If your home gets damaged in a storm, a contractor will assist in repairing damages. Be sure to read the fine print of any document the contractor (or vendor) provides to you, even if it is just “a quote”. This is where Assignment of Benefits (AOB) comes into play. An AOB is simply a legal document entitling the vendor (general contractor, electrician, plumber, etc.) to “stand in the shoes” of the homeowner so they can bill the insurance company directly for the services they provide. It is transferring your interest in your claim settlement over to them.
Once an AOB is signed, the vendor can demand any amount they choose from your insurance company (insurer) and if the insurer does not agree with that amount, it gives them the right to take legal action without your consent.
It also gives the vendor the right to be paid without your knowledge or permission, whether you are satisfied with their work or not. You will be left with very little control of your insurance claim.
The National Insurance Crime Bureau has developed a good check list to provide guidance to consumers when considering which service vendor to hire.
NICB suggests you consider these tips before hiring a contractor:
- Get more than one estimate
- Get everything in writing. Cost, work to be done, time schedules, guarantees, payment schedules and other expectations should be detailed
- Request references and check them out
- Ask to see the contractor’s driver’s license and write down the license number and their vehicle’s license plate number
- Never sign a contract with blanks; unacceptable terms can be added later
- Never pay a contractor in full or sign a completion certificate until the work is finished and ensure reconstruction is up to current code
- Make sure you review and understand all documents sent to your insurance carrier
- Never let a contractor pressure you into hiring them
- Never let a contractor interpret the insurance policy language
- Never let a contractor discourage you from contacting your insurance company
Protect yourself, read the fine print and make sure you ask for every detail in writing. If you have any questions about AOB or your policy, please contact your insurance agent.