Over the last several years, Florida’s property insurance consumers have experienced some of the largest rate hikes of any group in the country, and it’s not because of extreme hurricanes or floods. Indeed, from 2006 to 2016 Mother Nature gave the Sunshine State a remarkable reprieve from weather-related catastrophes.
So what’s driving up premiums, and how do we fix it?
The problem stems from the abuse of something called assignment of benefits (or AOB), which allows an insurance policyholder to transfer the right to collect benefits to a third party, such as a home repair contractor, who then bills the insurer directly for services. The purpose of an AOB is to streamline the billing process and make it more convenient for the policyholder, but AOBs are increasingly being exploited by unscrupulous contractors.
Homeowners seeking emergency repairs are often emotionally vulnerable and want to expedite the process — and a growing number are being victimized by dishonest contractors, especially water mitigation companies. Once an AOB is signed, contractors have been caught leaving repairs unfinished, performing shoddy work, and even duping homeowners into paying for the repairs upfront, leaving the contractor to pocket the settlement from the insurance claim.
AOB abuse is