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Orlando, Fla.— Florida is king when it comes to scams in all areas.  The Assignment of Benefits is no exception. We wanted to share this important reminder with you, well before the beginning of the storm season when you are most likely to require the services of repair contractors for your home. Although this type of fraud is not new, it has been increasingly exploited by scam artists in our area. 



In case you haven’t been exposed to this hot topic before, an assignment of benefits is an agreement that you may be requested to sign when a repair contractor is working on your property. Homeowners are especially exposed to this type of “practice.” 


Such contract, gives your contractor the authority to receive your insurance policy benefits and rights without your involvement. It by default voids your ability to negotiate with your insurance adjuster. In some cases, here in our State of Florida, it has resulted in theft of your covered benefits.


In the other hand, this unlawful practice can trigger a series of events that may result in a tremendous amount of hardship for the insured (property owner) since these unscrupulous contractors have learned all the loopholes that allow them to inflate the cost of their services, and they usually claim excessive amounts to the insurance companies. When the insurance company assigns the amount of compensation based on their experience of typical cost of repairs which doesn’t match their particular excessive claim, that when the problem begins.


The contractor will hire a lawyer to file a lawsuit against the insurance company, lawsuit in which you will likely be included as one of the parties. Also, here’s a thing —You could be sued for any remaining unpaid repair costs, anda lien has may have been put on your house in an attempt to collect. It is important to understand that homeowners throughout the state can expect premium costs to increase when insurance companies are tied up with unnecessary litigation. 




According to the Department of Financial Services, there were 405 Assignment of Benefits lawsuits across all 67 Florida counties in 2006, and that number had risen to 28,200 by 2016. The frequency and severity of water claims has progressively risen since 2010. In the 2017 report, the total combined impact of changes in frequency and severity reflect an average annual increase which is nearly triples the average annual increase shown in the 2016 report.


Needless to say, the rising loss trends with respect to water claims are having an impact on the profitability and rate need of many of the state’s domestic property insurance companies. These escalating trends and the rising use of AOBs associated with a water loss are causing tangible consumer harm. Absent an intervening change in the way AOBs are being utilized today, it is anticipated that these trends will continue to deteriorate and may cause availability issues as insurance companies struggle to control rising costs, resulting in higher insurance premiums for all Florida homeowners. 


According to the Florida Office of Insurance Regulation, this issue is a primary legislative priority and the number one objective has been, and will continue to be, holding consumers harmless. The Office is supportive of legislation addressing attorneys fees and providing for additional protections for consumers. To get involved and voice your support for legislative change, you are invited to contact your legislative representative.


Some insurers have taken preventive steps to help their customers make their selection of contractors less risky and provide them with a list of authorized repair vendors.


Some things you must keep in mind at the time of making this importance selection:


Thoroughly review your insurance policy to ensure you understand the policy, including your coverage, deductibles and responsibilities after damage has occurred.

Immediately following a loss, mitigate your damages and make any temporary repairs to prevent further damage from occurring. Remember not to make permanent repairs prior to contacting your insurance company or completion of an inspection by the company adjuster. The company has a right to inspect the damage prior to repair.

Make sure you thoroughly review and understand any contracts you sign with repair companies, including an AOB. You do not need to sign an AOB in order to get your insurance claim processed or your residence repaired. If you are asked to sign an AOB, make sure you read it carefully and understand clearly what rights and benefits under your insurance policy you may be signing away. Remember, this is a legally binding contract with no right to cancel after it is executed.

Verify the license (if one is required) of any contractor or vendor that you hire to make repairs to your property. You should also verify the company or person’s general liability and workers’ compensation insurance coverage.



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