A Note about Assignments of Benefits (AOBs) for Your Insurance Claim
When dealing with contractors during your insurance claim, you may be asked to sign a document titled, “Assignment of Benefits”. If you are asked to execute an assignment of benefits (AOB), you need to be extremely careful to protect your legal rights.
Contractors like AOBs because they allow contractors to work directly with property owners’ and business owners’ insurance companies. Instead of payment going through you, if you sign an AOB your contractor will be able to collect payment directly from your insurer. The main contractors that use AOBs are plumbers, water dryout or mitigation companies, mold remediation companies and sometimes roofers.
In July 2019, the Florida Legislature passed a new AOB law requiring AOB companies to meet certain record keeping requirements in order for an AOB to be valid. The new law is located at Florida Statute sec. 627.7152(2)(a) and requires the following:
- The homeowner must be given the right to rescind the AOB without a penalty or fee.
- The AOB company must provide the homeowner with a copy of the signed AOB within 3 business days after the AOB is signed, or the date on which the AOB company begins its work, whichever is earlier.
- The AOB must include a written estimate of the work to be performed.
- The AOB can only be for work to protect, repair, restore or replace property damage.
- The AOB must contain a warning in bold, uppercase letters that the homeowner is giving up important rights under their policy of insurance.
- The AOB must contain language that requires the AOB company to release the homeowner for any expenses related to the work performed.
There are additional provisions that the law requires an AOB contractor to comply with, but the new AOB law has made it much more difficult for AOB companies to provide repairs to a homeowner after the homeowner suffers damage to their house.
Why? Once you sign an AOB, you are essentially cut out of the process. You will have to sit on the sidelines while your contractor and your insurance company decide what repairs are necessary and what costs should be covered. When you sign an AOB, you generally waive your right to pursue mediation – in fact, you may waive your right to dispute any aspect of your claim directly with your insurer.
While AOBs are generally enforceable under Florida law, if you have signed an AOB and you are struggling to get your insurance company or your contractor to fulfill its obligations, you may still have options available. We encourage you to contact us promptly to speak with a Fort Lauderdale property damage lawyer about your situation.