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What is an Assignment of Benefits?

Assignment of benefits, commonly abbreviated as AOB, originated within the medical billing field, but has moved to the areas of auto coverage and, most recently, homeowners’ insurance claims.  An assignment of benefits is an agreement which transfers the rights of the policy holder to a third party.  As experienced homeowners’ insurance attorneys, we often see the following scenario depicts the assignment of benefits arrangement:

  • A leaky pipe sends water through the home of an insured individual;
  • The insured calls out a water mitigation company to dry out the home on an emergency basis;
  • The water mitigation company is dispatched and uses its extensive equipment to dry out the home, which includes removing baseboards and drying inside the house;
  • The company presents the homeowner with a document that includes an assignment of benefits, in which the homeowner assigns his or her rights under the insurance policy to recover insurance funds to the water mitigation company;
  • At some later point, a claim is filed with the insurance company.

The Potential Problems of an Assignment of Benefits

There are several ways in which AOB can present a problem for the homeowner.  At times, the contractor or repair company will over impair or inflate the cost to repair the damage, this increases the cost of the claim.  These repairs will often be completed before the insurance company has had a chance to assess the damage, making it difficult to make an accurate claim. At times, the homeowner may find him or herself on the hook to pay the difference between what is covered by the policy and what the repair company charged.

The Potential Benefits of an Assignment of Benefits

For homeowners, there can be some benefits to the AOB.  Homeowners may find themselves in need of emergency services, like water mitigation.  Some of these companies will require either a cash payment or an assignment of benefits.  For homeowners who feel stuck and in need of emergency services, allowing an assignment of benefits may be the only way to obtain the services they need.

Even considering this factor, however, it is imperative that homeowners carefully consider an AOB before they sign one out of urgency or seeming necessity.  It is best for the homeowner to consult with a licensed homeowners’ insurance company prior to accepting an AOB. Once you have signed the AOB, you will have a hard time attempting to take back your rights. As such, it is not something you should take lightly.  It should be carefully reviewed and the benefits and drawbacks considered.

Assignment of Benefits Laws May Soon Change

Assignment of benefits has been accepted as legal time and time again.  Just recently, a Florida case (One Call Property Services v. Security First Insurance Company) upheld the homeowner’s right to assign benefits at the point when the damages accrued.  However, the insurance companies are starting to push back against these claims and lobby for reform of assignment of benefit claims.  Insurance companies claim they are being bombarded with third party claims that exceed the actual cost of repair.  It seems likely that laws concerning AOB may change in the near future.

Contact the Homeowners’ Insurance Attorneys at Greenberg, Stone & Urbano Today For Your Free Consultation!

If you need assistance with a homeowners’ insurance related matter, contact the Miami Homeowners’ Insurance Attorneys at Greenberg, Stone & Urbano. Our skilled and dedicated attorneys will guide you towards the best possible outcome. We have over 130 collective years of experience representing homeowners against their insurers across South Florida and will put our extensive experience to work for you.  Contact our firm as soon as possible to protect your legal rights.  Our firm received an AV rating from Martindale Hubbell and was ranked as a top firm in South Florida by the Miami Herald.  Call us at (888) 499-9700 or (305) 595-2400 or you can visit our website to schedule your initial consultation.




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