Mother nature has done it again… She brings in a strong natural disaster that damages your home or business that you’ve worked so hard on. With it being one of your largest assets, it’s your priority to get it fixed as soon as possible. You hop on a call with a contractor to have them assess the situation and give you an estimate of the cost. You know the insurance company will want one anyway, so why not get a head start. Well believe it or not “getting a head start” may sound like a simple process, but it could turn into a nightmare. The reason why you ask? Assignment of benefits.
What you need to know
Assignment of benefits is a legal document that allows a third party to be paid for certain services that they do for an insured homeowner, in which the homeowner would normally be reimbursed by the insurance company directly after making a claim. Assignment of benefits (AOB) is commonly used when a homeowner experiences roof damage, a leaky pipe, a damaged appliance, etc. and they contact a contractor for assistance. Most Assignment of Benefits agreements presented to the homeowner allow the contractor to stand in the shoes of the homeowner for insurance collection purposes. This causes legal battles between the contractor and the insurance company leaving the homeowner left out of the picture.
How to avoid an Assignment of Benefits (AOB)
If the form says anything related to “I transfer and assign all insurance rights, benefits, and causes of action under my property insurance policy to the contractor” then you are probably signing an Assignment of Benefits. You are signing away your rights to the claim under your homeowner’s insurance policy. Educate yourself. If you experience a loss, be sure to contact your insurance company first, before doing anything else. This will help you avoid dealing with an AOB issue completely.
Here are some red flags to watch out for:
- Someone knocks on your door to tell you about damage to your home that you had no idea about
- Someone says you will get a free kitchen or free roof for no particular reason
- They claim the damage is a lot more than it clearly is
- Permanent repairs start before your insurance company is allowed to inspect or is notified
- They claim to cover your deductible
If something sounds too good to be true, it probably is. Don’t be a victim of AOB. Contact your Bankers agent if you have any questions or concerns if you need to sign any contracts. Our agents are available every day of the week to answer any questions or concerns you may have. Don’t hesitate to call 800-627-0000.