Understanding the Assignment of Benefits in Insurance Claims

As a policyholder, you expect your insurance claim to be settled smoothly and without any complications. However, you may come across some unfamiliar terms and phrases such as Assignment of Benefits (AOB). The Assignment of Benefits can be a bit confusing to understand if you’re not familiar with the insurance industry. In this blog, we will demystify this term and how it affects your insurance claims.

The Assignment of Benefits is a document that allows a third party to receive the benefits of a policy on your behalf. In other words, when you sign an AOB, you are giving a contractor, such as a water remediation company or roofing contractor, the right to receive payment directly from your insurance company for services related to your claim. This means that instead of paying you first, the insurance company pays the contractor.

One major benefit of assigning your benefits to a contractor is convenience. It allows you to avoid the hassle of dealing with the financial aspect of your claim while you focus on repairing the damages to your property. However, AOBs can be risky if you don't read the fine print or choose reliable contractors.

Some contractors may use AOBs to inflate the cost of repairs and sometimes even make fraudulent claims. This can lead to your insurance premium skyrocketing or even result in cancellation of your policy. To avoid this, it’s important to read the AOB document carefully and choose reputable contractors.

It’s also crucial to remember that an AOB isn’t always necessary for contractors to carry out the repairs. AOBs can become a problem when they're used in situations when repairs would have been made without the use of an AOB. This is why it’s essential to review the terms of the AOB before signing it.

In recent years, AOBs have become more common in Florida, especially for property damage claims. This is due to businesses using AOBs for convenience, but it also allows them to avoid being negatively affected by any complications in the claim process. However, the Florida Legislature has made efforts to protect consumers from AOB abuse.

Conclusion

In conclusion, the Assignment of Benefits can be both helpful and harmful depending on how you use it. It’s important to read and fully understand the AOB document before signing it. Choosing a reliable contractor who will use the AOB document responsibly is essential to avoid any fraudulent activity. At Five Star Claims Adjusting, we advise clients on the best course of action when it comes to assigning benefits to contractors. If you're looking for a loss adjuster in Orlando, FL, contact Five Star Claims Adjusting today to schedule a free inspection.