There is a knock at your door and the person there introduces themselves as a roofer. They tell you their company is doing some work in your neighborhood. The roofer says they would be happy to conduct a free roof inspection on your home and you happily agree. After a few minutes, the roofer tells you there is damage to your roof from hail. The roofer then explains how they are experienced at working with insurance companies and will negotiate with your home insurance company to replace your roof. The roofer then offers you a contract to sign. The contract you are being asked to sign is called an Assignment of Benefits (AOB).
There is a trend in the construction industry, primarily with roofers and water extraction firms, where Assignment of Benefits (AOB) contracts are being exploited for fraudulent purposes. These contractors are either over-inflating the cost for repairs or manufacturing damage when there is none. And while not all construction professionals who use AOB contracts are fraudulent, there are many contractors who are.
The problem with an Assignment of Benefits (AOB) contract is that you are transferring or “assigning” the claims proceeds directly to the contractor. When this happens, you lose control of the claims process. If the insurance company disputes the claim; the repairs may stop, the contractor may put a lien on your property or a law suit may be filed for breach of contract.
When insurance fraud is committed, we all pay. Florida has the highest property insurance rates in the country. There are two primary factors for this. First, Florida is ranked 2nd in the U.S. for natural disaster risk. The second reason is insurance fraud. As Floridians, we can’t do much about natural disaster risk but fraud is something we can control. AOB lawsuits have increased 16,000% since 2000 per the Florida Department of Financial Services. These lawsuits represent one-third of all insurance litigation. This problem has become so pervasive that even local news WKMG did a consumer alert segment about this. (Click here to see the segment.) Currently Florida Insurance advocate groups and the Consumer Protection Coalition are trying to work with Florida lawmakers to address the problem.
What should you do if you are faced with being asked to sign an AOB contract? Get a second opinion from another contactor to substantiate the costs for the repairs or damage. Work with a contractor who does not require an AOB contract.Call your insurance agent if you think something does not sound right. And notify your insurance company first if you have a claim.