Claims can be stressful, so no one would blame you for trying to find someone else to deal with yours. But while an assignment of benefits (AOB) contract might seem like your ticket to a hassle-free claim process, signing one means you’ve given someone else the right to deal with your insurance company and negotiate your benefits. Unfortunately, that person - usually a contractor or adjuster - may not have your best interests at heart.
Worse? The problems that come with assignment of benefits in Florida like rampant fraud and excessive litigation play a major role in the state’s rising home insurance premiums. Let’s dig into these numbers to see just how big an issue AOBs are in Florida and what homeowners can do to protect themselves.
76% of all lawsuits filed against insurers are in florida
According to the most recent data from the National Association of Insurance Commissioners (NAIC), Florida is responsible for 76 % of lawsuits filed against insurance companies in the United States.
On its own, that’s a staggering statistic. But when you add in that the Sunshine State accounts for just 8 percent of homeowners claims nationwide, you get an idea of just how big a problem assignment of benefits in Florida may be.
$15 billion paid out in claims
The idea that insurance companies have paid $15 billion in claims to Floridians since 2013 may be less shocking now that you know how often insurers are sued. However, only a small percentage of that money makes it to the actual homeowners with damaged roofs and flooded basements. Property Casualty 360 broke down how much everyone gets from these payouts.
- Attorney’s fees: 71%
- Insurers’ defense costs: 21%
- Property owners: 8&
That’s just $1.2 billion of the total claim payout going to the individuals who suffered losses.
33% of new litigation stems from AOB cases
Another sign that assignment of benefits is a problem for Florida homeowners? The number of overall new litigations dropped for insurance companies in 2021, but the percentage of new AOB cases increased, reaching 33% in December. That stat is specific to the month of December, but it represents the highest percentage of a distinct upward trend that began in the first six months of 2021.
A healthy majority of new assignment of benefit cases were in just five Florida counties:
- Miami-Dade County: 24%
- Broward County: 16%
- Palm Beach County: 7%
- Orange County: 7%
- Hillsborough County: 7%
The amount of new litigation over assignment of benefits in Florida continues to rise despite the state legislature passing a bill to limit AOB abuse through several provisions, including prohibiting certain fees and alterations to policy provisions and transferring particular pre-lawsuit duties to the assignee.
Home insurance costs and assignment of benefits in Florida
The premiums your insurance company collects go towards its expenses, including claims and legal fees if it's sued. When those costs get out of control, your insurer often has to raise premiums to cover them. That’s one reason insurance fraud is such a big deal. Claims paid to con artists make home insurance more expensive for everyone.
Unfortunately, assignment of benefits in Florida appears to be rife with fraudulent claims. Some of these claims were from unethical contractors who charged for unnecessary repairs. But Florida’s one-way attorney fee statute, designed to protect homeowners from exorbitant legal fees, encouraged lawyers to take on unwinnable cases and send the bill to the insurance company.
All in all, the cost of insuring homes in Florida became too great for many insurance companies. And where there are fewer companies competing for business, insurance rates can skyrocket - as evidenced by the 25% increase in Florida this year alone.
Be on the lookout for assignment of benefit scams
The tricky part about AOB scams is that the swindlers claim to have specialized knowledge and then offer to solve what seems like an overwhelming problem for essentially nothing. Who wouldn’t want that? However, that is also a red flag that something is amiss. Other signs of assignment of benefits scams include:
- Forms that look unprofessional.
- Claims that your damage is worse than it is.
- Incentives to sign an AOB, such as rebates and gift cards.
- Someone who is pushy about getting your benefits assigned.
Remember that you don’t need to assign away your benefits to get your claim processed. You can manage the claim yourself to ensure that you get what you are entitled to.