Contractor risk
Assignment of benefits, and why not to sign one on your doorstep
An assignment of benefits, or AOB, transfers your rights under your insurance policy to a third party, usually a contractor, so they can deal with the carrier directly and be paid directly. It can be convenient, but it removes your control of your own claim: the contractor, not you, decides what to settle for, and disputes between them and the carrier can proceed without you while the work on your house sits unfinished. Several states have restricted the practice after widespread abuse following major storms.
What it changes
| Without an AOB | With an AOB |
|---|---|
| You are the claimant | The contractor holds your policy rights |
| You decide what to accept | They decide what to accept |
| Payment comes to you | Payment goes to them |
| You can change contractor | Changing contractor is complicated |
| A dispute is yours to run | A dispute runs without you, on your house |
How it is usually presented
Rarely as "sign over your insurance claim". Much more often as a form on a clipboard described as authorising an inspection, letting them "work with your insurance company", or simply as the paperwork everyone signs. It frequently arrives in the first forty-eight hours, alongside an emergency tarping agreement, when the homeowner is stressed and grateful someone has turned up.
Emergency tarping is genuinely necessary. Signing over your claim rights to obtain it is not. Sign for the emergency work itself, at a stated price, and nothing else.
How to read one before you sign
- Take it inside and read it alone. Anyone objecting to that has told you something.
- Search the text for "assign", "assignment", "direction to pay", "irrevocable", and "power of attorney".
- Find the cancellation clause and the cancellation fee.
- Check whether it binds you to work not yet scoped or approved.
- Check whether it permits them to settle the claim without your agreement.
- Check whether it permits them to litigate in your name.
The legitimate way to have a professional handle your claim is to engage a licensed public adjuster, who is licensed and regulated for exactly that purpose and who owes duties to you. Signing an AOB with a roofing contractor achieves something quite different: it gives claim control to the party whose interest is in selling you a roof. When a public adjuster is worth it.
Questions
Should I sign an assignment of benefits?
Usually not, and never on a doorstep or under time pressure. It transfers control of your claim to the contractor, who then decides what is acceptable to settle for. If you are considering one because the process feels overwhelming, a licensed public adjuster is the alternative that keeps you as the policyholder rather than removing you from your own claim.
What is the difference between an assignment of benefits and a contingency agreement?
An assignment of benefits transfers your policy rights to the contractor. A contingency agreement typically binds you to use that contractor for whatever work the carrier approves, often with a cancellation fee, without transferring policy rights. Both are frequently presented as routine paperwork that merely allows an inspection, and both are contracts worth reading alone and indoors before signing.
Can I cancel an assignment of benefits?
It depends on the document and on your state, and some states require specific cancellation rights and notice periods for post-loss assignments. Read the cancellation clause before signing rather than after, and if you have already signed one you are unhappy with, take advice promptly rather than waiting.
Why do contractors want an assignment of benefits?
Because it lets them bill the carrier directly and pursue the claim themselves, which removes payment risk and gives them control of the scope negotiation. For a reputable contractor that can genuinely streamline a large job. For a bad one it is a mechanism to inflate a claim, litigate against the carrier, or hold an unfinished job over the homeowner.