What is an Assignment of Benefits?
Property damage can be costly and unexpected and often requires immediate attention. In some situations where homeowners cannot afford immediate payment to mitigation or remediation companies, these companies will accept an Assignment of Benefits ("AOB") in lieu of immediate payment.
An AOB is the process whereby a homeowner assigns their rights under their insurance company to the third party servicer. By assigning their rights, the servicer is essentially "stepping in the homeowner's shoes," and may act just as they would legally against the insurance company. The servicer may file a claim with the insurance company, make repair decisions, and collect payment directly from the insurer.
AOBs can be a great tool for homeowners by allowing quick mitigation, which may assist them to stay in compliance with their insurance policy and to quickly repair their property without waiting for the insurance company's claim process. Homeowners should be cautious when assigning their rights to the vendor accepting the AOB, as the AOB may file suit if they do not receive payment from the insurance company on the homeowner's behalf.
This article is not intended to be legal advice nor create an attorney-client relationship.