• Sample Contracts

FREE Assignment of Intellectual Property Rights [ Definition, Common Types, Purpose ]

As everyone may already know, protecting your intellectual property is of high importance. This way, no one will be able to claim your property or you can sue someone who claims that what is yours is theirs. But, did you know that you can assign your property or a part of your property to another entity? Yes, you can! You can do this by coming up with a basic agreement  that will state that you want to do so.

Intellectual Property Rights Assignment

20+ sample non disclosure agreements, 10+ sample asset purchase agreements, 8+ sample property contract agreements.

If you are new to all of this intellectual property assignment task, we are here to give you a few key pieces of information. We would like to share with you a couple of tips about what an intellectual property is and what is included in the agreement that you need for your intellectual property assignment agreement. If you are ready to find out more, just keep scrolling! You may also want to check out Guide for Buying and Selling Intellectual Property .

What is an Intellectual Property?

Intellectual property refers to a creation such as an invention, artistic works, and other creative property that is used in commerce. Intellectual property is always protected by law which allows the creators to earn recognition or money from what they have created. The system where intellectual property is involved in will actually help creators to continue doing what they are doing and to help their creations now and future creations flourish. You may also see home purchase agreement samples .

What are the Most Common Types of Intellectual Property?

1. Copyright.  Copyright is a legal term that is used to define the rights of the literary and artistic works. Such artistic works range from books, music, paintings, sculptures, films, short stories, poems, drawings, and maps.

2. Patents.  Inventions are the ones that get issued patents. Patents give an owner the power to decide on whether or not others can make use of the inventions. It is the responsibility of the inventor to make technical information regarding how the invention can be used publicly. You might want to check out patent license agreement samples .

3. Trademark.  In order to distinguish the goods and services of an enterprise from another enterprise. Trademarks help to ensure that no other business or company gets to use the property you have issued a trademark with. Trademarks have been done for a long time. You may also see property management agreements .

4. Industrial Designs.  Industrial designs help to make an article look more appealing and more attractive.

5. Geographical Indications.  A geographical indication will include the name of the place of origin of the goods. This means that items coming from a certain location can be considered as intellectual property. You may also see business contract samples .

What Should an Intellectual Property Agreement Include?

Every country or every state has different requirements about what should be included in an intellectual property agreement. The most common elements that you will find in an intellectual property agreement are the following:

You may find more interesting information on Sample Property Contract Agreement .

What is the Purpose of Intellectual Property Assignment?

The intellectual property assignment agreement is basically a  transfer agreement  of the owner’s rights, titles, and interest of the intellectual property. The owner may opt to transfer the whole property or part of the property to the assignee.

1. Trademarks

Transferring of trademarks refers to transferring one entity’s trademark registrations or applications to another company that wants the trademark.

Curious about setting up a trademark for your property? Check out our  Guide for Registering a Trademark in the USA .

A patent refers to the rights granted by the government to the inventor. If a mass production company wants to take over the rights to an invention, the patent may be transferred. You can find out more about transferring of patents by checking out  Patent Assignment Forms .

3. Copyright

Copyright is an official legal right that gives the original owner or creator the rights for reproduction and distribution of products. Transfer of copyrights will pertain to granting the assignee part ownership of the copyright or full ownership of the original work.

Need tips on how to obtain rights to use a copyrighted property? Have a look at our tips on  How to Obtain Permission to Use Copyrighted Material  for more information.

We hope that what we have shared with you has helped you in one way or another. If you need more information about intellectual property and agreements that are related to it, refer to the links down below:

Application for a License to Display Trademarks

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Assignment of benefits (aob).

Have you heard of the term assignment of benefits ? Do you know how it impacts you? An AOB is an agreement that, once signed, transfers the insurance claims rights or benefits of your insurance policy to a third party.

An AOB gives the third party authority to file a claim, make repair decisions and collect insurance payments without your involvement.

Review the resources below to better understand how transferring your insurance claims rights can impact you and your family.

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Legislative Updates

Recent legislative changes  prohibit a policyholder from assigning any post-loss benefits of a residential or commercial property insurance contract issued or renewed on or after January 1, 2023.  Therefore, Assignment of Benefit agreements may not be established for claims made under contracts subject to this new law.

These legislative changes are part of Senate Bill 2-A which was passed on December 14, 2022, during the Legislative Special Session and signed by Governor DeSantis on December 16, 2022.

What is an assignment of benefits?

An AOB is an agreement that transfers the insurance claims rights or benefits of the policy to a third party. An AOB gives the third party authority to file a claim, make repair decisions, and collect insurance payments without the involvement of the homeowner. AOBs have been used with life and health insurance policies for many years. However, AOBs are now being commonly used in homeowners’ insurance claims by restoration companies and contractors. Signing an AOB can be helpful with navigating the claims process, but if misused, it can lead to harmful consequences for the homeowner.

For example, you have a pipe leak in your home that causes water damage. If you call a restoration company to make repairs and sign an AOB that transfers your insurance rights to the company, the company can file a claim on your behalf and be paid directly.

What information must be included in an assignment of benefits?

The AOB must contain a written, itemized, per-unit cost estimate of the services to be performed by the third-party assignee and it must only relate to the work to be performed for services to protect, repair, restore, or replace a dwelling or structure or to mitigate against further damage to such property.

The AOB must contain a notification in 18-point, uppercase, boldfaced font that advises you that you are giving up certain rights under your insurance policy to a third party. The notification must also include the rescission terms.

The AOB must contain a provision that requires the third-party assignee to indemnify and hold you harmless from all liabilities, damages, losses, and costs (including attorney fees) if the policy prohibits an AOB. The execution of the AOB constitutes a waiver by the third-party assignee and its subcontractors of claims against you for payment arising from the AOB. The third-party assignee and its subcontractors may not collect, or attempt to collect money from you, maintain any action of law against you, file a lien against your property or report you to a credit reporting agency.

The AOB prohibits the third-party assignee from seeking payment from you in any amount in excess of the applicable policy deductible unless you have agreed to have additional work performed at your own expense.

The AOB cannot assign the right to recover attorney fees to the third-party assignee. In a suit related to an assignment agreement for claims arising under a residential or commercial property damage, the right to recover attorney fees stays with the assignor.

Florida law prohibits a third-party assignee from including the following charges/fees in an AOB:

If you are concerned with the language or terms of the contract, you should seek legal advice prior to signing the AOB. If you have questions as to whether the AOB incorporates the provisions required by Florida law, you may contact the Florida Department of Financial Services Insurance Consumer Helpline at 877-693-5236. If the AOB complies with all requirements stipulated by law, once the AOB has been signed, if the third-party assignee will not agree to release you from the contract, the only recourse is to pursue resolution in a court of law.

What responsibilities does the third-party assignee have under an assignment of benefits?

The assignee must provide a copy of the AOB to your insurance company within 3 business days following its execution, or the date work commenced, whichever is earlier.

The assignee must comply with certain policyholder duties as stipulated by the policy including the responsibility to maintain records of all services provided, cooperate with the insurance company’s claim investigation and provide the insurance company with requested records and documents related to the services provided. As a pre-condition to filing suit, the assignee must submit to examinations under oath or recorded statements related to the services provided, the associated cost, and the AOB itself.

Is an assignment of benefits a legal contract? How can I get out of the contract?

Yes. An AOB is a legal contract and it must contain three specific cancellation provisions.

NOTE: Recent legislative changes prohibit a policyholder from assigning any post-loss benefits of a residential or commercial property insurance contract issued or renewed on or after January 1, 2023. Therefore, Assignment of Benefit agreements may not be established for claims made under contracts subject to this new law.

If I have suffered damage to my insured property, what should I do first?

If you have damage, you should take the necessary steps to mitigate the damage and prevent any additional damage from occurring. This would include any temporary repairs such as covering the roof or removing standing water. You should also immediately contact your insurance company to inform them of the damage and file a claim.

Do not allow a third party, such as a water remediation firm or contractor, to contact your insurance company for you. You should be the one to make the first contact with your insurance company. You do not need to sign an AOB in order to get your insurance claim processed or your residence repaired.

How does an assignment of benefits impact me, as a homeowner?

An AOB can be helpful with navigating the claims process, but if misused it can lead to harmful consequences. Below are a few things to keep in mind:

Tips to remember before and after you have suffered damage:

Below is a checklist that may be helpful when reporting a claim:

Assignment of Benefits (AOB)  is an agreement that transfers the insurance claims rights or benefits of the policy to a third party. An AOB gives the third party authority to file a claim, make repair decisions, and collect insurance payments without the involvement of the homeowner. AOBs are commonly used in homeowners’ insurance claims by water remediation companies and contractors.

Assignor  is a person who assigns insurance claims rights or policy benefits to another person or entity through an AOB.

Assignee or Third-Party  is a person or entity who is assigned insurance claims rights or policy benefits through an AOB and has the authority to file a claim with the insurance company, make repair decisions and collect insurance payments without the involvement of the homeowner.

Contract for Repair  is a legal agreement for repairs that outlines the scope and cost of repairs to be completed. A contract for repair may state a certain amount is due up front before repairs can be started. If an initial payment is required, it will be listed on the contract and state the remaining balance is to be paid upon completion of the work. Most insurance companies will honor a contract for repair and make the check for outstanding amounts payable to the policyholder and the contractor.

Direct Payment Authorization Clause  provides authorization for the direct payment of any benefits or proceeds to the company that is performing the work. This clause is found in an AOB and a contract for repair. Depending on the language in the AOB or the contract for repair, the third party may be able to endorse checks received from the insurance company on behalf of the policyholder for services provided by them. Also, the policyholder is responsible for payment of their deductible and any additional work requested by the policyholder not covered by the insurance policy.

Power of Attorney  is a legal document by which one person authorizes another person to take specific actions on behalf of that person, as stated in the document.

Hold Harmless Agreement  is an agreement that releases and holds a company harmless against all liability claims in the event the work is halted prior to completion.

Assignment of Benefits Video View this scenario-based video to understand how signing an Assignment of Benefits may impact you as a policyholder. Watch Video

Assignment of Benefits Brochure This downloadable brochure includes definitions, tips and information on Assignment of Benefits. English  or  Spanish

Consumer Tips & Red Flags Know your rights and the red flags to look for when making a decision concerning Assignment of Benefits. English  or  Spanish

What to Expect After Filing a Homeowners Claim Learn more about what to expect after reporting a claim to your insurance company or agent. English ,  Spanish  or  Creole

What to Expect After Filing a Homeowners Claim Related to a Hurricane Learn more about what to expect after reporting a hurricane-related claim to your insurance company or agent. English ,  Spanish  or  Creole

The Flood Claims Process Learn more about what to expect after reporting a flood claim to your insurance company or agent. English

AOB Resources

Assignment of benefits, what are the concerns or risks regarding aobs.

AOBs have long been a part of Florida’s insurance marketplace. However, abuses in the way they were being used in the marketplace have driven up costs for homeowners across the state due to unnecessary litigation associated with certain AOB claims.

Consumers should be aware, when signing an AOB, that they may become involved in the third-party vendor’s lawsuit against the insurance company if the third party and company are in dispute on the payment amount of the claim.

What precautionary measures can consumers take prior to signing an AOB?

OIR offers the following tips consumers should consider prior to entering into an AOB contract.

Is a consumer required to sign an AOB to have repairs completed?

No. Consumers can file a claim directly with their insurance company. Filing a claim directly with the insurer allows the consumer to maintain control of the rights and benefits provided by their policy in resolving the claim.

How does a consumer know if they are signing an AOB?

After a loss, a consumer might call a roofer, contractor, plumber, water extraction company, or other third-party vendor to assist with emergency repairs. Once those vendors have assessed the damage, contractors or vendors may present consumers with a document to sign prior to beginning any work.

If the document is an AOB, it will sign over the consumer’s insurance benefits to the contractor or vendor and give this third-party the ability to negotiate and endorse claim payments or file suit against the insurance company on the consumer’s behalf.

An AOB must contain the following paragraph:


Can the AOB agreement be canceled?

Yes. Following AOB reform in 2019, a consumer can cancel an AOB without any penalties or fees. To cancel, the consumer must give the third-party vendor signed written notice of the desire to cancel the AOB at one of three points during the repair process:

(1) Within 14 days after executing the AOB;

(2) At least 30 days after the date the third-party vendor is scheduled to start work, if that vendor has not already completed a substantial amount of the work; or

(3) At least 30 days after executing the AOB, if the AOB does not have a start date for the work and the third-party vendor has not begun substantial work on the property.

What significant changes came from the 2019 AOB reform?

According to the Department of Financial Services, there were 405 AOB lawsuits across all 67 Florida counties in 2006, and that number had risen to 28,200 by 2016.

To stem the AOB misuse, OIR worked with the Governor, Cabinet, and Florida Legislature to pass significant consumer protection reform related to AOBs. On May 23, 2019, Governor DeSantis signed into law House Bill 7065 (2019) (“HB 7065”), a significant reform to the AOB landscape, effective July 1, 2019.

HB 7065 created  section 627.7152 , Florida Statutes, which contains definitions and required provisions for AOBs, referred to as “assignment agreements” in the statute, that are executed under residential or commercial property insurance policies. An AOB that does not comply with this new section is not valid under Florida law.

HB 7065 also created  section 627.7153 , Florida Statutes, which provides standards for policies that restrict the right to assign post-loss insurance benefits in whole or in part under a property insurance policy. Insurers offering restricted policies must notify an insured at least annually of the coverage options available for the assignability of benefits and must attach that notice to the premium notice. A restricted policy must be available at a lower cost than a policy that provides the same benefits but does not restrict assignment rights.

Assignment of Benefits Data Calls

In June 2019, OIR issued Informational Memorandum  OIR-19-02M  to notify insurers that a data call would be issued sooner than required in order to evaluate the preliminary impact of HB 7065. OIR has proactively issued a data call in 2020 to evaluate the preliminary impacts of the legislation.

Previous AOB data call reports are listed below:

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What is assignment of benefits, and how does it impact insurers?

What is assignment of benefits, and how does it impact insurers | insurance business america.

What is assignment of benefits, and how does it impact insurers?

Assignment of benefits, widely referred to as AOB, is a contractual agreement signed by a policyholder, which enables a third party to file an insurance claim, make repair decisions, and directly bill an insurer on the policyholder’s behalf.

The Insurance Information Institute (III) describes AOB as “an efficient and customer-friendly way to settle claims.” Having a problem like a water leak in your home is stressful enough without having to negotiate an insurance claim. By signing an AOB, policyholders can leave that claim to the contractor they’ve brought in to fix the issue - in this case, potentially a plumber or a water remediation firm – and assuming that contractor acts in good faith, the repairs and the claim should be sorted without the policyholder losing too much sleep.

AOB – a fraudster’s playground In recent years, AOB has hit the headlines for all the wrong reasons. Loopholes in the way AOB is being used are enabling contractors and restoration companies to abuse the practice by inflating claims costs and charging insurance companies for work that was either unnecessary or simply wasn’t done at all. These fraudsters then keep any extra money for themselves.

Florida-based insurance brokerage, AssuredPartners, shared the following about AOB: “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 double, even triple the going market rate for their services, and sometimes including work that was never performed.

Read more: New to the insurance industry? Learn these basic terms.

“You don’t see this, and you can’t verify what was done but you have now committed to this contractor. You now have little to no recourse, nor are you able to comparison shop if you’re not satisfied with their work. Even if their work is incomplete, or you are unsatisfied with the end result, they can still claim compensation from the insurance company, which gets deducted from your benefits.”

A number of things could go wrong with AOB. When a vendor assumes control of a claim, that company is still bound by the terms and conditions of the original insurance policy. If a contractor violates any of those terms, the claim could be deemed void, leaving the policyholder out of pocket for a potentially significant loss.

Also, if the contractor files a claim and the insurance company does not agree with the dollar amount requested, under the AOB the contractor can engage in legal action against the insurer without the policyholder’s consent. According to the III, this can lead to: “a state of affairs in which legal fees can dwarf actual damages paid to the policyholder – sometimes tens of thousands of dollars for a single low-damage claim.”

Protecting policyholders from AOB fraud The National Insurance Crime Bureau, whose mission it is to combat insurance fraud, has published a checklist for policyholders – also something that brokers can share with any clients considering AOB – to consider before hiring a contractor:

Impact of AOB on the insurance industry Insurers who choose to dispute inflated AOB bills are up against it in the era of plaintiff-friendly court verdicts. If the insurance companies fight in court and lose, they must pay compensation to the plaintiff’s attorneys, but the opposite is not true if the insurers win their case. So, the cost of the legal expense is prohibitive for the insurance company either way, which is why many insurers opt to settle.

Inflated claims and massive volumes of lawsuits have the predictable result of driving up insurance companies’ legal costs – and insurers are forced to pass those costs on to consumers in the form of higher insurance premiums and more restrictive policy terms and conditions.

Related stories:

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Our Positions | Assignment of Benefits

Issues | Our Positions

An assignment of benefits, or AOB, is a legal tool that allows an insurer to directly pay a third party for services performed rather than reimbursing a claimant afterwards. In recent years, insurers have experienced an increase in fraud and abuse of assignment of benefit provisions, resulting in higher costs.

Assignment of rights to collect under an insurance policy after a loss are common. In many cases, homeowners will assign the right to collect to contractors or other service providers following a loss. Vendors soliciting AOBs from policyholders are typically associated with property insurance, auto repair, and personal insurance claims. While such assignment may allow policyholders to make emergency repairs more quickly, the practice has resulted in many homeowners becoming the victims of scam artists and other unscrupulous service providers. Contractors have sought to unilaterally establish the value of the claim and demand payment for inflated invoices. Many contractors also work with attorneys that then sue the insurance company over the claim.

State legislatures have sought to protect insurance consumers from AOB abuse by imposing common sense limitations, and 2019 finally saw some progress. For example, for the past several years, the Florida legislature has sought to put some parameters around the use of assignment of benefits to curtail the explosion of lawsuits filed by contractors and attorneys allegedly on behalf of consumers who knew nothing about the lawsuits. The only beneficiary of such fraud were the unscrupulous lawyers and contractors. In 2019, AOB reform legislation finally passed the Florida legislature, and was signed into law by the governor. Among other things, the new law gives policyholders the right to rescind the contract, and mandates that the assignment include an itemized description of the work to be done. Similarly, governors in North Dakota, Kansas, and Iowa all signed into law NAMIC-backed legislation to protect consumers from abusive assignment of benefit practices.

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Asset publisher, what is an assignment of benefits.

An assignment of benefits (AOB) is a contract between you and a third party – typically a contractor, roofer or water mitigation company – giving them the right to deal directly with Citizens and receive payment for your claim. You sign an AOB, you give up your right to manage your claim and ensure it is resolved to your complete satisfaction. 

In 2019, the Florida Legislature passed common sense reforms aimed at bringing balance to the AOB process. As a result of these reforms, AOB vendors must adhere to certain legal requirements to receive payment for your claim. In addition, policyholders have been given the right to cancel an assignment agreement under certain circumstances and take back control of their claim. 

How Do You Benefit From AOB Reform?

Aob reform protects your rights.

AOB Reform puts control back in your hands by giving you the right to cancel an assignment agreement under certain circumstances. This gives policyholders who felt pressured to sign an AOB, didn't understand what they were signing, or are unhappy with the work performed to take back control of their claim and ensure it is resolved timely and to their complete satisfaction. 

AOB Reform Saves You Money

Following the enactment of 2019 reforms, Citizens filed a revised rate filing that reflects projected rate savings from the AOB reforms. Citizens has projected a reduced statewide rate need for homeowners multiperil policies from 25.2 to 7.2 percent, with roughly 67,000 policyholders expected to receive rate decreases.

Watch our interactive eBrief to learn how assignment of benefits reform helps you.

You've Signed an AOB - What's Next?


Even after signing an AOB, you still must comply with all the duties owed to Citizens under your policy. These duties can be found in your policy’s Duties After a Loss section.

Under Florida law , you have the right to terminate or cancel an assignment of benefits agreement under certain circumstances which are required to be described in the assignment agreement. The assignment agreement must provide that you have the right to cancel without penalty, however, you may be obligated to pay for any contracted work performed before the agreement is cancelled. Once you have notified your assignee that you are terminating your assignment agreement, you must notify Citizens as soon as possible by submitting notice of your cancellation either online or by mail. Until you do so, Citizens must continue to deal with and pay the assignee to whom you assigned your benefits.

AOB Reforms Policyholder Letter - June 2019

Claim Process When an AOB is Used

AOB Vendors and Legal Representatives

Under Florida Law , if a Citizens policyholder signs an AOB agreement with you, you must submit a copy of the signed assignment agreement to Citizens online or by mail/delivery within three business days of the contract being executed or work beginning, whichever is earlier. Citizens will review your agreement to ensure it meets all statutory requirements and inform you if the agreement cannot be accepted as written. Until an AOB complying with applicable legal requirements has been received, Citizens must deal directly with the policyholder for all claims-related correspondence.

Citizens has 90 days from the receipt of a claim to make a claims determination, unless factors beyond our control reasonably prevent us from doing so. Suit cannot be filed against Citizens unless a written Notice of Intent to Initiate Litigation which complies with Florida law is provided to us. The Notice of Intent must be provided to Citizens at least 10 days before suit is filed but cannot be provided before we have made a claim determination or the 90 day period to do so has elapsed. Citizens has 10 days to respond to the Notice of Intent by either making a presuit settlement offer or requiring participation in appraisal as provided for under the insurance policy.

AOB Reforms Vendor Letter - July 2019

For detailed information about Florida's new AOB requirements, review Ch. 2019-57, Laws of Fla. (2019)

Submit AOB Documents

Policyholders, vendors and legal representatives can submit AOB-related documents electronically or by mail.

You must have a valid claim and policy number to submit assignment of benefits documents online.

Mail or Delivery

You can mail or deliver all required AOB documentation to Citizens at:

Citizens Property Insurance Corporation 301 West Bay Street, Suite 1300 Jacksonville, FL 32202 

AOB - Prevent Fraud

Know the signs of aob abuse.

Although most AOB is not fraud, AOB fraud and abuse are on the rise. Be on the lookout for following AOB Fraud red flags:

Help Stop AOB Abuse

Calling Citizens as soon as you become aware of or suspect any damage puts you in control of your claim and ensures repairs are completed to your satisfaction and Citizens’ high-quality standards:

What is an assignment of benefits agreement?

How does assignment of benefits work.

Assignment of benefits for homeowners

Assignment of benefits in healthcare, pros and cons of an aob agreement, canceling an aob agreement, the bottom line, an assignment of benefits contract lets someone else bill an insurance provider on your behalf.

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When you obtain insurance, whether for your health or your home , you're probably thinking about what the coverage will pay for, not how the payments will be made. 

Policyholders who sign an assignment of benefits agreement allow their insurance benefits to go directly to the service provider. Usually, this eliminates the headache of dealing with an insurance company's claims department. But it can also open you up to potential fraud.

An assignment of benefits (AOB) agreement is a contract that a policyholder signs to allow a third party to receive their insurance benefits.

"An assignment of benefits is designating who's going to receive the payment that the insurance company issues after a claim is received," explains Lauren Winans, chief executive officer and principal HR consultant at Next Level Benefits , an HR consulting firm that helps companies navigate employee benefits including insurance.

Without an AOB agreement in place, the policyholder would pay the other party out of their own pocket, then file a claim with their insurance company to get reimbursed.

For example, if you go to a doctor, you might sign an AOB agreement so that their billing department can deal with the insurance provider directly. Ideally, that would prevent you from having to get involved with the claims department at your insurance company. 

That said, there can still be circumstances where you have to get involved, even with an assignment of benefits agreement — for example, if you owe the difference between what your doctor charges and what the insurer pays.

These AOB agreements can vary depending on factors like the type of insurance policy, the provider, and state laws. In some cases, an AOB happens automatically. If you go to an in-network doctor, they're under contract with that insurance company. That contract states that the provider will handle billing and receive payment directly from the insurance company, Winans says. But with out-of-network providers you might sign an AOB agreement as part of standard check-in paperwork. That way the doctor can still receive at least some payment directly from the insurance company, and then bill you for the remainder. 

Similarly, with property insurance, a contractor or other type of service professional might ask you to sign an assignment of benefits for repair work. When that happens, the service provider would be able to file a claim on your behalf and receive reimbursement from the insurance company. 

The exact terms of an AOB agreement vary based on who's asking you to sign. Some agreements might be specific to one type of repair or project, whereas others might cover several. Some agreements go beyond an assignment of benefits and give the contractor full power of attorney rights, says Angel Conlin, chief insurance officer at Kin Insurance , a home insurance provider. Insurers can also differ in how they handle these agreements. A 2019 Florida law, for example, enables insurers to offer policies that restrict the right to use an assignment of benefits agreement, as long as the policy is offered at a discount. Conlin says Kin Insurance policyholders who waive their assignment of benefits right save an average of 5% on their policy. "The good news is they get a discount for giving up a right they probably never knew they had and never really want to use," she says.

For homeowners' insurance, an AOB agreement could be used if a contractor wants to get paid directly from the insurer. In many cases, says Conlin, that happens in a high-pressure situation. 

"You discover that there's a water leak and your house is flooding. So you quickly call the fastest place you can find," she says. "Then you're standing there with some papers on a clipboard in front of you to sign so they can start sucking the water out. Oftentimes, there's an assignment of benefits included in there."

In healthcare, an AOB agreement might be used to pay a medical professional that you don't necessarily choose, like an anesthesiologist, Winans says. You may have chosen a surgeon, but the anesthesiologist that gets assigned to you the day of the surgery might bill separately. So, you might be asked to sign an assignment of benefits when you check in. "You're essentially signing that anyone who sees me today can accept payment directly from the insurance company, it doesn't have to go through me as the patient," Winans adds.

An AOB agreement can make the claims and payment processes easier at times, but there are also some downsides to note. Much depends on the situation, so consider factors like what your insurer allows and what the service provider is specifically asking for. 

Here are some general pros and cons to consider:

Even though an AOB agreement can streamline the claims and payment processes, there can be downsides that come with transferring benefits to another party, particularly with property insurance. "Because they now stand in the shoes of the insured, they can do everything without asking the insured's permission," Conlin says. For example, a vendor could inflate a claim and commit fraud, she says, causing the claim to get denied and leaving the homeowner unable to get their home repaired. Or, the vendor could sue the insurance company on your behalf for payment on an inflated claim. "So then the insured doesn't have any idea that all of a sudden they have a lawsuit on their record," Conlin adds.

In Florida, these types of lawsuits became an issue due to a state law that helped contractors get attorney's fees paid for by the insurance company. That incentivized some attorneys to work with contractors to obtain AOB agreements and then sue insurers. "That way, the vendor gets to inflate the amount they're demanding, and the attorney gets attorney's fees. So it was this sort of symbiotic partnership between them," Conlin says. A 2022 Florida law removed this allowance, but contractors are trying to fight it in court .

Depending on the circumstances, including laws where you live, policyholders might have some flexibility to cancel an assignment of benefits agreement. For example, in Florida, homeowners have at least 14 days to back out of an agreement without any penalties. 

Once the grace period passes, there isn't much recourse. For example, a vendor might file a lawsuit long after the period passes where you can rescind the agreement. In that case, the assignment of benefits agreement stands.

An AOB agreement can make it easy for you to receive insurance benefits without dealing with the claims department at your insurance company. But not all agreements look the same, so read carefully before signing. In some cases, like healthcare, the agreement could work well for all parties. But in other cases, such as home repairs, it might be benefitting the vendor more than the policyholder. If you're unsure about what an assignment of benefits agreement means for you, consider talking to a professional. Your insurer should be able to explain what's allowed in your situation, and external experts, like an attorney, might help you make a more informed decision.

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Assignment of Benefits (AOB) 101 – What You Need to Know To Stay Safe

Assignment of benefits is a legal contract between you and a third party, such as a roofer, contractor, or other vendors. The AOB allows you to transfer specific rights that your insurance policy grants you to a third party. These rights can include filing a claim , financial payments to a contractor, and even allowing the third party to file a lawsuit on your behalf ! 

While there are reputable entities that use this form, AOBs have often been abused and broadly written. In some cases, they can give away all of your rights under your insurance policy to a third party. Unethical contractors commonly use AOBs to inflate damages and the cost of a claim, which results in legal battles and increased insurance premiums.

How To Avoid an Assignment of Benefits

Assignment of benefits (AOB) is commonly used when a homeowner experiences roof damage, a leaky pipe, etc., and they contact a contractor for assistance. The contractor may take this time to present the homeowner with an AOB. Most Assignment of Benefits agreements presented to the homeowner allows the contractor to stand in the homeowner’s shoes for insurance payment purposes. 

What To Look Out For? 

If the contractor hands you a form that reads, “I transfer and assign all insurance rights, benefits, and causes of action under my property insurance policy to the contractor.” They are asking you to sign away your rights to the claim under your homeowner’s insurance policy, and you don’t want that!  If you experience a loss, be sure to contact your insurance company first before doing anything else . This will help protect yourself and avoid dealing with an AOB issue altogether.

Here are some red flags to look out for:

Protect Yourself

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. Our agents are available to answer any questions you may have, don’t hesitate to call us at 800-627-0000.

Stay safe! It’s hurricane season, and we’ve got  tips  to keep you and your loved ones safe, as well as a  free hurricane survival guide . The  National Oceanic and Atmospheric Administration Hurricane Center  is another excellent resource that tracks hurricanes and tropical storms.

What is an assignment of benefits?

Three people in an office talking over a pile of papers.

The last time you sought medical care, you likely made an appointment with your provider, got the treatment you needed, paid your copay or deductible, and that was it. No paperwork, no waiting to be reimbursed; your doctor received payment from your insurance company and you both went on with your lives.

This is how most people receive health care in the U.S. This system, known as assignment of benefits or AOB, is now being used with other types of insurance, including auto and homeowners coverage . 

What is an assignment of benefits?  

An AOB is a legal agreement that allows your insurance company to directly pay a third party for services performed on your behalf. In the case of health care, it could be your doctor or another medical professional providing care. With a homeowners, renters, or auto insurance claim, the third party could be a contractor, auto repair shop, or other facility.

Assignment of benefits is legal, thanks to a concept known as freedom of contract, which says two parties may make a private agreement, including the forfeiture of certain rights, and the government may not interfere. There are exceptions, making freedom of contract something less than an absolute right. For example, the contract may not violate the law or contain unfair terms.

Not all doctors or contractors utilize AOBs. Therefore, it’s a good idea to make sure the doctor or service provider and you are on the same page when it comes to AOBs before treatment or work begins.

How an AOB works

The function of an AOB agreement varies depending on the type of insurance policy involved, the healthcare provider, contractor, or service provider, and increasingly, state law. Although an AOB is normal in health insurance, other applications of assignment of benefits have now included the auto and homeowners insurance industry.

Because AOBs are common in health care, you probably don’t think twice about signing a piece of paper that says “assignment of benefits” across the top. But once you sign it, you’re likely turning over your right to deal with your insurance company regarding service from that provider. Why would you do this? 

According to Dr. David Berg of Redirect Health , the reason is simple: “Without an AOB in place, the patient themselves would be responsible for paying the cost of their service and would then file a claim with their insurance company for reimbursement.”

With homeowners or auto insurance, the same rules apply. Once you sign the AOB, you are effectively out of the picture. The contractor who reroofs your house or the mechanic who rebuilds your engine works with your insurance company by filing a claim on your behalf and receiving their money without your help or involvement.

“Each state has its own rules, regulations, and permissions regarding AOBs,” says Gregg Barrett, founder and CEO of WaterStreet , a cloud-based P&C insurance administration platform. “Some states require a strict written breakdown of work to be done, while others allow assignment of only parts of claims.” 

Within the guidelines of the specific insurance rules for AOBs in your state, the general steps include:

After work is complete and signed off, the insurer will issue the check and the claim will be considered settled.

Example of an assignment of benefits  

If you’re dealing with insurance, how would an AOB factor in? Let’s take an example. “Say you have a water leak in the house,” says Angel Conlin, chief insurance officer at Kin Insurance . “You call a home restoration company to stop the water flow, clean up the mess, and restore your home to its former glory. The restoration company may ask for an assignment of benefits so it can deal directly with the insurance company without your input.”

In this case, by eliminating the homeowner, whose interests are already represented by an experienced insurance adjustor, the AOB reduces redundancy, saves time and money, and allows the restoration process to proceed with much greater efficiency.

When would you need to use an assignment of benefits?  

An AOB can simplify complicated and costly insurance transactions and allow you to turn these transactions over to trusted experts, thereby avoiding time-consuming negotiations. 

An AOB also frees you from paying the entire bill upfront and seeking reimbursement from your insurance company after work has been completed or services rendered. Since you are not required to sign an assignment of benefits, failure to sign will result in you paying the entire medical bill and filing for reimbursement. The three most common uses of AOBs are with health insurance, car insurance, and homeowners insurance.

Assignment of benefits for health insurance

As discussed, AOBs in health insurance are commonplace. If you have health insurance, you’ve probably signed AOBs for years. Each provider (doctor) or practice requires a separate AOB. From your point of view, the big advantages of an AOB are that you receive medical care, your doctor and insurance company work out the details and, in the event of a disagreement, those two entities deal with each other. 

Assignment of benefits for car owners

If your car is damaged in an accident and needs extensive repair, the benefits of an AOB can quickly add up. Not only will you have your automobile repaired with minimal upfront costs to you, inconvenience will be almost nonexistent. You drop your car off (or have it towed), wait to be called, told the repair is finished, and pick it up. Similar to a health care AOB, disagreements are worked out between the provider and insurer. You are usually not involved.

Assignment of benefits for homeowners  

When your home or belongings are damaged or destroyed, your primary concern is to “return to normal.” You want to do this with the least amount of hassle. An AOB allows you to transfer your rights to a third party, usually a contractor, freeing you to deal with the crisis at hand.

When you sign an AOB, your contractor can begin immediately working on damage repair, shoring up against additional deterioration, and coordinating with various subcontractors without waiting for clearance or communication with you.

The fraud factor

No legal agreement, including an AOB, is free from the possibility of abuse or fraud. Built-in safeguards are essential to ensure the benefits you assign to a third party are as protected as possible.

In terms of what can and does go wrong, the answer is: plenty. According to the National Association of Mutual Insurance Companies (NAMICs), examples of AOB fraud include inflated invoices or charges for work that hasn’t been done. Another common tactic is to sue the insurance company, without the policyholder’s knowledge or consent, something that can ultimately result in the policyholder being stuck with the bill and higher insurance premiums due to losses experienced by the insurer.

State legislatures have tried to protect consumers from AOB fraud and some progress has been made. Florida, for example, passed legislation in 2019 that gives consumers the right to rescind a fraudulent contract and requires that AOB contracts include an itemized description of the work to be done. Other states, including North Dakota, Kansas, and Iowa have all signed NAMIC-backed legislation into law to protect consumers from AOB fraud.

The National Association of Insurance Commissioners (NAIC), offers advice for consumers to help avoid AOB fraud and abuse:

Pros and cons of an assignment of benefits  

The advantages and disadvantages of an AOB agreement depend largely on the amount and type of protection your state’s insurance laws provide.  

Pros of assignment of benefits

With proper safeguards in place to reduce opportunities for fraud, AOBs have the ability to streamline and simplify the insurance claims process.

Cons of assignment of benefits

As with most contracts, AOBs are a double-edged sword. Be aware of potential traps and ask questions if you are unsure.

The takeaway  

An AOB, as the health insurance example shows, can simplify complicated and costly insurance transactions and help consumers avoid time-consuming negotiations. And it can save upfront costs while letting experts work out the details.

It can also introduce a nightmare scenario laced with fraud requiring years of costly litigation. Universal state-level legislation with safeguards is required to avoid the latter. Until that is in place, your best bet is to work closely with your insurer when signing an AOB. Look for suspicious or inflated charges when negotiating with contractors, providers, and other servicers.

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EDITORIAL DISCLOSURE : The advice, opinions, or rankings contained in this article are solely those of the Fortune Recommends ™ editorial team. This content has not been reviewed or endorsed by any of our affiliate partners or other third parties.

Assignment of Benefits for Contractors: Pros & Cons of Accepting an AOB

property assignment of benefits

22 articles

Insurance , Restoration , Slow Payment

An illustrated assignment of benefits form in front of a damaged house

When a property owner files an insurance claim to cover a restoration or roofing project, the owner typically deals directly with the insurance company. They may not have the funds available to pay the contractor out of pocket, so they’re counting on that insurance check to cover the construction costs.

But insurance companies often drag their feet, and payments can take even longer than normal. Contractors often wish they could simply deal with the insurance company directly through an assignment of benefits. In some circumstances, an AOB can be an effective tool that helps contractors collect payment faster — but is it worth it?

In this article, we’ll explain what an assignment of benefits is, and how the process works. More importantly, we’ll look at the pros and cons for restoration and roofing contractors to help you decide if an AOB is worth it . 

What is an assignment of benefits? 

An assignment of benefits , or AOB, is an agreement to transfer insurance claim rights to a third party. It gives the assignee authority to file and negotiate a claim directly with the insurance company, without involvement from the property owner. 

An AOB also allows the insurer to pay the contractor directly instead of funneling funds through the customer. AOBs take the homeowner out of the claims equation.

Here’s an example: A property owner’s roof is damaged in a hurricane. The owner contacts a restoration company to repair the damage, and signs an AOB to transfer their insurance rights to the contractor. The contractor, now the assignee, negotiates the claim directly with the insurance company. The insurer will pay the claim by issuing a check for the repairs directly to the restoration contractor. 

Setting up an AOB

A property owner and contractor can set up an assignment of benefits in two steps: 

Keep in mind that many states have their own laws about what the agreement can or should include .

For example, Florida’s assignment of benefits law contains relatively strict requirements when it comes to an assignment of benefits: 

Before signing an AOB agreement, make sure you understand the property owner’s insurance policy, and whether the project is likely to be covered.

Learn more: Navigating an insurance claim on a restoration project

Pros & cons for contractors

It’s smart to do a cost-benefit analysis on the practice of accepting AOBs. Listing pros and cons can help you make a logical assessment before deciding either way. 

Pro: Hiring a public adjuster

An insurance carrier’s claims adjuster will inspect property damage and arrive at a dollar figure calculated to cover the cost of repairs. Often, you might feel this adjuster may have overlooked some details that should factor into the estimate. 

If you encounter pushback from the insurer under these circumstances, a licensed, public adjuster may be warranted. These appraisers work for the homeowner, whose best interests you now represent as a result of the AOB. A public adjuster could help win the battle to complete the repairs properly. 

Pro: More control over payment

You may sink a considerable amount of time into preparing an estimate for a customer. You may even get green-lighted to order materials and get started. Once the ball starts rolling, you wouldn’t want a customer to back out on the deal. 

Klark Brown , Co-founder of The Alliance of Independent Restorers, concedes this might be one of the very situations in which an AOB construction agreement might help a contractor. “An AOB helps make sure the homeowner doesn’t take the insurance money and run,” says Brown.  

Klark Brown

Pro: Build a better relationship with the homeowner

A homeowner suffers a substantial loss and it’s easy to understand why push and pull with an insurance company might be the last thing they want to undertake. They may desire to have another party act on their behalf. 

As an AOB recipient, the claims ball is now in your court. By taking some of the weight off a customer’s shoulders during a difficult period, it could help build good faith and further the relationship you strive to build with that client. 

Learn more : 8 Ways for Contractors to Build Trust With a Homeowner

Con: It confuses payment responsibilities

Even if you accept an AOB, the property owner still generally bears responsibility for making payment. If the insurance company is dragging their feet, a restoration contractor can still likely file a mechanics lien on the property .

A homeowner may think that by signing away their right to an insurance claim, they are also signing away their responsibility to pay for the restoration work. This typically isn’t true, and this expectation could set you up for a more contentious dispute down the line if there is a problem with the insurance claim. 

Con: Tighter margins

Insurance companies will want repairs made at the lowest cost possible. Just like you, carriers run a business and need to cut costs while boosting revenue. 

While some restoration contractors work directly with insurers and could get a steady stream of work from them, Brown emphasizes that you may be sacrificing your own margins. “Expect to accept work for less money than you’d charge independently,” he adds. 

The takeaway here suggests that any contractor accepting an AOB could subject themselves to the same bare-boned profit margins. 

Con: More administrative work

Among others, creating additional administrative busywork is another reason Brown recommends that you steer clear of accepting AOBs. You’re committing additional resources while agreeing to work for less money. 

“Administrative costs are a burden,” Brown states. Insurers may reduce and/or delay payments to help their own bottom lines. “Insurers will play the float with reserves and claims funds,” he added. So, AOBs can be detrimental to your business if you’re spending more while chasing payments. 

Con: Increase in average collection period

Every contractor should use some financial metrics to help gauge the health of the business . The average collection period for receivables measures the average time it takes you to get paid on your open accounts. 

Insurance companies aren’t known for paying claims quickly. If you do restoration work without accepting an AOB, you can often take action with the homeowner to get paid faster. When you’re depending on an insurance company to make your payment, rather than the owner, collection times will likely increase.

The literal and figurative bottom line is: If accepting assignment of benefits agreements increases the time it takes to get paid and costs you more in operational expense, these are both situations you want to avoid. 

Learn more: How to calculate your collection effectiveness 

AOBs and mechanics liens

A mechanics lien is hands down a contractor’s most effective tool to ensure they get paid for their work. Many types of restoration services are protected under lien laws in most states. But what happens to lien rights when a contractor accepts an assignment of benefits? 

An AOB generally won’t affect a contractor’s ability to file a mechanics lien on the property if they don’t receive payment. The homeowner is typically still responsible to pay for the improvements. This is especially true if the contract involves work that wasn’t covered by the insurance policy. 

However, make sure you know the laws in the state where your project is located. For example, Florida’s assignment of benefits law, perhaps the most restrictive in the country, appears to prohibit an AOB assignee from filing a lien. 

Florida AOB agreements are required to include language that waives the contractor’s rights to collect payment from the owner. The required statement takes it even further, stating that neither the contractor or any of their subs can file a mechanics lien on the owner’s property. 

On his website , Florida’s CFO says: “The third-party assignee and its subcontractors may not collect, or attempt to collect money from you, maintain any action of law against you, file a lien against your property or report you to a credit reporting agency.”

That sounds like a contractor assignee can’t file a lien if they aren’t paid . But, according to construction lawyer Alex Benarroche , it’s not so cut-and-dry.

Alex Benarroche

“Florida’s AOB law has yet to be tested in court, and it’s possible that the no-lien provision would be invalid,” says Benarroche. “This is because Florida also prohibits no-lien clauses in a contract. It is not legal for a contractor to waive their right to file a lien via an agreement prior to performance.” 

Learn more about no-lien clauses and their enforceability state-by-state

Remember that every state treats AOBs differently, and conflicting laws can create additional risk. It’s important to consult with a construction lawyer in the project’s state before accepting an assignment of benefits. 

Best practices for contractors 

At the end of the day, there are advantages and disadvantages to accepting an assignment of benefits. While it’s possible in some circumstances that an AOB could help a contractor get paid faster, there are lots of other payment tools that are more effective and require less administrative costs. An AOB should never be the first option on the table . 

If you do decide to become an assignee to the property owner’s claim benefits, make sure you do your homework beforehand and adopt some best practices to effectively manage the assignment of benefits process. You’ll need to keep on top of the administrative details involved in drafting AOBs and schedule work in a timely manner to stay in compliance with the conditions of the agreement. 

Make sure you understand all the nuances of how insurance works when there’s a claim . You need to understand the owner’s policy and what it covers. Home insurance policy forms are basically standardized for easy comparisons in each state, so what you see with one company is what you get with all carriers. 

Since you’re now the point of contact for the insurance company, expect more phone calls and emails from both clients and the insurer . You’ll need to have a strategy to efficiently handle ramped-up communications since the frequency will increase. Keep homeowners and claims reps in the loop so you can build customer relationships and hopefully get paid faster by the insurer for your work.

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Julie Gelderblom

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Assignment of benefits

property assignment of benefits

What is an assignment of benefits?

An assignment of benefits (or AOB for short) is an agreement that gives your claims benefits, and in some instances complete control of your claim, to someone else. It’s usually used so that a contractor can “stand in your shoes” and file a claim, make decisions about repairs, and collect insurance payments from your insurance company directly for covered repairs. In some states, the contractor will even file a lawsuit against your insurer as your assignee.

Why do homeowners agree to an assignment of benefits?

Homeowners may sign an assignment of benefits form because they think it’s more convenient and efficient than dealing with the claims process firsthand.

Once a contractor has been assigned your benefits, they tell the insurance company what work they believe is required and negotiate the claim. For example, say you have a water leak in the house. You call a home restoration company to stop the water flow, clean up the mess, and restore your home to its former glory. The restoration company may ask for an assignment of benefits so it can deal directly with the insurance company without your input. That may sound like a relief at first glance – someone else can deal with all that!

But signing away your rights in the claims process may not be worth the risk.

Assignment of benefits in Florida: a case of rampant fraud

Because the assignment of benefits takes control out of the homeowner’s hands, insurance fraud is a major concern. Some contractors may take advantage of the situation and inflate repair needs and costs or bill for work that was never completed. They may also hire attorneys to sue the insurance company if it does not pay the full amount of their estimate or denies claims.

These lawsuits became a huge problem in Florida – by 2018, there were 135,000 AOB lawsuits , a 70 percent increase in 15 years. On the whole, the FBI estimates fraudulent claims account for nearly $6 billion of the $80 billion appropriated for post-hurricane reconstruction.

Florida eventually passed a bill in 2019 to curb the abuse of assignment of benefits.

Ultimately, AOB fraud hurts homeowners the most. It increases homeowners insurance rates across the board, and you may be stuck with incomplete work and no recourse.

That’s why we offer a Responsible Repair discount for homeowners who retain their rights during a claim. It’s about a 5 percent discount on average to reward you for proactively protecting yourself and preventing fraud.

What responsibilities does the AOB contractor have?

Once you sign an AOB, a contractor has full power to make all decisions about the claim without consulting you. The assignment of benefits gives contractors the ability to:

Sometimes the assignment of benefits limits the scope to the work the contractor was hired for. For example, say your home has a leaky pipe. You may hire a plumber to fix the leak, a remediation company to dry the walls and carpet, and a general contractor to replace the bathroom cabinets. Each of the three contractors may have a respective assignment of benefits for their part of the job.

How assignment of benefits impacts homeowners

Under some circumstances, an assignment of benefits agreement could work out for homeowners who don’t want to handle their insurance claim. If the contractor is reputable, performs the work, and knows what information the insurance company needs, it can be a big help.

For example:

AOB arrangements only work for covered damage in need of repair. If you must replace belongings or appliances, you’d still need to work directly with your insurer and payments would go to you.

Protecting yourself in an assignment of benefits agreement

Don’t sign an assignment of benefits agreement right off the bat. Before you hire any contractor:

You might be tempted to hire the first contractor you find, but you save yourself headaches if you do some due diligence before signing an assignment of benefits. Great contractors use this to expedite repairs and spare you some work. Take a beat to find that great contractor .

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What Is an Assignment of Benefits (AOB) and How Does it Affect You?

As a homeowner, you likely have a homeowners’ insurance policy. This policy typically covers damages to your house from weather, water damage, smoke, fire, theft, vandalism, and other unexpected events. 

When the unexpected happens and you have to make a claim on your policy, you may find the claim process complicated to navigate. This is especially true in emergency situations when you need to act quickly to protect your home or business property and belongings. 

You may encounter the term “assignment of benefits” as you contact vendors and sort through payment options. 

What does “assignment of benefits” mean for you, the vendors employed, and your coverage?

Assignment of Benefits – A Shortcut of Sorts

“Assignment of benefits” (AOB) is a legal document with which you can assign some or all of the benefits under your policy to another party. An AOB gives the other party the right to deal directly with the insurance company and the right to enforce its right to payment – even by filing a lawsuit against the insurer. 

When unexpected damage and a claim occurs, some contractors – such as restoration companies, mold testers and remediators, plumbers, movers, and roofers – will accept an assignment of benefits instead of insisting upon cash payment up front. After receiving an AOB, the contractor will bill the insurer directly for the work being done.  

What is the advantage of this? Why not do it yourself? Let’s go back to the emergency damage situation.

AOB for Emergency Repairs

When damage occurs and a claim is made, property owners have an obligation under the insurance policy to comply with “post-loss obligations.” Not complying with these obligations could give the insurer a reason to deny the claim and not pay. One of the post-loss obligations is to mitigate damages. This means that the insured has an obligation to conduct basic clean up and prevent the damage from getting worse. 

We hope this doesn’t happen, but let’s say a small house fire took down one wall of your master bedroom. Now your master bedroom is exposed to the elements. And the water that was used to put out the fire could cause mold and other damage. 

After the property damage occurs, property owners usually need a restoration company to clean up the damage and stabilize and protect the property.

If this happened to you, you could pay the restoration company out of pocket for the company’s work. Then you would take a few weeks to collect paperwork, file a claim, then wait and hope for your insurance company’s approval and reimbursement. 

Unfortunately, most people don’t have quick access to the thousands of dollars necessary to pay these bills. And if they do, they don’t want to pay without knowing that they will be reimbursed by the insurer. 

In the meantime, wind, water, and sun will very likely cause more damage to your house and possessions if you wait. Also, if you wait, you could violate the post-loss obligations under your policy and risk not receiving coverage at all.

This is where AOB comes in handy. You can find a contractor who will accept an assignment of benefits from you. That means they will do the cleanup and repair your wall right away with the understanding that they will deal with your insurance company directly at invoice time. If the insurance company doesn’t want to reimburse for the cost, the contractor will deal with the insurer, not you. 

It sounds convenient… but is there a downside?

AOB Disadvantages

Sometimes an AOB does carry certain restrictions. 

For instance, a 2019 Florida law placed a cap on how much insurance companies can pay contractors for emergency services paid through an AOB. That can make dealing with certain emergency situations tricky. Non-emergency services are not capped, but the contractor must know how to properly document its work and how and when to submit the proper documentation. 

You may also need to check that an assignment of benefits is an option in your policy at all. Sometimes, insurance policies don’t permit the AOB route. Instead, they might require you to pay for services out-of-pocket and be repaid after the fact. 

For some homeowners, this can create real financial hardship, especially for sudden and exorbitant house repairs. If a policy prohibits assignments of benefits, the policy must say so in clear, large print. Though these policies may sell for a discount of a few dollars, we would argue that this small savings is not worth the risk of losing the options the AOB can give you.

You’ll need to read your policy carefully to determine if this is the case for you. Though it may feel like a headache, it’s better to know than to find yourself stuck with a surprise expense. You may need to save more than expected for potential house damages. Or you may want to work on changing your policy – or a combination of both strategies.

Insurance companies have engaged in campaigns claiming that some contractors are using AOBs to do unnecessary work or over-charge insurers for the work they do. Insurers say these people are costing the insurance companies too much money. 

While it is never appropriate to engage in unscrupulous activity, blaming AOBs for the behavior of a few bad actors is not fair. Moreover, it deprives property owners of a valuable option when dealing with a property insurance claim, which can be difficult and stressful. 

Like a computer or a hammer, an assignment of benefits is a tool. In most people’s hands, they are used for good, while in a few they are used to commit bad deeds. The person might be bad, but the computer or the hammer is neutral. The same is true of assignments of benefits.  

Have a claim and need to hire a contractor who will work in exchange for an assignment of benefits? We recommend understanding the work that the contractor will do, how much it will cost, how much of your claim is being assigned to the contractor, and if the contractor is familiar with Florida Statute 627.7152, Florida’s assignment of benefits law.

If you need assistance understanding your coverage, AOBs, or assistance dealing with a new, delayed, under-paid, or denied insurance claim, we’re here to help .

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    Assignment of benefits is a legal contract between you and a third party, such as a roofer, contractor, or other vendors. The AOB allows you

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    What is an assignment of benefits? ... An AOB is a legal agreement that allows your insurance company to directly pay a third party for services

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    An assignment of benefits, or AOB, is an agreement to transfer insurance claim rights to a third party. It gives the assignee authority to file

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    As a homeowner, you likely have a homeowners' insurance policy. This policy typically covers damages to your house from weather