Oh no! You’ve just had a leaky pipe flood your bathroom and bedroom. While you’re busy fixing the pipe, mopping up and drying out, along comes a water mitigation company that wants you to sign a contract that allows them to deal directly with your homeowners insurance claim. They make it sound like they’ll handle everything from filing the claim with your insurance company to dealing with all the contractors who will be involved in making repairs to your home—if you sign a contract that contains an Assignment of Benefits clause. This sounds tempting—should you do it?

No, you should not, and here’s why.

Assignment of Benefits (AOB) is a tool that allows a third party to be paid directly by the insurance company for services performed, rather than by the homeowner after making a claim. Unfortunately, in Florida, unscrupulous trial lawyers and shady contractors (many of them unlicensed) have taken advantage of this tool, inflating repair costs and suing insurance companies if they deny the claim or don’t pay it in full. AOB abuse has become so rampant in Florida that’s it’s costing every homeowner money in the form of higher homeowners insurance premiums. According to the Consumer Protection Coalition, since 2000, there has been a 90,000% increase in AOB lawsuits.

Ultimately, this will cost Florida consumers as much as $1 billion dollars in rate hikes, and those rate hikes have already begun. State-run Citizens Property Insurance Corp. asked for a 3.2% increase in rates for all personal lines policyholders in its 2016 rate filing, and CEO and President Barry Gilway told Florida insurance regulators, “I want to be crystal clear on this issue: water losses are the major reason Citizens is seeking rate hikes for the coming year….” (AOB is most commonly used when a homeowner experiences a water-related loss, but the scam is also spreading to the roofing industry.)

Private insurance companies are also raising rates in response, with one large insurer saying it needs a rate increase of 15% statewide to cover the explosion of water loss claims and AOB lawsuits. Private insurers may also begin withdrawing from or eliminating certain zip codes where the abuse is widespread, making homeowners insurance not only more expensive but harder to get.

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In addition, often, AOB abuse also leaves homeowners with poor workmanship or incomplete jobs, and because they’ve signed over the rights to their insurance policy, they have no recourse.

If you have a water damage claim, here’s what you should do:

1. Call L & M Insurance Group or your homeowners insurance company.
2. Be leery of unsolicited offers from contractors or other vendors who want to take over dealing with your insurance company for your claim.
3. Carefully read any contracts of service, and look for a clause titled “Assignment of Benefits.” If you see it, don’t sign.

To learn more, visit www.FightFraud.Today.

L & M Insurance Group is an Independent Insurance Agency based in Riverview, Florida. We can shop, compare and recommend the home, auto, commercial or life insurance policy that’s best suited for you, your family or your business. Call 813-672-4100 or visit landminsurancegroup.com for more information.

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