Questions You Should Ask About Assignment of Benefits (AOB)

When your home is seriously damaged by a fire, storm, or another emergency, call your home insurance provider first. While they may not be the ones in charge of rebuilding your roof or removing smoke damaged drywall, they are the ones who will be paying for it. Yet even after you have approval to start repairs from your insurance company, you must be wary of signing over your rights as a homeowner. Many home repair specialists, both scrupulous and not, will ask you to sign an assignment of benefits (AOB) form before they begin work. Find out why you should always avoid signing AOB forms and why you need to find a professional who will repair your home without one.

What’s the Assignment of Benefits?

Few homeowners hear anything about this AOB term until their home is damaged. In the standard arrangement, a repair professional inspects the damage, gives the homeowner a quote for repairs, and lets the homeowner contact the insurance company with the claim. Other professionals will offer to take care of all that extra work for you by having you sign an assignment of benefits instead. By signing this form, you are basically assigning the benefit of your insurance payment to the repair company. They contact the insurance company, negotiate the payment, and collect it without you having to do any work. This might sound good when you’re facing a serious home repair and already have plenty of clean up to do. Unfortunately, thousands of homeowners a year sign an AOB because it sounds reasonable enough and only then discover why it’s such a bad idea.

Why Does the AOB Matter So Much?

Your job is to fix your home, and you might think that it’s also the job of the contractor who wants you to sign the AOB. But the contractor’s main job is to maximize profit, not just get your home fixed. When you sign an AOB, the contractor can spend as much time as they like submitting inflated quotes and trying to convince the insurance company to spend more than what’s necessary. Since you don’t get to see the bids or hear from the insurance provider during the process, all you know is that repairs are taking forever to get started. The contractor will blame the insurance company’s unwillingness to pay when it’s really a dispute over what repairs are necessary and the exact fees being charged for them.

What Can Go Wrong If I Fill Out an AOB?

After signing an AOB form, you lose most of your control over the home repair process. You can’t easily switch to a different contractor who offers a better rate or has more experience. Your insurance company is limited in its ability to communicate with you about the claim, making it harder to sort out what’s going on and why there are delays. Contractors claim that they can get the work done more quickly after you sign an AOB, but in almost every case, the opposite is true. You also hand over your rights to make decisions about the repair process in most states, right down to the type of shingles used to repair your roof.

How Do I Tell the Repair Company I Won’t Sign an AOB?

Don’t be intimidated by a home repair company that overemphasizes the importance of an AOB. Homeowners have the right to stay in control of the repair process in all 50 states. Simply refuse to sign any benefits assignment related documents and request quotes and bids you can forward yourself as part of your claim. If a company refuses to work with you without an AOB in place, find a new repair company since they have likely built their business around the extra profit that can be earned by manipulating insurance-related home repairs. You’ll get the best results by remaining in contact with your insurance provider yourself during the repair process.

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