Florida lawmakers seek 'assignment of benefits' solution

'AOB' involves insurance customers signing over claims to contractors

Lawsuits surrounding assignment of benefits, or AOB, have contributed to Florida having some of the highest insurance rates in the nation, according to insurance experts. Florida lawmakers took the issue up Thursday.

An I-TEAM investigation in December exposed problems with AOB, one of Florida’s most controversial property insurance practices. The law allows a homeowner to sign over insurance claim rights and benefits to a third party, such as a contractor being hired to do repairs. 

In Jacksonville, homeowners told the I-TEAM that contractors used the AOB law to their advantage by overcharging the insurance companies for services that weren't approved by the homeowner. 

After Hurricane Michael hit Panama City, Jasmin Tolbert said that contractors were practically knocking down her door.

"Trying to get me to sign forms so they could help me," she said. 

Tolbert said those contractors wanted her to sign an AOB, giving them the right to bill the insurance company directly. Signing that form has led to the doubling of lawsuits over the last five years, primarily because most legal fees fall on the insurer, according to insurance experts. 

"The primary driver of abuse is the way attorneys get paid," said James Lynch, with Insurance Information Institute. 

One proposed change discussed in Tallahassee would continue to protect homeowners in fights with their insurers, but place the potential responsibility for paying legal fees on contractors who accept an AOB.

"And that if you assign your benefits to a third party, that third party does not get the benefit of that one-way attorney's fee," said Florida Insurance Commissioner David Altamier. 

According to water restoration companies, the problem is lowball estimates from insurance companies. 

“Right now, the insurance companies are paying on average around 20 to 25 percent of what the estimates are," said Josh Reynolds, with Right Way Emergency Services.

Industry experts say the AOB process has become rife with fraud and litigation, driving up insurance premiums, to among the highest in the country. 

"Well, they probably can’t get regulated," said Foyt Ralston, with the Florida Association of Restoration Specialists. "They probably don’t have the educational training, probably don’t have the financial ability to train their people in mold, so absolutely, you get rid of them.” 

Opponents and advocates agree that only a handful of attorneys and companies are gaming the system, but if changes are approved, they would apply to everyone.

Without being able to bill insurance companies directly, many contractors won’t risk taking on big jobs without a guarantee of getting paid or getting paid up front.

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