Assignment of Benefits: Florida Legislation Change that is Sure to Impact Residential & Commercial Policyholders
With assignment of benefits (AOB), a policyholder grants a third party – a home contractor, roofer, or plumber – permission to directly bill an insurer to settle a claim. That’s all about to change.
As a homeowner, you know how time-consuming and costly minor repairs, such as replacing a damaged toilet or broken pool pump, can be. Now visualize having to finance the cost of repairs following a major accident or natural disasters like fire, wind or storm. That’s usually what policyholders are required to do when they file an insurance claim after a major loss or damage to property. That’s because the majority of residential and commercial insurance policies stipulate that the insured take immediate action to prevent or mitigate further damage or loss.
What is an Assignment of Benefits?
With an assignment of benefits (AOB), a policyholder grants a third party – a home contractor, roofer, or plumber – permission to directly bill an insurer to settle a claim. For policyholders who are both short on cash and need to make repairs, an AOB is both a legal document and a way to get the work done without having to lay out the cash. Once the contractor accepts the assignment of benefits, he or she can then seek payment directly from the homeowner or property owner’s insurance company.
Having a contractor willing to forgo a hefty deposit or payment, make the needed and/or necessary repairs, and file for reimbursement directly from the insurance company, are many of the advantages of AOBs policyholders have enjoyed.
However, in the State of Florida, this advantage will likely change for many residential and commercial policyholders. That’s because on Wednesday, April 24, 2019, the Florida Senate approved changing this more than 100-year-old insurance practice.
What Does This Mean for Florida Policyholders?
For many years, the insurance industry and proponents have attempted, unsuccessfully, to restrict the use of assignment of benefits. Typically, AOBs have been an efficient, customer-friendly way to settle claims. Policyholders get the services they need without going through the lengthy and time-consuming process of settling an insurance claim.
However, in recent years there have been increased claims of fraud by unscrupulous contractors. In addition, contractors who accept AOBs often pursue legal recourse when negotiating a claim, which can increase the costs to the insurance company. As a result, it is in the insurance company’s best interest to limit AOBs. The recent proposed legislative changes would allow insurers to sell policies that do not include assignment of benefits clauses at a reduced cost to policyholders.
While a lower premium may look attractive on its face, in the event of damage or loss it may restrict the policyholders options and cause a financial hardship.
How Residential & Commercial Policyholders Protect Themselves.
Insurance claims can become complex and time consuming, which is where an attorney who works only for policyholder, can provide time savings and expertise in protecting your rights and negotiate a fair settlement.
We’ve helped property owners just like you get the money you need to rebuild, replace or repair what’s been damaged by an event or natural disaster. Contact us for a free, no-obligation consultation.
The information provided here is intended for informational purposes and should not be considered legal advice.
About Desir Law Firm
Attorney Leonard Desir is the founder of Desir Law Firm, a boutique insurance law office representing only insurance policyholders. We work with homeowners, renters, homeowner associations (HOAs), condominium associations, small and mid-sized businesses, and commercial property investors throughout the State of Florida.
When damage happens to your home or business, you have enough to worry about without having to worry about whether your insurance company will act in your best interests. Learn how Desir Law Firm can help you with your insurance damage claim. Contact us for a free, no-obligation consultation.
Florida law allows for the recovery of attorney’s fees and costs from your insurance company, if you prevail in a lawsuit. At Desir Law Firm, even if we do not prevail, you will not owe money to an attorney since our cases are taken on a contingency basis. It is truly a win-win situation to hire an insurance attorney to dispute a partial or complete insurance denial or partial payments.