For those of us who are restoration contractors, we had a feeling that this day may come. If you’re not in the mold remediation and water damage repair industry, there are some changes that you need to know about the assignment of benefits - as this will change the insurance claims process that you may have been used to in the past.
Before we get into the AOB Reform Bill that was passed yesterday (04/24/2019), let’s make sure we’re all on the same page - as to what the assignment of benefits actually is. According to the Florida Division of Consumer Services, “An AOB gives the third party authority to file a claim, make repair decisions and collect insurance payments without your involvement“. So, what does this mean in the restoration industry? Well, if you have a pipe leak and proceed to hire a remediation professional by signing an AOB, that company now has the right to file a claim on your behalf and even be paid directly. Sound scary to you? It shouldn’t, but it could have been when greed is the motivational factor behind having you sign such a document.
Before we go any further, you may be wondering where I stand on the use of the assignment of benefits within our industry. Well… my company has utilized an AOB only twice in nearly a decade of operation. Does this mean I’m against it? Absolutely not! Like anything in life, I feel there is value when used properly. An example of this would be when a homeowner is not in a position to afford an emergency service. What I am against is the selection of contractors that have abused the AOB, and required homeowners to sign over their rights to work that was yet to be performed. The leverage that a contractor then possesses is unfair to the homeowner - as they lose the right to hire other contractors for upcoming services that are part of the claim.
Ok, so now that you know that myself and our company is split down the middle with the usage of the Assignment of benefits, here’s what changes you need to be aware of, according to the Restoration Association of Florida…
Changes to Florida’s Assignment of Benefits (AOB) for Property Claims:
$3,000 or 1% of coverage A: Cap on emergency repairs
Allows for 14 day rescission period of AOB.
Allows for policies to be sold that do not allow an assignment, at a lower cost.
Provides that you must turn in your AOB within 3 days with a detailed estimate of costs.
Lastly, the attorney fee structure has been amended, no longer allowing Restoration contractors the ability to recoup attorney’s fees.
Overall, I don’t think there are very many contractors, consumers or insurance professionals out there that would disagree that the AOB required some level of reform - but this extent of revision will certainly change the way in which the contractor and consumer work together. There will no longer be a simple “sign and move forward” process. More discussions will have to be had relating to proposed services, following water and mold damage. While not necessarily a bad thing, homeowners will need to understand that contractors now have their hands tied the second an estimate reaches the $3,000 mark with emergency services. Financial plans on how to handle the workload beyond this point will be a topic of interest for both the contractor and consumer
Assignment of Benefits (AOB) Sources:
Division of Consumer Services: https://www.myfloridacfo.com/Division/Consumers/AssignmentofBenefits.htm
Restoration Association of Florida: https://raflorida.org