Assignment of Benefit Fraud Affecting Florida Homeowners

If you have Orlando Homeowners Insurance and have had weather-related damage to your home in the past decade, you may have learned the hard way what “assignment of benefit fraud” means. According to the Coalition Against Insurance Fraud, assignment of benefit fraud affecting Florida homeowners has increased each year since 2005.

Assignment of benefits (AOB) refers to the practice of insured homeowners signing over their insurance claims to contractors who they’ve hired to handle the repairs. When used as intended, AOB saves homeowners time and out-of-pocket expense, because contractors deal directly with insurance companies. Unfortunately, many Florida contractors aren’t using AOB as it was intended.

What is AOB Fraud?

In Florida, there has been a disturbing spike in AOB fraud. Here’s how it happens. Contractors approach homeowners, often after a severe weather event like a flood or hailstorm, and promise to repair weather-related damage quickly and even waive the homeowner’s deductible (as a sort of “bonus” for signing on as a customer.) All the homeowner has to do is sign a legal document assigning his insurance benefits directly to the contractor. The contractor usually explains that this is necessary to reduce red tape and get repairs completed more quickly.

The problem is that many of these contractors, armed with legally binding AOBs, either fail to complete the work they were hired to do, do a shoddy job, or pad a legitimate insurance claim by charging the insurance company with phony services and materials. Should the insurance company catch on to the scheme and refuse to pay the contractor what he has billed for, the contractor can actually place a lien on the value of the insured party’s home!

What Can You do To Protect Yourself?

Do not fall for this ploy. Never agree to sign an AOB when a contractor pressures you to, be leery of contractors who knock at your door wanting to inspect your roof after a storm, and never believe a contractor promising to get you a “free roof.”

Despite the fact that the trickle-down effect of rampant AOB fraud costs everyone who has homeowner’s insurance, going without it is simply not an option. Call Newman Crane & Associates Insurance at (407) 859-3691 for a quote on comprehensive, affordable, homeowners insurance. Our knowledgeable, friendly team will look at your unique situation and recommend a policy that will provide the best coverage at a competitive price.