One day, a roofer shows up at your front door, offering a free roof inspection. Innocently, you think that it’s a good idea. Couldn’t hurt to take a look, right? Especially since he says there’s been recent storm activity that could have caused damage, although you can’t recall any.
He comes down and says, “Looks like you have some minor storm damage. We can fix it for you no problem, just sign a few papers and your insurance will take care of it.”
You think, “Wow this was a lot less work than I thought.”
Screech… hold up. Everything the roofer has just told you may cause you a major headache when it comes time to file the claim with the insurance company. A red flag should go up before you sign those miscellaneous papers they so casually hand you. As the red flag goes up the first thing that should come to your head is to call your insurance company so they can help advise you before signing anything. What you could be signing is an Assignment of Benefits.
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. It is a form that authorizes the roofing company to bill the insurance company directly to potentially pay for any supposed damage. You are signing away your rights to the claim under your homeowner’s insurance policy. This means when the insurance company pays, they will pay the money directly to the contractor, not you. AND more importantly, if they deny the claim, you agree to pay the contractor for the repairs. Therein lies the rub with the Assignment of Benefits form, as most homeowners have no idea what they are signing.
While some contractors will use this to assign away your rights, they are also known to charge the insurance company an inflated amount, more than what the company’s professional claim adjuster would deem is industry standard for the same repair. Once the repairs are made, it leaves the insurance company little choice. They could deny the claim, or pay only what would be industry standard for the same repair, leaving you to cover the rest of the cost. Many companies also like the right to inspect the damage prior to repairs being made. This shows up in your policy language as part of your responsibility as an insured. Depending on your policy language, your company might not be able to help you, because of the clause in your contract.
If the insurance carrier does pay the inflated amount, then the company loses money paying for those unnecessary repairs. This is reflected in the premiums all consumers pay, many times causing rates to increase. Bringing us to why your neighbors could be paying for your roof… through higher premiums for everyone. Either situation leads to a bad outcome.
Education is power. Knowing what those papers say, before you sign, is critical. Not only is this happening with roof repairs, but all water damage issues. Help your neighbors to not only not sign those AOB’s, but educate them about what it actually is. You AND them will be saving a whole lot of money if you do.
If you have any questions, call your bankers agent before making any decisions. He/she is there to help provide professional advice you can trust. 800-627-0000.