An Assignment of Benefits Agreement (AOB) is an agreement that allows a third party to work directly with your insurance company on your behalf. If an AOB is signed, the third party can file insurance claims, collect money and make decisions without having you do anything extra. While this all may sound great for you, there are some things you need to consider before signing an Assignment of Benefits Agreement.
Where you may see an Assignment of Benefits agreement:
If you are a homeowner and have some unexpected damage to your house, such as a water leak, you would naturally hire a contractor to fix the damage. One of your contractor’s selling points might include taking care of all the paperwork. The paperwork would most likely have an AOB. Unfortunately, this could result in more of a headache for you than working with your insurance agent yourself.
Contractors like to work directly with insurance companies to try and get the most money out of them for the hard work they did or will be doing on your home. If your contractor inflated the price of a claim, the insurance company will take its time and maybe even fight the claim. This process could take weeks. This means your house could still be in shambles, or the damage could be getting worse. If the work has been completed, but the insurance company hasn’t settled yet, the contractor can place a lien on your home until you pay, which could mean money out of your own pocket.
If the insurance company agrees to pay the large amount of money, it could result in your premium going up. Insurance companies need money to pay claims to remain in business. The way that they get this money is by increasing your premiums.
If you find yourself being asked to sign an Assignment of Benefits Agreement, be cautious before doing so. Not sure if you should sign one? Reach out to a DSI agent, and we can talk you through it to see if it is the best route for you to take.