Insurance fraud is on the rise in Florida, especially during storm season when insurance claims are high. However, help is on the way to protect homeowners from shady contractors who have bilked insurance carriers and policyholders out of millions of dollars!
In February, the Florida legislature drafted a bill that addresses the Assignment of Benefits (AOB) clause found in homeowners insurance policies. The AOB allows an insured to assign policy rights to a third party. By doing so, the homeowner can no longer deal directly with the insurance carrier in the event of a claim. Once a homeowner gives up those rights, the policyholder allows claims to be paid directly to contractors. Claims adjusters can only legally negotiate with the contractor. Some home repair firms have been cashing claims checks without making any repairs to the insured’s home – which is then cited as AOB fraud. The bill seeks to crack down on the illegal practice.
Lawmakers propose that the AOB agreement will not hold up in court unless certain conditions apply:
- Any AOB must be presented in writing and signed by both interested parties.
- The contractor must draft a written, detailed estimate outlining proposed repairs to the insured’s dwelling.
- Once the agreement is signed, the receiving party has three days to provide a copy to the insured. The policyholder then has a week to void the assignment.
Florida’s political and insurance leaders have done their part to expose abuse of the AOB, and homeowners can also help the cause! By signing a petition, policyholders can join forces with consumer organizations set to stop AOB abuse.
Experts recently stated that policy costs to consumers will increase about 10% annually. Almost three-quarters of insurance companies filed for rate increases since 2012. Many companies did so because of AOB disputes that generate significant attorney’s fees. A homeowners claim can create a lot of anxiety and out-of-pocket expense. Now, policyholders have some legal recourse against unscrupulous contractors who are partially responsible for increased premiums.
When it comes to storm season, contractor fraud isn’t the only thing homeowners need to be aware of. Staying informed on AOB regulations is definitely crucial, however your personal valuables may also be in danger in the event of a storm. Do you have all of your family’s valuables accounted for? Save yourself time and money by downloading our Home Inventory Checklist, and avoid the guesswork when filing an insurance claim! Click the image to get your copy!