Autoethnography Assignment Of Benefits

You may have figured out that I like to watch the insurance news. I mean, I work for the company that produces my favorite insurance news (Insurance Journal) and I don’t say that just because I work here. I was an IJ reader before I became the Director of the Academy. Anyway, I’m really interested in the what laws are passed and how the different regulators operate. I’m actually a fan of the way that insurance regulation in the US has evolved over the last 300 years or so.

An item that is particularly interesting where I live in Florida is the topic of Assignments of Benefits. For those among us who aren’t dealing with this issue yet, let’s define what we’re talking about before we dig into the problem and maybe what Florida is trying to do to fix it.

An Assignment of Benefits is a simple document that allows someone, other than the insured to receive the money payable by an insurance policy. You signed one the first time you visited your doctor. It’s among the stack of paperwork when you first become their patient. It’s what allows them to send the bill to your health coverage without you having to pay the whole bill, submit it to the health coverage, and wait for the check to come from them. It makes the whole process of paying for medical needs faster and relatively less painful.

That’s not where the problem has come up. The problem is coming up when there has been a property loss. The insured does what he thinks is right, he contacts a contractor who comes out, examines the damage, creates an estimate, and then tells the insured that they can get started as soon as they sign this little form. What’s that form? You already know that it’s the assignment of benefits form. What happens next depends on the contractor. An ethical contractor works with the insurance company by providing estimates, letting the adjuster examine the property, makes the needed repairs and charges the insured their deductible amount. The home is repaired, and everyone is happy.

What seems to be happening more often is a little different. Somehow between the signing of the assignment of benefits and contact with the insurance company, either the contractor’s estimates become inflated or they simply contact their normal attorney, who files suit against the insurance company. In the end, the insurance company ends up paying more for the repair, the insured might end up having to write a check (or worse, end up with incomplete work), and homeowners’ rates for everyone go up.

I hear you asking if I have a solution to recommend, rather than just complaining about a problem in my state. That’s a fair question to ask. Right off, I don’t know what the solution is. I’ve read the text of the bill that’s before the Florida legislature and it looks like it might help. Do I think it’ll solve the problem? Not really. I believe that the vast majority of contractors are honest, hard working people who use assignments of benefits to make sure that they get paid for the work that they do. I also believe that most insureds are honest, too. I also believe that there are a few people that think that all they’re doing is taking money from insurance companies and no one gets hurt.

Let’s be clear about this, please. Whenever someone causes the costs of an insurance company to go up, like by inflating claims beyond what would be reasonable, those costs are not just absorbed by the insurance company. They aren’t even just absorbed by those new insuretech companies that promise transparency and giving back. Those costs are absorbed by consumers. In the end, the company will turn a profit somehow. They may not this year, but next year they will. By the way, the contractors (and others that work hard to get extra money out of insurance companies) are making their money, too. In the end, the only one that suffers is the consumer.

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Assignment of Benefits is hot topic, especially in the Florida insurance market as the number of scams related to this practice increase.

What is Assignment of Benefits?

Assignment of Benefits is an agreement a repair contractor may ask you to sign that transfers your insurance policy benefits and rights to them.  This eliminates your ability to work with your insurance company adjuster and may result in theft of your claims payment.  While this practice has been around for over 100 years, and was originally designed to streamline the claims and repair process for homeowner, it’s been increasingly exploited by scam artists, especially in Florida over the last several years.  The challenge is that the scam artists are getting paid while homeowners are losing their ability to get claims payments, and it delays the claims process. 

If your home is damaged by a storm or other event, the good news is that Heritage Insurance has a pre-approved network for you called Contractors Alliance Network (CAN).  When working with CAN, you will sign paperwork that helps expedite your claims process compared to delaying it while lining the pockets of scam artist. 

A scam artist contractor may encourage you to sign an Assignment of Benefits document under the guise that it will make the claims process much easier for you.  Because of rampant fraud, this practice can trigger a chain of events that may result in a tremendous amount of hardship for the homeowner as unscrupulous contractors are now taking advantage of loopholes which allow them to inflate the cost of the repairs and request excessive claim amounts from insurers. 

What Does This Mean for Homeowners?

Homeowners insurers are well-versed on the typical cost of repairs and will deny payment when presented with these ridiculous claim amounts from the contractor.  The contractor gets together with their lawyer and files suit against the insurance company.  For the homeowner who will likely be named as a party in the lawsuit, this could mean hours spent on depositions and other court-related activities.  And, you could be sued for any remaining unpaid repair costs, or find that a lien has been put on your house in an attempt to collect. All homeowners throughout the state can expect premium costs to increase when insurance companies are tied up with unnecessary litigation.

How do Homeowners Protect Against this Abuse?

Heritage Insurance makes the claim process easy so there’s no need to sign an unauthorized Assignment of Benefits.  Call Heritage Insurance first!  855-439-4719, Option 1.  Heritage Insurance has an authorized repair networkthat will expedite the claim process.  While you may be contacted by non-authorized third party vendors to do repairs, please do not contract with any vendor except a vendor approved by Heritage.   Policyholders will be asked to sign approved forms through a program called Contractors Alliance Network (CAN).Contractors Alliance Network prequalifies the best mitigation specialists and general contractors, who provide unparalleled service.  The contractors are trusted, and licensed contractors who use the most effective mitigation and restoration techniques to ensure that your loss is handled quickly and professionally.

If you need immediate mitigation assistance such as water removal or a tarp on your roof, please fill out our please fill out our dispatching form and we will dispatch a repair team to your house.

Our Claims Department is available at (855) 415-7120, option 1 for policyholders who need to report a claim.  Policies originating from Sawgrass Mutual should call (877) 853-4336, option 1 to report a claim.  Commercial property policyholders should call (855) 439-4719.

For more information on how to stomp out this type of insurance fraud, see this brochure: Stomp Out Fraud

Posted in Blog
Tags: AOB, Assignment of Benefits, Assignment of Benefits Fraud, Contractors Alliance Network, Heritage Claims

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