You paid for your Benefits. Shouldn't you keep them???
What is an Assignment of Benefits?
An Assignment of Benefits (AOB) is a contract between you and a contractor (such as a plumber, water remediation firm, roofer, etc.) where you give the contractor control of your claims benefits. They file a claim for their services and direct the insurance company to pay them directly.
What's in it for the contractor?
Once you sign an AOB, you lose control of the direction of your claim. The contractor takes control, and can submit whatever they like to your insurance company, sometimes billing the company two, three, four, five times the going market rate for their services, and sometimes including work that was never performed. You don't see this, and you can't verify what they did.
What are the potential pitfalls in signing an AOB?
You have committed to this contractor, and you have little to no recourse if you're not satisfied with their work. You can no longer comparison shop if you are not satisfied with their work. Even if they walk off the job with their work incomplete, they can still claim compensation from the insurance company which gets deducted from your benefits. Both you, and the contractor, are still bound by the terms and conditions of the policy, and if the contractor violates those terms and conditions, those actions could potentially jeopardize coverage for your entire loss.
What's in it for the contractor?
This is where the age old mantra of "if it seems too good to be true, it probably is," comes into play.
Has the contractor done any of the following?
- Solicits a job from you unannounced for damages you didn't even know were allegedly present?
- The contractor is offering you something for nothing, such as a free roof or kitchen
- Wants to start work immediately and advises you to delay contacting your insurance company?
- Offered to "take care of" your deductible.
Any of these issues could potentially lead to a fraud investigation which could jeopardize your coverage.
Possible Litigation:
As mentioned above, there is no standard for what the contractor can submit to the insurance company, and if the company questions the scope and/or the pricing submitted by the contractor the company can be sued directly by the contractor. And while you may not be a party to this lawsuit, more likely than not you will end up being a witness.
