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Jax Daily Record Wednesday, Sep. 13, 201701:43 PM EST

State Farm warns about signing benefits over to a contractor

Dishonest companies can take advantage of AOB claims to inflate prices.

State Farm insurance is issuing warnings about a legal, but often abused, method of filing claims in the aftermath of Hurricane Irma.

State Farm, which as of midday Wednesday had received 11,200 Florida homeowners’ claims and 3,660 auto claims reporting damage from the storm, is warning homeowners about assigning their benefits over to a contractor.

While AOB is a legal tool that can be used appropriately, it also provides an opportunity for dishonest companies to partner with trial attorneys to significantly inflate home repair costs, State Farm said in a news release. This can lead to an increase in premiums that adversely affect Florida policyholders.

State Farm provides these tips to avoid AOB issues:

  • If you have a property damage loss in your home, contact your homeowners insurance carrier immediately to report the claim.
  • Be careful before signing anything without fully reading the documents. An AOB transfers the payment and many rights of your claim to the vendor or contractor for the services provided or to be provided. This language is often difficult to identify in the documents.
  • Vendors taking AOBs may be water mitigation companies, roofers or other contractors. Be diligent before signing anything with a vendor/contractor that solicits you directly and advises you to file a homeowners’ claim.
  • Preserve all building materials removed by any contractor or vendor until you speak with your insurer.

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