The Assignment of Benefits (AOB): To Sign or Not to Sign

Roof replacement_sheathingWhat is the contractor asking me to sign?

Reputable contractors and roofing companies will ask you to sign an Assignments of Benefits contract (AOB). The AOB transfers the insurance claims rights or benefits of your insurance policy to the service provider. Signing the AOB allows the service provider to be in direct contact with the insurance company about the claim filed. You may be asking, “Why do they need a contract?” Frankly, because it can get petty. The insurance company looks at the project as a money game where the goal is to take away line items owed for work completed. They want to pay the least amount of money possible, so they will nitpick each line item. Without an AOB in place, you, the homeowner, would be forced to be the go-between for a contractor waiting to be paid for work completed and an insurance company not wanting to pay.

How they want you to view an AOB

Many news stations and insurance specialists have tried to demonize the AOB by explaining how it can be used to scam money. The belief is that by using the AOB the service provider can increase money earned from the claim, which will increase premiums for homeowners. Rather than talking about how to avoid common scams, the AOB is shunned. This is very misleading. The reality of the situation is that Florida has recently experienced a spike in hurricanes and tropical storms, which has caused massive widespread damage and been quite costly. If a contractor cannot be paid for the work they have done, they will not take future jobs. Florida needs quality contractors to rebuild now more than ever. Unfortunately, there are those who would seek to abuse an AOB contract. However, a reputable contractor would never take advantage of the AOB. The key is for homeowners to closely read every single thing the contractor puts in front of them and educate themselves on ways to avoid scams.

How an AOB should be viewed

AOBs have been around for years: Lawyers, doctors, and contractors all have their own versions of contracts. The AOB used by a reputable contractor/roofing company is not a weapon to bring down the homeowner or insurer, it’s a lifeline for the contractor to ensure payment for work completed. Here in Florida we have the best, most enforceable building codes a state could ask for, meaning additional steps must be taken to ensure payment of work performed and all repairs required by the Florida Building Code are made. The AOB also serves to take the pressure off of homeowners. Why should the homeowner be responsible for communication between contractor and insurance company for work the service provider completed? Before signing an AOB, or any contract, do your research. Fully read what you are signing and check the credibility of the company you are signing with.

Knowledge of construction when writing claims

Xactimate is the most widely used estimating software program when it comes to insurance claims. However, despite using the same software, the estimate you are handed after filing a claim can be night and day when cross-referenced with thousands of other estimates. A public adjuster with the proper adjusting license can write a full report on your property loss without any construction knowledge. Often with catastrophic storms, a license is not required, and adjusters are granted temporary certificates without ever having written a report before. How can someone without any construction experience be expected to write a thorough and accurate estimate if they are unaware of what goes into the job? Furthermore, they expect a contractor or roofing company, who runs jobs, orders materials, and pays employees, to accept this report at face value and attempt to perform the work needed at their estimated cost. If there is no AOB in place, there could be a gap between the estimate given by the independent adjuster or staff adjuster for the insurance company and the estimate given by the contractor, and the homeowner could be stuck relaying messages back and forth for final invoice with supplements. Homeowners stuck in the middle will often feel pressure from insurers. What’s worse, poorly written estimates can attract unethical roofing companies, who will accept this estimate and leave your roof in worse condition than before the storm. It is important to work with a reputable company of highly skilled construction craftsmen that will repair or rebuild your home following all laws and building codes, and who knows how to operate using an AOB.

Bottom Line

Get to know who you are working with. Read every piece of paper. Question every line item. If a contractor cannot back it up, an insurer will not pay. If you want quality work, you will want to work with a contractor who knows how this complicated system functions. If they are not using the AOB, you probably do not have an experienced contractor. When you refuse to sign an AOB, you are placing full trust in your insurance company to pay the full price for every bit of work done. Does that sound like how insurance companies like to work? At A.J. Wells Roofing & Construction, we have been doing this work for over 15 years and have a team of qualified estimators that have extensive construction experience and work in connection with a team of lawyers to protect both our interests as a company and the homeowners’ interests as our client. If you are still not sold on the benefits of an AOB, give us a call at 904.553.0069. A.J. Wells Roofing & Construction serves all counties across Northeast Florida.

— Dylan Miller, Lead Estimator, Xactimate Specialist for A.J. Wells Roofing & Construction

5651 Colcord Avenue
Jacksonville, FL 32211
License #CCC1328871 & #CGC1511202

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