Assignment of Benefits
Understanding Assignment of Benefits
You Paid for Your Benefits. Don’t Give Them Away.
What is an Assignment of Benefits?
An Assignment of Benefits (AOB) is a contract between you and a contractor (such as a plumber, water remediation firm, roofer, etc.) where you give the contractor control of your claims benefits. They file a claim for their services and direct the insurance company to pay them directly.
What’s in it for the Contractor?
Once you sign an AOB, you lose control of the direction of your claim. The contractor takes control and can submit whatever they like to your insurance company. They’ll sometimes bill the company as much as five times the going market rate for their services. We’ve also seen them include work that was never performed. You don’t see it, and you can’t verify what they did.
What are the Potential Pitfalls in Signing an AOB?
- You have committed to this contractor, and you have little to no recourse if you’re not satisfied with the work.
- You can no longer comparison shop if you’re not satisfied with the work.
- Even if the contractor walks off an incomplete job, they can still claim compensation from the insurance company that will get deducted from your benefits.
- Both you and the contractor are still bound by the terms and conditions of the policy, and if the contractor violates those terms and conditions, those actions could potentially jeopardize coverage for your entire loss.
What Signs Should I be Aware of?
This is where the age-old adage — if it seems too good to be true, it probably is — comes into play. Has the contractor done any of the following?
- Solicit a job from you unannounced for damages you didn’t know were allegedly present?
- Offer you something for nothing, such as a free roof or kitchen?
- Try to start work immediately while advising you to delay contacting your insurance company?
- Offer to “take care of” your deductible?
Any of these issues could potentially lead to an insurance fraud investigation, which could jeopardize your coverage.
There is no standard for what the contractor can submit to the insurance company, and if the company questions the scope and/or the pricing submitted by the contractor, the company can be sued directly by the contractor. And while you may not be a party to this lawsuit, more than likely you will end up being a witness.
What Should I do if I Have a Claim?
Call us first at 800-293-2532. We are available 24 hours a day, seven days a week, 365 days a year.
Depending on the nature of your loss, we can help determine if emergency services are needed and provide guidance on how to secure a reputable contractor to assist with any emergency needs you may have. Then, once you have the loss under control, you can make an informed and well-reasoned decision as to how you wish to proceed to ensure your home is brought back to its pre-loss condition.
If you have questions about the claims process, visit our FAQ section.