Your life back to normal…
That's all you want after you've experienced loss or damage to your home.
Contractors also know this and some will take advantage of you during this difficult time by inflating your repair costs and having you sign a contract that includes something called an Assignment of Benefits (AOB) Clause. Even if you didn’t know what you were signing when you signed this paperwork, you've just assigned control of your claim to your contractor. At this point, your insurance company may no longer be able to provide you with a claim check. Everything would go through the contractor.
This could be extremely bad because if you lose control of your claim, your house may never be repaired and therefore end up unlivable.
Dishonest contractors pressure unsuspecting homeowners into signing contracts that include these Assignment of Benefits (AOB) clauses. What you want to look for are phrases like, "I transfer and assign any and all insurance rights, benefits and causes of action under my property insurance policy to the contractor" or something along those lines.
What do you stand to lose?
Now that your contractor is in control, he can bill your insurance company for work he hasn’t done, overcharge your insurer, or simply take your money and never even begin working on your home. The contractor could take the money and run, leaving your home unrepaired or partially repaired. Either way, you may be the one left to pay for your contractor’s scams.
Also, if an inflated bill from your contractor exceeds what is covered by your homeowner’s insurance policy, you may have to pay the difference. The contractor could place a lien on your home, and contractor liens in Florida can be enforced by foreclosure. This type of fraud, while extremely costly to individual homeowners who’ve fallen victim to the scam, affects all Florida homeowners.
Fraud is currently one of the primary reasons why home insurance premium costs increase.
How to prevent from becoming a victim:
- Following a loss, the first call should be to your homeowners insurance company. They can refer a licensed, experienced and reputable contractor. This will also help expedite your claims process.
- Never sign anything with a contractor who requires you to agree to an assignment of benefits document.
- Ask the contractor for proof of liability insurance.
- Never sign a document you don’t fully understand. When in doubt, call your homeowners insurance company for help.
- In the event of a family member’s home emergency, make sure to tell them not to sign anything that requires them to assign their benefits to a contractor.