What Is an Assignment of Benefits Form?

Florida policyholders who must file a home insurance claim will likely come across the term assignment of benefits (AOB) at some point. It’s extremely important that you know what this form entails, how to revoke the contract and whether it’s the right decision for you.

An assignment of benefits (AOB) form is a legally binding contractual document that transfers the rights and benefits of an insurance claim from the policyholder to a third-party vendor, such as a contractor. An AOB gives the third-party vendor all the rights in a claim, including the authority to file a claim, collect the insurance claim payouts and make repair decisions — all without the input or consent of the policyholder who owns the home.

It’s extremely important to note that you don’t have to sign an AOB to navigate the claims process or for the contractor to begin work on your property. It’s a red flag if the third-party vendor is pressuring you into signing an AOB. If they are, you may want to part ways and find a new contractor.

AOBs were put in place to take the stress off the policyholder, allowing them to focus on their daily life rather than negotiating an insurance claim, finding and vetting contractors, scheduling the work to be completed and overseeing all aspects of the claim.

But they’ve also become a hotbed for scammers and fraudsters who have taken advantage of these legally binding contracts to inflate repair prices, tussle with your insurer and, even worse, get away with a less-than-par job — all without the policyholder holding any legal right.

As the policyholder, you lose any legal right to control your claim the second you sign the AOB over to the contractors or third-party vendor. At that point, the contractor or third-party vendor takes over and makes every decision in the process without your input. And whatever vendor you sign the AOB over to is now the sole authority on the claim. So even if they do a horrid job, you can’t change contractors.

While signing an AOB may be right for some projects, it’s best to use your best judgment — and take some tips from this article — to determine whether signing an AOB will benefit or hinder you. Because once you sign, it can be extremely difficult to nullify the contract.

In April of 2019, Florida legislature passed an assignment of benefits reform bill that aimed to protect insurance policyholders by allowing them to revoke an assignment of benefits agreement after it has been signed if their situation meets one of three unique scenarios.

The bill aimed to prevent contractors and repair companies from taking advantage of abusive AOB contracts by requiring them to “contain a provision that allows the assignor to rescind the assignment agreement without a penalty or fee by submitting a written notice of rescission signed by the assignor to the assignee:

Once signed, an assignment of benefits claim form locks you into the agreement with the third-party vendor for the duration of the claim it was signed for. So if it takes the vendor six months to file the claim, do all the repairs, submit the proper paperwork to your insurer and collect the claim payout, the AOB is good for six months.

The good thing is that once the repairs have been completed on your home and the claim has been closed out by your insurer, you’re no longer contractually obligated to stick with that third-party vendor for any damages that occur or claims that must be filed in the future.

An assignment of benefits contract is meant for rather large projects and repairs. While the decision to sign an AOB is solely up to the discretion of the policyholder, it’s good practice to never sign an AOB claims form. You especially shouldn’t sign one if you’re comfortable navigating the home insurance claims process yourself.

If you do decide signing an AOB is right for you, there are a few things you can do to help protect yourself from AOB scammers and fraudsters: