Assignment of benefits: Easier not always better for storm victims
TALLAHASSEE, Fla. – Oct. 12, 2018 – Floridians facing a partial or total loss from Hurricane Michael are now turning to property insurers for relief, but in some cases, private vendors are offering to do that for them. The only thing the homeowner must do is sign an assignment of benefits (AOB) that empowers the vendor to make all repairs and handle all insurance claims.
“So many Floridians are suffering right now,” says Margy Grant, COO and general counsel of Florida Realtors. “If you’ve lost almost everything or your bedroom has a tree in it or you need a new roof, it’s easy to say ‘yes’ when a stranger promises to fix everything and take the burden off your shoulders – all you have to do is ‘sign this piece of paper.’ But this is a time to make wise decisions – not necessarily emotional ones.”
“AOB isn’t necessarily a bad thing,” adds Juana Watkins, Florida Realtors associate general counsel. “A legitimate contractor can make the recovery process easier. However, some AOB vendors abuse the system, which raises insurance costs for everyone. Also, the AOB paper you sign is actually a legal contract, and you should never sign a contract without making sure you understand your rights and obligations.”
According to Grant, scammers also come out following a disaster such as Hurricane Michael.
“Fraud is rampant during disasters,” Grant says. “It’s essential to evaluate a vendor you’re working with to complete repairs.”
As a legally binding contract, an AOB has no “right of rescission” or “cooling off period,” according to Florida Chief Financial Officer Jimmy Patronis. If something goes wrong after the contract is signed, the AOB vendor has no legal obligation to release a dissatisfied homeowner from the contract. In this case, the homeowner’s only recourse would be a court of law.
Checklist for reporting a post-disaster claim
- Take photos of the damage.
- Make emergency or temporary repairs – but don’t make permanent repairs before contacting your insurance company since they have a right to inspect damage prior to repair.
- Make an inventory of damaged items.
- Save receipts for any repairs.
- Don’t discard damaged items without insurance company pre-approval.
- Make a list of questions you would like to ask the insurance adjuster.
- Request a copy of the fire or police report, if applicable.
- Thoroughly review and understand any contracts you sign with repair companies, including an AOB. If you do not agree with a provision, you may be able to negotiate the terms of the contract.
- Understand that you don’t need to sign an AOB in order to get your insurance claim processed or your residence repaired.
“If you decide to limit your stress by signing an AOB contract, think of that ‘limited stress’ as something that comes later – after you’ve signed the contract,” says Watkins. “First make sure that you agree with the AOB contract’s terms and have faith that the contractor will do a good job.”
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