Assignment of Benefits Property Insurance Abuse

Assignment of Benefits (AOB) property insurance abuse in Florida is a prevalent issue leading to higher rates for homeowners all across the Sunshine State. AOB allows contractors to represent the insured to obtain payment from insurance agencies for services rendered.

Even though AOB has been around for more than 100 years, loopholes have resulted in significant abuse of power, making it a hot topic in Florida. A 2016 study by the Department of Financial Services highlights the increase of AOB lawsuits from 405 in 2006, to 28,200 AOB lawsuits in 2016. It also noted the increase in the severity of claims with AOB than those without.

Assignment of Benefits Property Insurance Abuse

Despite the insurance industry going head-to-head with Florida Legislature to enact necessary AOB reform, each attempt to reduce assignment of benefits property insurance abuse through law modification has failed. A bill aimed at closing the loophole criticized for encouraging exploitation amid trial attorneys, contractors and water remediation firms failed to be seen in the Florida Senate.

Another reform bill meant to reduce incentives for third parties that sue insurance agencies was once again rejected. Translation: Absolutely nothing was accomplished for the fifth consecutive year, leaving homeowners holding the bill of increasing property insurance rate hikes due to the distasteful and dishonest tactics of complicit attorneys and “restoration contractors.”

Assignment of Benefits

After a homeowner discovers damage in their home, a restoration company comes in to say the work can be done in a specific period of time. The company then turns around and claims they can go directly from the insurance company without the homeowner needing to go through any additional trouble or putting down any money upfront to begin the repair process.

When you sign on the dotted line, AKA Assignment of Benefits, you’ve given away your rights to negotiate your claim with your insurance company. You transfer your rights to the contractor—meaning the contractor can legally do as they please. The kicker is there’s nothing you can do about it.

In some instances, contractors submit forged AOB documents after completing work for homeowners that refuse to sign. That’s not even the end of it. A typical claim with an AOB more than doubles in cost and an AOB claim enlisted with a lawyer nearly triples. These actions are driving homeowner’s insurance rates through the roof.

AOB Consumer Alert

Regions of Florida undergoing repair after Hurricane Irma ripped through in September still have a long way to go. The Florida Chamber of Commerce released a new consumer alert warning Florida homeowners of AOB scams, leaving owners with nothing to show except terrible or incomplete house repairs and an insurance premium hike.

The Road Ahead

In spite of the roadblocks, insurance company Security First has already requested a motion for rehearing its case to amend assignment of benefits property insurance language. In this year alone, many Floridians will see rate hikes of 5 to 10 percent due to claims abuses. This rising trend is set to continue unless reforms to Florida’s current assignment of benefits property insurance laws are set in place.