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Below is some information regarding the potential risks with assignment of benefits when handling a homeowners/property claim.

An AOB is a contract between a policyholder and a third party, such as a roofer or a contractor, giving the third party the right to deal directly with the policyholder's insurance company and receive payment for the claim.  

Some third parties are telling policyholders that work only can begin if they sign an AOB. Should a policyholder sign an AOB, they need to be aware of the following:

  • They have limited authority to deal with their insurance company directly.
  • They have little or no say over the type or extent of the work performed.
  • They have little or no say over the settlement payment.
  • The service provider could put a lien on the property for unpaid services.
  • They cannot comparison shop for the best quality and price.
  • They have limited recourse when the service provider has inflated the claim or misrepresented damage and repairs.
  • They cannot withhold payment if they are unsatisfied with the quality of work.
In many cases, third parties are filing inflated claims and lawsuits against insurance companies over claims without the policyholder's knowledge. Without legislative action, private insurance companies will have little choice but to request higher rate hikes. This situation is especially troublesome for low and moderate income policyholders, who are least able to afford it.  
 
Posted 12:34 PM  View Comments

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