or your mortgage company.
- The language prevents your insurance company from communicating directly with you about your claim.
- The document looks unprofessional and contains grammatical errors, misspelled words or blank spaces.
To Protect Your Insurance Benefits:
- Contact your insurance company as soon as possible if you have damage.
- Do not allow a third party to contact your insurance company for you – you should be the one to make first contact.
- Know your rights and your duties as an insured. You don’t need to sign an AOB to have your claim processed or for repairs to be made.
- Read AOB forms carefully and understand what rights you may be signing away. It is always advisable to have your legal counsel review any contract before you sign it.
- Stay in control of the insurance benefits you purchased and paid for. Make sure signing an AOB is a help to you and doesn’t cause an increase in costs or negate valuable coverage.
For more information on AOB’s, go to the Florida Office of Insurance Regulation’s Assignment of Benefits information page or consult your state’s Department of Insurance.
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