Assignment of Benefits: What Does a Homeowner Need to Know?

What is an Assignment of Benefits?

An assignment of benefits (AOB) is a contract between you and a third party – typically a contractor or water mitigation company – giving them the right to deal directly with your insurance company and receive payment for your claim. In the past, this was a popular way for homeowners to have repairs done quickly, and let the contractor deal with getting payment directly from the insurance company.

Last year, in 2019, the Florida Legislature passed reforms aimed at changing the AOB process. As a result of these reforms, AOB vendors must satisfy specific legal requirements to receive payment for your claim. In addition, policyholders have been given the right to cancel an assignment agreement under certain circumstances. 

What information must be included in an Assignment of Benefits?

The AOB must contain a written, itemized, per-unit cost estimate of the services to be performed by the third-party company and it must only relate to the work to be performed for services to protect, repair, restore, or replace a dwelling or structure or to mitigate against further damage to that property.

The AOB must contain a notification in 18-point, uppercase, boldfaced font that advises you that you are giving up certain rights under your insurance policy to a third-party. The notification must also include the terms to cancel.

The AOB should prohibit the third-party company from seeking payment from you in any amount in excess of the applicable policy deductible unless you have agreed to have additional work performed at your own expense.

Florida law prohibits a third-party assignee from including the following charges/fees in an AOB:

·    A penalty or fee for rescission of the AOB during the timeframes outlined in the AOB.

·    A check or mortgage processing fee.

·    A penalty or fee for cancellation of the AOB.

·    An administrative fee.

If you are concerned with the language or terms of the contract, you should seek legal advice prior to signing the AOB