The Consumer Protection Coalition is an insurance front group located in Florida. The Consumer Protection Coalition tries to prejudice the public against trial lawyers. Read this post. It describes how “billboard trial lawyers” and “shady repair firms” are taking advantage of consumers by using the Assignment of Benefits to force insurance companies to pay repair bills. Let’s unpack this concept, so the public truly understands what is happening.
When people buy insurance, they want protection. The goal is that, when bad things happen, your insurance company will step in and say, “No problem, we have you covered.” This works for anything you insure — your car, your jewelry, or your home. The problem is that insurance companies rarely work for their insured. Insurance companies work for themselves. Their function is to take in insurance payments, called premiums. The insurance companies make money by taking in these premiums. They lose money when people try to collect on their insurance policies by making claims for damages.
In other words, the insurance companies’ game is to take in premium dollars and NOT pay out damages. Homeowner’s insurance is a prime example of the game in action. Every year that there isn’t a hurricane or bad storm, the insurance companies win big. They collect millions of dollars in premium payments, they invest the money they collect, and they make huge sums of money off those premium dollars. Few, if any, insurance companies ever return even a portion of the premiums at the end of the year, saying, “Hey, you didn’t use your insurance this year. That means you paid for nothing, so here’s some money back.” Oh no, they don’t do that all! They just send you a nice fat bill for next year’s premium.
Assignment of Benefits vs. Direction to Pay
Now, we need to understand what an Assignment of Benefits is and why one is executed. We also need to look at what a Direction to Pay is and why it’s no longer used. An Assignment of Benefits (AOB) is a legal document that gives to another person all the rights you have to some benefit. When it comes to insurance, the “benefit” is the money you are allowed to collect under a claim. When you give someone an insurance AOB, you are basically saying, “Here. You can have all my ‘rights’ under my insurance policy.” Therefore, an insurance AOB is a very powerful document. It allows the holder to bill the insurance company, make a claim, and sue the insurance company if the company doesn’t pay. A Direction to Pay (DPT) is simpler; it doesn’t confer any rights to the insurance benefit. A DPT only allows the holder to make a claim on behalf of the insured.
Why would a person want to sign an AOB instead of a DPT? The reason is simple: Insurance companies continue to underpay claims. They fight over value. They fight over whether or not there is coverage. They fight over the age of the damage, questioning the relationship between the hurricane and the need for a new roof. They fight, and they fight, and then they fight some more. That is their modus operandi, because the longer they hold the money, the more they earn from their investment of your premium dollars. The longer an insurance company holds the money, the more frustrated the insured gets by not getting the repairs done. The longer the insurance company holds the money, the more money the company makes and the less money the company pays the insured. Insurance companies are in the business of pushing back against anyone who makes a claim. Consumers are not in the business of collecting insurance proceeds. Consumers usually have jobs and kids and lives. The insurance game is a hardship for consumers. It is a hassle. It is a huge frustration. And the insurance companies know this — so the insurance companies intentionally make the claims process difficult. That’s a fact.
Instead of facing the battle themselves, consumers can give their rights to contractors or lawyers who force the insurance companies to pay what is due and owed. By signing an AOB, the consumer gives the job of getting the money from the insurance company to the contractor or lawyer. As for the contractor, he/she is simply a roofer, plumber or trade worker who wants to get paid for the work he/she performs — and who also doesn’t want to hassle with the insurance industry — so he/she will take a signed AOB and hire a lawyer to get the bill paid. The lawyer will do this on a contingency basis, because the lawyer knows if he/she wins the case, the insurance company will pay his/her fee.
All this goes on without the insurance policy holder being hassled at all. You can save yourself the fight, get your roof fixed, tell your insurance company to pay the bill, and go to sleep comfortably in your bed. This is why a consumer will sign an AOB vs. a DPT: With an AOB, the consumer gets the needed benefit right away and he/she avoids getting into a lawsuit with the insurance company. A DPT forces the consumer to be the named party — to run all the risks and spend all the time of litigation.
In closing, do find a reputable contractor to fix your home. Do choose a respected lawyer to help with your homeowner’s insurance claim. But don’t be afraid of an AOB. It isn’t necessary for you to keep the lawsuit. It is far better for you to give it away in trade for getting your insurance benefit up front.
Contact the attorneys at the LaBovick Law Group today for a free consultation regarding your Florida homeowner’s insurance claim. And yes, all property damage insurance cases are completed on a contingency basis — which means, we don’t get paid unless we get money for you!