An assignment of benefits (AOB) is an agreement that transfers a policyholder’s home insurance benefits to a third party, usually a contractor or repair company, after their home or property is damaged or destroyed. The third party would then deal directly with the insurance company and collect payment for covered work.
Florida Statute 627.7152 governs assignment agreements under property insurance policies issued before Jan. 1, 2023, and prohibits policyholders from assigning post-loss benefits under policies issued on or after that date. Any attempted assignment under those policies is considered void. Older AOB agreements may still be covered by the rules in effect when they were created.
What is an assignment of benefits agreement?
An assignment of benefits agreement lets a policyholder transfer insurance benefits after a covered loss to a contractor, roofer, plumber, or other repair company. That third party can then work with the insurance company to seek payment directly for the work they’ve done, in theory making it easier for the homeowner. Section 627.7152 of the Florida Statutes defines and governs these agreements.
AOBs were common in Florida for years, but they also became associated with a sharp increase in disputes and litigation. The Florida Office of Insurance Regulation reports that AOB lawsuits rose from 405 statewide in 2006 to 28,200 in 2016. In response, lawmakers first tightened the rules for AOB agreements in 2019, then banned new post-loss agreements in 2023.
Is assignment of benefits still legal in Florida?
Generally, no. Florida policyholders cannot assign post-loss benefits under residential or commercial insurance policies issued or renewed on or after Jan. 1, 2023.
Florida law governs qualifying assignment agreements involving policies issued before that date. Older AOB agreements are still valid if they followed the rules in place when they were signed. Because most homeowner policies renew annually, however, your current coverage is likely to fall under the post-2023 AOB rules, as outlined by the Florida Department of Financial Services.
What rules applied to AOB agreements before the ban?
Before Florida prohibited new property-insurance AOBs, state law imposed detailed requirements for these agreements. Among other things, an AOB had to give the policyholder cancellation rights, provide the insurer with prompt notice, and include a detailed estimate of work to be performed.
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Pre-2023 requirement |
What it meant |
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Right to cancel |
The policyholder could cancel without penalty within 14 days of signing. They also retained the right to cancel if the contractor failed to perform substantial work within 30 days of the scheduled start date or, if no start date was provided, within 30 days of signing. |
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Notice to the insurer |
The contractor or other assignee generally had to send the insurer a copy of the signed agreement within three business days after signing or after work began, whichever came first. |
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Itemized estimate |
The agreement had to include a written, itemized, per-unit estimate of the services to be performed. |
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Limits on attorney fees |
In lawsuits involving an AOB agreement, the assignee could recover attorney fees and costs only under limited circumstances allowed by the Florida AOB statute. |
What are the risks of signing an AOB?
Although AOBs were intended to simplify the repair and claims process, signing one could also create complications. Risks to the policyholder may include:
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Less control over the claim: Once certain insurance benefits were assigned, the contractor or other assignee could communicate with the insurance company and seek payment directly. This could leave the policyholder with less of a say in decisions about the claim.
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Disputes over repair costs: A contractor’s estimate could differ from what the insurance company believed was covered or reasonably priced, potentially leading to disagreements over the amount owed.
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Problems with the agreement itself: An older AOB that remains relevant today may be challenged if it did not meet the legal requirements in effect when it was signed.
What Florida’s AOB reform means for homeowners today
AOB reforms mean that homeowners must file and manage property claims themselves rather than signing over post-loss benefits to a contractor. The goal is to reduce AOB-related disputes and litigation, something the Florida Office of Insurance Regulation says contributed to unnecessary lawsuits and higher policy costs (called premiums) for homeowners.
If you file a claim, you can still hire a contractor to perform repairs, but payment and claim decisions typically remain between you and your insurance company.
If a contractor asks you to sign an agreement that appears to transfer insurance benefits or payment rights, read it carefully before signing. You may want to:
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Ask whether the document transfers any of your rights under the insurance policy.
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Contact your insurance company before signing anything that affects claim payments.
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Ask the contractor to explain how they will be paid if no AOB is used.
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Consider getting legal advice if you are dealing with an older AOB or are unsure whether an agreement is enforceable.
Frequently asked questions
What are the new changes to Florida’s AOB law?
Florida’s 2022 property insurance reform, Section 627.7152 of the Florida Statutes, prohibits the assignment of post-loss benefits for residential and commercial property insurance policies issued on or after Jan. 1, 2023. Under the new law, an attempted AOB is void and unenforceable. Florida’s Department of Financial Services describes the prohibition as applying to property insurance contracts issued or renewed on or after that date, thereby applying to most Florida property policies.
What are the legal implications of assignment of benefits?
Historically, signing an AOB could transfer post-loss insurance rights from the policyholder to a contractor or other assignee, including the right to seek payment directly from the insurer, and, in some cases, pursue a dispute over that payment. That meant the homeowner would be giving up some control over how the claim was handled.
Older AOB agreements may still be enforceable if they were permitted under the policy and complied with the legal requirements in effect at the time they were signed. For property policies subject to the 2023 reform, however, new assignments of post-loss benefits are generally void under Florida law.
What are the risks of signing an AOB?
An assignment of benefits or AOB can reduce your control over parts of your claim by allowing a contractor or other assignee to seek payment directly from the insurer. It can also lead to disputes over the scope or cost of repairs. For most current Florida property policies, new post-loss AOBs are not permitted. Older agreements may still be subject to the laws that were in place when they were signed.
