Assignment of Benefits Abuse Hurting Everyday Floridians
Assignment of Benefits (AOB) abuse has become a significant problem that threatens to increase insurance costs for hardworking Floridians statewide. Consumers who sign AOB forms to get home repair work done are losing control of their insurance policies and being threatened by repair firms and trial attorneys with legal action if they fail to pay excessive bills. In many cases, unscrupulous repair companies and trial attorneys are filing lawsuits against insurance companies over homeowners’ claims without the policyholders knowing it. Legislative action must be taken immediately to stop this problem from spiraling out of control.
Here are a few stories of real Floridians who have been victimized as a result of signing an AOB form to handle a homeowner’s insurance claim.
Natalie Kreiter, Port St. Lucie
After discovering a simple leak in her kitchen, Natalie Kreiter hired a plumbing company to repair it. She had minimal water damage to her kitchen but was advised by the plumber to hire a water mitigation company to dry it out. The water mitigation company told her the loss was covered and asked her to sign an AOB form before they would begin the work.
The water mitigation company told her to hire a public adjuster because, without one, they claimed, her insurance company would try to underestimate the necessary work and not pay her claim. Kreiter told the PA she had just minimal water damage initially but now her kitchen had been torn apart by the water mitigation company. As a result of signing over the benefits of her homeowner’s policy, her insurance company had no choice but to issue the payment directly to the water mitigation company. The contractor was paid but her kitchen was left torn apart and unrepaired.
Jim Gowan, Tallahassee
Jim Gowan’s water heater exploded, flooding the downstairs of his townhome. He contacted a water mitigation company that came out and said that, if he signed an AOB form, they would take care of it. The company ended up billing what the insurance company deemed to be an excessive charge. The company refused to negotiate with his insurer so he contacted the Department of Agriculture’s Consumer Affairs Division to try to resolve the dispute. When he threatened to file a complaint, the water mitigation company abruptly agreed to lower its price by 25 percent. Had he not called the Consumer Affairs Division, he would have been responsible for costly overcharges.
Florida House Rep. Barbara Watson and husband, Alvin, Miami Gardens
Florida House Rep. Barbara Watson and her husband, Alvin, had a pipe burst at their home that damaged the floor and some of the cabinets around the dishwasher in their kitchen. A water mitigation company reviewed the damage and insisted on replacing all of the cabinets and repairing areas in the living room. Watson became suspicious because there was no damage to the cabinets or living room. Despite being pressured to signing an AOB form, she decided against it and instead chose to work with her insurance company directly. After contacting and working with her insurance company, her house was fully restored to her satisfaction.
Jim and Lillian Hetrich, Clermont
A roofing company soliciting business in Jim and Lillian Hetrich’s neighborhood notified them that their roof suffered hail damage and needed repairs. In order to start the work, the elderly couple signed an AOB form. They subsequently assumed their roof repairs had been settled and the company had been paid by their insurer. It was only when an adjuster from their insurance company met with them about a second solicitation about possible hail damage to their roof did they learn that their roofing company was suing their insurance company over the earlier claim. Because they had signed away control of their insurance policy to the roofing contractor, they were completely unaware of the lawsuit and became very upset at the news.
Alberto Velasquez and Maria Velez, Deltona
Alberto Velasquez and Maria Velez had a pipe break in their hallway bathroom. A neighbor volunteered to repair it and called a water mitigation company to handle the cleanup. A representative from the company told Velasquez to sign an AOB form to start removal of the water. Velasquez can’t read or speak English but signed the AOB form without getting any explanation about it in order to get the work done. When his English-speaking daughter attempted to contact the water mitigation company about the claim, her calls were not returned and she never received a copy of the invoice or a repair estimate. When Velasquez finally received a copy of the bill, some of the items listed had not been performed and several items on the repair estimate did not even exist.
Robert and Eleanor Posner, Hollywood
Eleanor Posner said she was pressured into signing an AOB after a water mitigation company told her they would not start the cleanup until she signed it. The mitigation company said they would bill the insurance company directly and she would not owe any money. After completing the work, it was determined the mitigation company charged unreasonable and unnecessary amounts. The insurance company issued payment in the amount that was deemed fair based on a peer review of the invoice, but the mitigation company threatened Posner for the remaining balance. Because she signed the AOB, she was overcharged and received poor water mitigation services.
Jose Shinto and Joseph Soumya, Broward County
After signing an AOB form, Jose Shinto and Joseph Soumya decided to use their own contractors to do some repair work. Unfortunately, the mitigation company refused to release them from the AOB contract without paying a fee. A peer review was conducted on the mitigation company’s invoice and found excessive charges. The mitigation company was unwilling to negotiate with the insurance company and a lawsuit was filed. To make matters worse, the couple’s insurance agent is no longer employed with their insurance company, resulting in a statutorily required, non-renewal of their insurance policy. But because of the lawsuit, they are not able to secure new insurance for their property based on their open claim.
Laura Pearce, Tallahassee
When heavy rain flooded Laura Pearce’s Tallahassee home, she called a water damage restoration company to do repairs. She and her husband were immediately asked to sign an AOB form to start the work, but they declined. She ended up receiving a huge bill for unexplained charges, including an emergency response fee. She also was charged for three days of work when the job only took two. When she inquired with the contractor, she never got a good explanation for the charges. As general counsel for the Florida Association of Insurance Agents, she is concerned that AOB allows contractors to send bills directly to insurance companies that are unaware of the actual work performed. Overbilling will lead to higher insurance premiums for all Floridians, she said.
The Consumer Protection Coalition is a broad-based group of business leaders, consumer advocates, real estate agents, construction contractors, insurance agents and insurance trade groups pushing for reforms to end Assignment of Benefits (AOB) abuse. Members include the Florida Chamber of Commerce, Consumer Federation of the Southeast, Florida Roofers and Sheet Metal Contractors, Associated Builders and Contractors, Florida Justice Reform Institute, Florida Realtors, Florida Bankers Association, Florida Retail Federation, Latin American Association of Insurance Agencies, Council of Property Claims Professionals, Florida Insurance Council, Personal Insurance Federation of Florida, Florida Association of Insurance Agents, Property Casualty Insurers Association of America, Professional Insurance Agents of Florida, former state Insurance Consumer Advocate Steve Burgess and Citizens Property Insurance Corp.
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