As we all clean up the mess from Hurricane Sally, it is important to avoid making a mess of your insurance claim. We have decades of experience handling hurricane claims. One of the recent problems we have seen from Hurricane Michael is when people unknowingly sign an Assignment of Benefits (“AOB”). Don't take our word for it. See what the official in charge of Florida's insurance industry has to say about them at http://www.myfloridacfo.com/.../AssignmentofBenefits.htm.
BEWARE of companies telling you there will be no charge for their services if you sign their paperwork. People desperate to have help often fall victim to unscrupulous companies that can deprive you of the insurance proceeds needed to make your repairs.
What Is An Assignment of Benefits?
If your home suffers damage from a storm like Hurricane Sally, contractors and restoration companies often come swarming. If your home or business is insured under a homeowners policy, they typically want to begin repairs immediately under what is called an Assignment of Benefits ("AOB"). WARNING: this document signs your insurance rights over to your contractor. An AOB allows the contractor to step into your shoes as the policyholder. Meaning, the contractor now has your contractual right to recover the cost of repairs from the insurance company, not you. Assignments of Benefits may appear to be beneficial to you because they prevent you from having to pay upfront for the repairs or deal with the insurance company on the claim. They are very beneficial to the contractor because it offers him paying work, assuming the insurance company pays, but that is not always a guarantee. Insurance companies often dispute and refuse to pay for work performed by restoration professionals or contractors who come sweeping in after a storm and begin immediate repairs.
Why Insurance Companies Do Not Like AOBs
The insurance company has incentive to make it difficult for you to assign your benefits to a contractor because contractors will then not be as eager to start repairs. The longer it takes for repairs to commence, the less likely you will discover that the true cost of repairs vastly exceeds the amount the insurance company is offering. The insurance company wants to have a say in how extensive your damage is and how much it will actually cost to repair, because they want to reduce these amounts and pay you less. Even the determination by the insurance company's software often does not accurately account for all of the damage and true cost to repair. The insurance company has a more difficult time manipulating software estimates to your disadvantage after a competent local contractor has determined the extent of the damage, made the repairs, and sent them a bill. The bottom line is, hindering your ability to assign your benefits to a contractor gives the insurance company far more control over your claim, the progress of repairs, and the amount it is required to pay for those repairs.
Insurance Companies Have Pushed for Limits on AOBs
All of these motives have encouraged insurance companies for years to lobby legislators to pass laws that limit and restrict Assignments of Benefits. Recently, insurance companies have argued to Florida appellate courts that an Assignment of Benefits to a contractor is not valid unless it is signed by all insureds AND THE MORTGAGEE. They want this limitation because they know it will be difficult for you, as the policyholder, to get your mortgage-holder (the bank) to sign an Assignment of Benefits. This gives the insurance company more control over your claim and more opportunities to delay, deny, or underpay your claim.
Do Not Sign Any Document That Impacts Your Rights Without Seeking Legal Advice
The aftermath of a storm like Hurricane Sally is a tumultuous, stressful time. Unfortunately, while your main focus is on getting your home or business repaired and getting your life back to normal, this can make you an easy target for unscrupulous contractors who want you to sign over your insurance rights so they can get paid. Once your building is tarped with no more water coming in, it is in your best interest to take a moment to seek legal advice before signing documents. This is particularly true when we offer it for no fee, cost, or obligation. Before you sign documents that could cost you more than you have already lost, CONTACT US with any questions you may have. We are here to help.