At The Marcus Group we are always looking out for our policy holders, and recently we encountered a little known practice that is plaguing homeowners, that we were compelled to share it with you.
It starts with an emergency in the home causing property damage; perhaps a flood or minor fire. The homeowner calls a mitigation company and feels confident when they have come to their aid. The mitigation company has the homeowner sign an Assignment of Benefits (AOB) form either with the promise of helping them to negotiate their claim, or worse, without their knowledge of what they are signing at all.
But what is an Assignment of Benefits? Basically, the homeowner “assigns” their rights to the mitigation company to negotiate the claim for their loss. In other words, the assignee takes control of negotiating the claim and collecting the settlement from the insurance company, without any involvement with the homeowner. The result of this could mean the homeowner would have to come out of pocket to pay for repairs and the contractor could put a lien on the home.
Some very disreputable mitigation companies and contractors also charge the insurance companies exorbitant fees forcing either the insurance company or the homeowner to pay their fees. The consequence for all of us because of these unscrupulous practices is higher insurance rates and premiums.
How can you ensure you aren’t a victim of insurance fraud?
• Do not sign any documents you do not understand.
• Do not choose a contractor, water mitigation company or other emergency repair company that forces you to sign an Assignment of Benefits form.
• If you have any concerns, talk to your insurance agent.