By: Alan Daley, American Consumer Institute, Florida
Every year, disreputable attorneys and home-repair contractors launch an Assignment of Benefits (AOB) “open season” on home insurance policy holders. Consumers whose homes are damaged by a leaky pipe or storm damage want quick action by repair contractors to mitigate further damage. Some contractors will not proceed unless the owner completes an AOB agreement with the contractor.
If later there is a disagreement over repair costs, the contractor can engage an attorney who will attempt to settle the case. If the case goes to court and the insurer wins the case, under Florida law, the insurer pays the legal fees and cannot recoup fees from the contractor’s attorneys. However, if the contractor’s attorney wins, the insurer still pays all the legal costs, including the contractor’s. These “one-way” legal fees work to extort the insurance company into quick settlement rather than defend against unreasonable claims.
Florida’s Legislature has the opportunity to protect consumers from jumps in insurance premiums caused by these AOB scams. The incidence of AOB water claims rose 46 percent between 2010 and 2015,