We want you to be fully prepared when you speak to contractors, and that means knowing your rights. When you sign an AOB form, you are handing over all your policy rights to recover costs to the contractor.
Assignment of Benefits Abuse
Protect yourself and help fight AOB abuse
The facts of AOB abuse
What is Assignment of Benefits?
An Assignment of Benefits is an agreement or contract that transfers the rights of an insurance policy to a contractor or other entity. This includes any cause of action that may result from a contractor’s incomplete work.
How do contractors exploit AOB?
Imagine a cracked water pipe floods your home. You contact a plumber to fix the leak. The plumber then refers you to a water extraction company. The water extraction company promises to take care of everything including billing the insurance company directly if you sign a work authorization form which includes AOB language. The water extraction company begins the dry out process and removes areas of your home not damaged preventing the insurance company from properly inspecting damages. The water extraction company then bills the insurance company sometimes 2 to 3 times the actual cost of the water mitigation. Due to the AOB, the water extraction company can place a lien on your property or foreclose if the bill is not paid to their satisfaction by the insurance company.
Who are the main abusers of AOB?
The biggest abusers are water extraction companies and roofers.
What can policyholders do to prevent AOB fraud?
The first thing you should do after experiencing a loss is call your insurance company. We can refer a qualified, licensed professional to help you mitigate damages and accurately evaluate your loss. Also, never sign a contract you haven’t read or don’t understand. Call your agent or insurance company if you need help or guidance. And finally, ask contractors if they utilize AOB and for proof of liability & workman’s compensation insurance. Be cautious if the contractor shows up unsolicited, offers something for free, pressures you for a quick decision, isn’t local or asks for referrals for your family and friends in return for referral fees.