Assignment of Benefits: Ultimate Guide for Contractors & Policyholders

If you’re involved with a property insurance claim as a policyholder or a restoration contractor, you may encounter the term “Assignment of Benefits” (AOB).

And, your research may find a lot of conflicting and confusing AOB information.

The AOB concept is quite controversial. Many smart and well-intended attorneys, restoration contractors, and insurance professionals have strong AOB opinions. State insurance commissioners disagree on AOBs. Laws and regulations conflict on AOBs state-by-state.

Wow! So, what gives?

And how should you think about the Assignment of Benefits process as it relates to your property or homeowners insurance claim, or your business?

For you, I’ve written this Ultimate Guide to the Assignment of Benefits to help.

As a construction and insurance attorney cutting my teeth in post-Katrina New Orleans, and the founder & CEO of the construction payment tech platform Levelset (now a PCOR company), I’ve accumulated almost 2 decades of experiencing helping people, companies, and contractors plow through complex concepts to help them level their playing field and get money that they’ve deserved. Interestingly, the AOB concept has surfaced throughout my entire career.

Assignment of Benefits: What Is It?

The Assignment of Benefits concept is not just a property/homeowners insurance claim concept — it’s a broad, legal concept used in all sorts of situations.

And if you Google Search something general — like “What Is An Assignment of Benefits” — you’ll see the variety; you’ll get information on health insurance, car insurance, and maybe just plain contract matters.

That’s because the “Assignment of Benefits” is simply that — it’s an:

• “assignment”
• by someone with something (i.e., a right, asset, etc.)
• to someone else
• who typically buys it or gives some “consideration” for it

It is that simple.

This article discusses the AOB concept specifically as it relates to homeowners or property insurance claims. And the typical situation of a property owner assigning his/her insurance claim to a contractor.

The National Association of Insurance Commissions provides a good definition in this context:

An Assignment of Benefits, or an AOB, is an agreement signed by a policyholder that allows a third party—such as a water extraction company, a roofer or a plumber—to act on behalf of the insured and seek direct payment from the insurance company.

National Association of Insurance Commissioners (NAIC) on AOBs

The AOB can be extremely convenient and helpful to policyholders. Policyholders want their property repaired fast, and the claims process sucks!

But insurance companies really hate AOBs and heavily lobby state governments to outlaw them.

Why all the fuss? What are the risks and benefits of AOBs? What’s best for the policyholder? Can contractors do it? Is a AOB right for you? We go into all these questions below.

The Problems That AOBs Try To Solve

No one buys insurance policies for sport. And when a claim arises, property owners aren’t jazzed by the claims process. Property owners want the policy benefits. They want to repair and replace their property and get back to their life.

Insurance companies can’t just shell out money indiscriminately. They need the claim process to calculate the losses, determine coverages, and responsibly distribute money.

This presents some practical problems.

Time: The claims process takes time. Property owners need to wait for the claim process before getting policy benefits.

Money: Property owners rarely have enough cash to repair and replace property losses and cover their expenses while waiting for claim checks. They either have to wait it out, or seek expensive credit elsewhere. And a lot of companies have business models built around trying to bridge this money-squeeze gap (consider: ClaimPay, iink, Insurance Claim Check, Sureti, Captain, LoanGlide, SquareDash, etc.)

Knowledge: Insurance companies are experts at the insurance claim process and property owners are not, creating — (i) a disadvantage to property owners, at the worst; and (ii) high probability of property owners making costly mistakes, at the best.

And it’s really quite difficult and expensive for property owners to get help with their insurance claim. Anyone offering services to help a property owner on an insurance claim is heavily, heavily regulated.

Property owners can hire an attorney but will likely pay a contingency fee of 30% – 40% of the claim value. Likewise, owners can hire a public adjuster to help, but will again be shelling out 10% – 20% of their claim value. Anyone else who tries to help at all — like a restoration contractor or a helpful neighbor — will be dancing with “unauthorized practice of law (UPL)” and “unauthorized practice of public adjusting (UPPA)” regulations.

The Assignment of Benefits concept aims to solve these problems.

With an AOB, the property owner “assigns” their insurance claim to a third party, such as a restoration contractor. The contractor is more experienced with insurance claims (solving the knowledge problem). The contractor can do the work immediately and fund the project (solving the time and money problems). And the property owner gets what they want most: to be made whole after a loss.

As you can see, AOBs have a lot of appeal.

Arguments For AOBs: Why They Are Great For Contractors & Policyholders

Even the NAIC — while issuing a consumer warning on AOBs — admits that they can beneficial to policyholders, explaining “An AOB can be a useful tool for getting repairs done, as it allows the repair company to deal directly with your insurance company when negotiating repairs and issuing payment directly to the repair company.”

The NAIC’s admission here is 100% correct: AOBs can be extremely benefical to proeprty owners. And frankly, short of hiring a public adjuster or attorney (which usually only comes about in the event of an escalating dispute), property owners are really quite lost and alone in their insurance claims. The claims process is long, stressful, and complicated, but all of the “consumer protection” laws go great distance to protect the turf of attorneys and regulated industries, yet leave the property owner alone with their claim.

While anything can be subject to fraud and abuse, the Assignment of Benefits concept is the device that makes it possible to empower property owners in the claims process and to help them get their policy benefits.

Per the above section, the AOB attacks the time, money, and knowledge claim problems. But more specifically:

AOBs Harness The Construction Industry

The construction industry is an obvious and major stakeholder in property insurance claims and restoration, yet strangely, they are forced to the sidelines throughout the claims process. Restoration contractors and other industry players are prohibited from helping property owners with their claims by strict “unauthorized practice of public adjusting” laws. The result is unfortunate. Contractors who know the scope and cost factors best, who can help with claims, and who ultimately will do the work are not available to owners.

The AOB device harnesses the construction industry to help property owners.

Contractors are willing to shoulder the claim complexities and can be very hands-on in both getting the owner’s work done and in making the best determination for cause, scope, and cost of loss.

Since these stakeholders are so critical to the property owner — and often in short supply! — one incredible argument in favor of AOBs is that they harness the construction industry and enable them to get involved with claims. And this is just the tip of the iceberg…

AOBs Empower Business Models That Can Help Owners

Like restoration contractors and other construction stakeholders, there is an entire universe of “helpers” out there pushed to the sidelines. UPL and UPPA laws claim they are designed to protect property owners, but it’s clear that these regulations mostly protect the industries they regulate; in other words, they protect attorneys and public adjusters.

Owners are left lost and alone…but the Assignment of Benefits device creates an opening for interesting business models to develop that can help property owners.

Property owners don’t have the funds, time, or knowledge to deal with an insurance claim…and unless they have a claim dispute with significant value, they especially can’t afford to hire professional help like lawyers or public adjusters. It’s just basic math!

The property owners do have one thing of value to deal: the insurance claim itself.

Because of this, AOBs have spawned a lot of interesting business models designed to help owners get repairs done faster, and allowing the property owner to “pay for” the repairs and the claims management services by turning over the claim itself. This creates a win-win for the property owner and the service provider, and it really levels the playing field with the insurance company.

AOBs Level The Playing Field

Insurance companies have all the insurance claim advantages. It’s true that consumer protection laws are stacked up to favor policyholders, but in truth, these laws are extraordinarily out-of-reach for most homeowners and property owners. To avail themselves of these protections, owners must go toe-to-toe with insurance companies over a long period of time. That’s expensive and stressful.

But, what if the insurance company had to deal with a professional operation that knew the claims process inside-and-out, had resources to determine and communicate about loss causes, scope, and cost, and had the funding to go through the claims process long enough to get paid completely?

Well, that would really help level the playing field.

And that’s what AOBs can do. The owner gets the full benefits of their policy because their property is repaired/replaced in full, and the owners can afford such complete “benefits” because the professional operation will get the claim paid out fully.

AOBs Promise Major Advantages

As you can see, AOBs promise major advantages to both property owners and a wide community of stakeholders who would like to help property owners. I like how the Schwartzapfel Law Firm explained it in an article titled “What You Need To Know,” which lays out a few advantages to AOBs: Save time for yourself, possibly save yourself money in the long run, and increased peace of mind.

That sounds pretty good to me.

Nevertheless, with that said, a lot of stakeholders are against AOBs.

Arguments Against AOBs: Why PAs, Insurance Industry, & Others Hate Them

The Assignment of Benefits instrument creates some interesting bedfellows.

For example, insurance companies and public adjusters — so often adversarial — have a shared hatred for AOBs.

It’s possible they dislike AOBs because they are sometimes used improperly and hurt policyholders.

But, it’s also possible because AOBs “take their cheese.”

Although everyone seems to recognize that AOBs could be beneficial to property owners, many arguments are made against the use of AOBs. The arguments are almost all couched as “consumer protections.” Some have become laws prohibiting AOBs completely as “against public policy.”

Here’s a summary of the argument.

Allegation: Homeowners Can Get Scammed

The insurance industry warns consumers to “read the [AOB] fine print” to avoid signing away more rights than you think (NAIC).

“While such assignment may allow policyholders to make emergency repairs more quickly, the practice has resulted in many homeowners becoming the victims of scam artists and other unscrupulous service providers…National Association of Mutual Insurance Companies (NAMIC) believes in fairness when it comes to the litigation process and supports efforts to protect policyholders from unscrupulous third-party service providers.”

“Our Position [on] Assignment of Benefits,” NAMIC

According to this argument, “scam artists” can use AOBs to take advantage of property owners. To “protect policyholders from unscrupulous third-party service providers” the insurance industry lobbies legislatures to make the entire device illegal!

It’s not clear whether “scam artists” are encountered more frequently than good and helpful providers. Further, the insurance industry lobbies for complete illegality, rather than supporting regulations to reduce fraud.

Allegation: AOBs Creates Unnecessary Litigation

The insurance industry also complains that assigned claims “results in more litigation and costs, hurting policyholders in the long run” (NAMIC).

This NAMIC comment is echo’d by the Florida Insurance Office of Regulation, who posts on its website that “[AOB] abuses…have driven up costs for homeowners across the state due to unnecessary litigation associated with certain AOB claims.” According to the Department of Financial Services, there were 405 AOB lawsuits across all 67 Florida counties in 2006, and that number had risen to 28,200 by 2016!

In other words, the insurance industry claims that AOBs are responsible for 70x the insurance claims litigation! And all of this litigation is driving up premiums.

In my opinion, there are a few important nuances not addressed in the aggressive conclusions promoted by the insurance industry and Florida regulators.

• What Are The Non-AOB Factors? Insurance premiums and claims volumes have increased in recent years for a variety of reasons, and it’s not clear how much can really be attributed to AOBs;
• Who Says These Lawsuits Are Not Proper? It’s totally believable that AOBs result in more litigation…but it’s quite a leap to categorize it as “unnecessary” litigation. The legal system has many processes to dispose of “unnecessary” litigation. Are the above Florida cases being dismissed by judges en masse? If litigation is sticking around and costing insurance companies more money…maybe there was a problem with the cases not being filed before the widespread AOB use.

AOBs are a weird scapegoat for “litigation.”

One problem AOBs solve is the fact that homeowners and property owners don’t have the knowledge, time, or means to require full and fair payment on a claim. Assigning the claim benefits to someone who can get the full and fair payment is resulting in…more insurers being sued for not making full and fair payment.

I like this headline in an article from Insurance Business Magazine: “While AOB is convenient for policyholders, it has become quite the headache for insurers.”

To me — while, of course, being against fraud and abuse of the device — some of the insurer’s headaches look like “features” of AOBs, and not “bugs.”

AOBs Allow Contractors To Become Public Adjusters

With AOBs, public adjusters finally find common ground with the insurance industry!

Public adjusters dislike AOBs because they enable contractors to directly manage insurance claims, which is their ‘turf.’

The public adjusting industry is protected by “unauthorized practice of public adjusting” laws, which protects their slide of the insurance claim pie. If contractors can help property owners with claims directly, this undercuts the adjuster business model and value proposition.

Public adjusters, like the insurance carriers, point to the potential for fraud.

AOBs: Fraud Honeypot or Not?

Certainly, it sounds noble and sensible to support efforts to reduce fraud. Fraud is bad (to see how AOB fraud does happen, see the below section “Mind These AOB Traps“).

But, if you ask me, fraud is already illegal and I hate the idea of restricting help to policyholders. Policyholders (and contractors) have “freedom of contract” constitutional rights, among other rights. It’s crazy to propose blunt and total illegality of a contracting concept that benefits homeowners and property owners who have extreme needs for help.

The policyholder is completely outmatched when dealing with insurance carriers. They suffered a financial loss, policy complexities are over their head, and the insurance companies have totally professionalized and proceduralized the claims process for its own benefit.

AOBs can be a great option for policyholders — nearly everyone advocating for regulation admits that AOBs are “not all bad” and do help policyholders.

And, in good news for policyholders, contractors, and others, AOBs are available in most states.

Are AOBs Legal In Your State?

Generally speaking, as a bedrock American principle, people and businesses enjoy a freedom of contract, which means that people are free to contract with one another however they wish. The “Assignment of Benefits” is simply that: an agreement between two parties to assign an asset (the claim) from one party to another.

The “Assignment of Benefits” right can be restricted in one of two ways: by contract (i.e. Non-Assignment Clauses) or by public policy (i.e. made illegal by specific law).

Non-Assignment Clause In The Insurance Policy Usually Does NOT Impact AOBs

Most insurance policies contain an “non-assignment” clause.

You may be familiar with lease provisions that prohibit sub-leasing. These “non-sublease clauses” are contractual agreements to not do something (i.e., to not sublease a property). This is a very typical restriction whereby one party is agreeing with another to not “assign” their lease to another party.

Non-assignment clauses within insurance policies work a lot like this. IRMI has a great definition:

Anti-assignment clauses are insurance policy provisions that require the insurance company’s consent to any assignment or transfer of rights of the policy and are generally enforceable before a loss occurs.

IRMI

Most insurance policies have “anti-assignment clauses” within them. However, these policy provisions rarely operate to prohibit policyholders from using an “Assignment of Benefits.” And the reason is right there at the end of the IRMI definition….these provisions are “generally enforceable before a loss occurs.”

This is best explained in a legal bible on insurance law, Couch on Insurance, which explains that non-assignment provisions are valid to prohibit assignments before loss, but do not prevent assignment after a loss. Here’s why:

The purpose of a no assignment clause is to protect the insurer from increased liability, and after events giving rise to the insurer’s liability have occurred, the insurer’s risk cannot be increased by a change in the insured’s identity

Couch on Insurance, §35:7 (Westlaw 2010)

So, generally speaking, insurance policy anti-assignment clauses do not prevent policyholders from using the AOB Device on their insurance claim. This is the “majority rule.”

There are a few exceptions to this, such as:

Therefore, if you are in one of the above states, AOBs are probably invalid for insurance claims in that state.

Some States Make AOBs Illegal & “Against Public Policy”

In most states, Anti-Assignment clauses do not prohibit “Assignment of Benefits” on insurance claims. But, this good news is balanced by the states who have passed regulations specifically outlawing the “Assignment of Benefits” use. As mentioned in previous sections, these states typically style the regulations are “consumer protections,” and declare AOBs to be “against public policy.”

Here are states where Assignment of Benefits are now “illegal:”

Therefore, if you are in one of the above listed states, AOBs are probably invalid as against public policy.

As you can see, generally speaking, the Assignment of Benefits (AOB) device is allowed across the United States. Unless you live in one of the above-listed states, policyholders, contractors, lenders, purchasers, and others, can use the AOB process. For more clarity, here is a USA State Map showing where AOBs Are Allowed, Not Allowed, and Limited:

Laws making AOBs illegal are quite new, really coming onto the scene in just 2022 and 2023! And, so far, only in two states that are getting desperate to appease insurance companies. The laws are hotly contested by groups representing policyholders and the restoration industry. Therefore, the laws have not yet been vigorously tested in the courts, and we may see these new statutes contested by “freedom of contract” arguments.

The Form & Process To Create An Assignment of Benefits

So, for all other states not identified above, the Assignment of Benefits process is alive and well.

In these states, creating an “Assignment of Benefits” is easy. The AOB is created by signing an “Assignment of Benefits” contract. Usually, the company “buying” the claim will provide the contract form. This may be, for example, a restoration contractor offering to perform restoration services to the property. The below sections provide more detail about what’s important to include and look for in these contracts. However, importantly, once the contract is signed, all rights identified in the contract will be “assigned” to the receiving party.

It’s important to use a form that is clear to both parties about what is being assigned, and a form that will enable the assignee (i.e. the person acquiring rights to the claim) to “step into the policyholder’s shoes” and interact with the insurance company.

Accordingly, there is 2 important form components to a successful Assignment of Benefits.

1. Assignment Contract: Download Free Assignment Contract Form Here.
2. Notice to Insurance Company: Download Free “Insurance Company Notice & Privacy Rights Waiver” form here. This must waive privacy rights and authorize the insurance company to interact with the assignee.

Okay, let’s now dig into how to get this right!

Policyholders: Your Rights & What Happens After You Assign Benefits To A Contractor

There are a lot of things for Policyholders to love about AOBs. From start to finish, insurance claims require a lot of nuanced experience and knowledge; but the only thing the policyholder really cares about it getting their property put back together. The Assignment of Benefits instrument is a great concept to give policyholders just that, and to delegate all the noise to other stakeholders.

Unfortunately, the AOB itself also presents wrinkles and complexities. Here are important things for policyholders to know:

Only Assign Parts Of The Claim You Want To Assign

Policyholders must remember that their insurance claim has a lot of component parts. Policyholders should be mindful to assign only the parts of the insurance claim that relevant to the transaction with the third party. For example, an AOB with a restoration contractor may assign the “Dwelling” claim, but the policyholder may not want to assign the “Contents” claim. When preparing the assignment, keep all the component parts in mind, and exclude parts of the claim that should remain the policyholders’ property, such as:

1. Emergency Repairs: Most insurance policies provide coverage and payments to make “emergency repairs.” If they’ve already done this work, policyholders should make sure they collect this before assigning their claim, or account for it with the assignee;
2. Additional Living Expenses: Policies may provide coverage for additional living expenses, which the policyholder may want to keep separately.
3. Contents: Do the parties want to include contents coverage, or is this kept separate?
4. Additional Structures: Is there coverage for “other structures” on the property, and is this contemplated by the assignment transaction?

Assignment of Benefits Contracts are just contractual agreements — that is, the parties can agree to whatever they see fit. Make sure that the AOB captures the agreement of the parties and that all claim components are contemplated.

Mind These AOB Traps

Like any transaction — especially those between experienced businesses and inexperienced consumers — there are many traps for the unwary. The insurance industry has magnified these traps in their quest to squash AOBs. While I don’t think these traps should destroy the helpful AOB process, policyholders should definitely know them and be cautious to avoid them.

• You’re assigning your entire claim! AOBs are not simply a tool to allow the insurance company to talk to your contractor (that’s different). This assigns your entire claim to the contractor. This means the policyholder may lose ability to communicate to the insurance company about the claim or know the status — all of that stuff is in the assignee’s hands. While that may be relief for the policyholder, it’s something to remember and understand. As explained in the Insurance Business Magazine article on AOBs, “Once you sign an AOB, you lose control of the direction of your claim. The contractor takes control and can submit whatever they like to your insurance company.”
• Be alert for fraud: Especially after a hurricane, fire, or natural disaster, contractors swoop in from all over to get work. Check credentials, references, and more, because you don’t want a fly-by-night carpetbagger leaving you in a tight spot.
• Once you sign, it’s gone: Policyholders really can’t “take back” the assignment. Once it’s signed, policyholders are along for the ride. So measure twice and cut once when entering into an AOB contract.
• Get A Few Offers / Options: Don’t fall in love with a single provider. Shop the market a little bit. Get multiple work and repair estimates, ask for references, etc.

Some helpful materials on the “traps” are available from: NAIC Consumer Warning on AOBs, the Florida Department of Financial Service’s AOB Brochure.

Dealing with Contractor Disputes With AOBs in Place

There are things for policyholders (and contractors) to keep in mind even after the AOB is in place. Irrespective to the insurance claim assignment, the policyholder and contractor still have a contractual relationship in-place. The contractor still has obligations to the policyholder (i.e. to do the work) and the policyholder to the contractor (i.e. be cooperative, pay deductibles, etc.).

• What Happens if Policyholders Have Problems With Contractors’ Workmanship? If the contractor’s workmanship is insufficient, the policyholder will have a workmanship claim against the contractor just like any other construction job. The insurance claim assignment is really quite irrelevant.
• What if the Contractor Doesn’t Do The Work, Finish The Work, or Show Up? Again, just like a standard construction agreement, the policyholder will have claims against the contractor (and possibly the contractors’ bond) if the work is not finished or done at all. In this situation, the policyholder’s biggest headache will be getting another contractor to do the work. While the policyholder maintains this right, he/she may not have the funds to hire another contractor, because the insurance claim funds will get directed to the original contractor (and the policyholder will need to intervene and claim those funds as damages). This can present a complicated case that will be stressful and annoying to the parties.
• Rights To Damages, Attorney Fees, Or Other Things Recovered by the Contractor: Remember that the contractor may be able to recover all sorts of money from the insurance carrier related to the claim like damages, attorney fees, bad faith penalties, and more. How much can be recovered varies from state-to-state, but generally speaking, all of this will go to the contractor and the policyholder will not have a claim to it because of the assignment.

Contractors: Your Rights & How To Proceed After Getting An AOB

There are a lot of things for Contractors to love about AOBs. As a contractor, you want to jump in to help the customer and get the property repairs done. The insurance claims process throws a major headache into the equation, turning contractors into a “monkey in the middle.” Contractors feel like they can help, understand how to help, but often have their hands tied behind their back. They must give estimates and then wait months before work can be approved, and then must work within the strict confines of the claim determinations.

The Assignment of Benefits instrument is a great tool to empower contractors to get to work and to help the policyholder. But contractors have a lot to juggle and keep in mind.

Get Authority To Communicate To Insurance Company

In addition to the “Assignment of Benefits” contract, the contractor must also get the policyholder to “waive” their privacy rights with respect to the insurance claim and mortgage, thus giving the contractor the right to communicate directly with the insurance company about the claim. This is a very important step to a successful AOB.

Ed Cross – an attorney who specializes in restoration contractor law and publishes a bunch of terrific content for restoration contractors – writes this about AOBs:

The first roadblock they throw out is the convenient excuse that they are not authorized to talk to you. This is easily remedied if you have the customer sign a professionally drafted mortgage information release and authorization. It irrevocably waives the customer’s right of privacy regarding the status of the loan and disbursement of insurance loss proceeds and directs the mortgagee to tell you everything you want to know and send you copies of all the documents request.

Turning The Tables on Mortgage Companies, by Ed Cross, Cleaning & Restoration, February 2017.

Contractors can expect insurance companies to be very picky about communicating with a third party assignee. Clear this roadblock by having all the proper AOB documentation (i.e. the assignment contract) and this important waiver.

Following Up & Managing The Insurance Claim

Once the contractor is assigned the insurance claim, the contractor will “stand in the shoes” of the policyholder for that claim. This means that the contractor must make sure they meet all the duties under the policy, manage insurer and adjuster communications, prepare a great proof of loss, and meet all policy and statutory deadlines. As we’ve explored in our Comprehensive Guide To Filing An Insurance Claim…there is a lot to juggle! Here are a few high-level things to keep in mind.

• Pay Close Attention to Policy Duties: When assigned an insurance claim, it’s easy to overlook duties within the policy. This is because these are policyholder duties, and the assignee (i.e. the contractor) isn’t in the drivers seat for these duties. Policyholders, for example, must “mitigate damages,” “cooperate with” the insurer and claims investigations, provide timely notices, and more. Pay close attention and make sure the policyholder is meeting these duties, or it could crush the contractors’ assigned claim.
• Communicate & Keep The Ball In The Insurance Company’s Court: The #1 suggestion to policyholders is the #1 suggestion to contractors who own insurance claim through AOBs: communicate and keep the ball in the insurance company’s court. There are so many regulations written in the policyholder’s favor and that put the insurance company on tight timelines. Leverage these with every single communication.

Beware: How To Manage The Regulatory Eye

Finally, remember that insurance claims are a hyper-regulated environment, and there are a lot of regulatory eyeballs staring at contractors and AOBs. Consider:

• Bar Associations & UPL: State bar associations — protecting the legal industry — have enforcement bodies to prevent contractors and others from engaging in the “unauthorized practice of law.” These restrictions are severe and sometimes create criminal liability.
• UPPA: Public adjuster organizations and insurance regulators are on the look out for “unauthorized practice of public adjusting.”
• Insurance Regulators: Finally, insurance regulators and commissioners pay close attention to any actions that are fraudulent related to insurance claims.

Conclusion: AOBs Can Be A Great Option For Policyholders & Contractors

Generally speaking, AOBs are used successfully everyday across the country by policyholders, contractors, lenders, purchasers, and other stakeholders. These devices can be controversial and are not well-liked by the insurance industry; after all, they certainly put more pressure on insurance companies to pay claims fairly, completely, and quickly. This can be a big positive for policyholders, property owners, and contractors.

There are some states that eliminate or substantially reduce AOB usage, such as in Florida, Louisiana, Oregon, and Texas. However, the predominate and majority rule is that these AOBs are legal contracts, and parties are free to leverage them. Though both policyholders and contractors must be vigilant when entering into AOBs, the Assignment of Benefits instrument can be highly beneficial, levelsetting a policyholder’s knowledge, money, and time disadvantages, and helping policyholders get fully whole faster and easier.