The assignment of benefits (AOB) option allows contractors to file your claims directly with your insurance company. Stressed property owners often welcome the added simplicity. Unfortunately, our Broward County property damage attorneys have seen too many cases when building contractors make fraudulent use of this option — at significant cost to property owners.

How AOB Fraud Works

The stress of dealing with flood or other major damage makes it tempting to take advantage of a repair contractor's offer to handle everything from the repair to the insurance claim. Homeowners see this as an opportunity to take care of the repairs without laying out upfront out-of-pocket payments, while avoiding the hassles of an insurance claim.

While this deal may work perfectly for some property owners, The Tampa Tribune reports that numerous Florida contractors are using the AOB to pad their profits. They file inflated property damage claims, often settling claims priced at nearly triple the value they would bill if the property owner retained control of the claim.

Payments of this type can have a profound effect on insurance company budgeting practices. In fact, the state-run Citizens Property Insurance Corp. reported that excessive water damage claims caused them to put aside only 18 cents of every collected premium dollar to prepare for future hurricane damage claims. After a nine-year lull, many Floridians believe the time is ripe for a more active 2015 hurricane season.

The Risks of Losing Control of Property Damage Claims

Property owners may hand off control of their claims to third parties, but they remain responsible for those claims and could find themselves in trouble with the insurer if the contractor abuses the AOB. 

This abuse by the contractor could even taint the rest of your claim with fraud to the point where the insurer won’t pay any other part of your claim. In addition to facing possible future challenges for hurricane or other catastrophic event claims, they can experience any of the following issues:

  • Premium rates increasing by about 17 percent every year in some parts of the state
  • Questionable terms ranging from signing away the right to privacy to agreeing to hefty late charges for unpaid balances
  • Potential lawsuits from insurance companies attempting to recover overpaid funds
  • Possible additional lawsuits and property liens from contractors seeking payment of unpaid balances

Legal Support is Vital at the First Sign of Damage

The Florida legislature is starting to review the issues associated with AOB claims to find viable solutions without completely eliminating an option that can be beneficial to all parties if used legitimately. Still, legislative solutions can take months or even years to accomplish, and in the end, they may not be effective.

When property owners face any type of challenges caused by AOB or other aspects of property damage insurance claims, they should seek advice and support from an experienced attorney as soon as possible. Call us at (954) 767-6333 or contact us online to learn how we can help.