The assignment of benefits (AOB) problem: will the Florida Legislature fix it?

The Florida Legislature is planning to take another stab at ending claims abuses blamed for property insurance rate hikes.  Property insurers (homeowners and commercial property insurers alike) are battling the well-financed trial attorneys to bring an end to the manipulative self-serving generation of attorney fees from excessive lawsuits by repair contractors working under an affidavit called an assignment of benefits [AOB].  Without increasing the benefit to consumers the cost of abusive lawsuits by roofing contractors and their attorneys are passed on to consumers.  Insurers want to stop this abuse.  Attorneys counter that lawsuits would be unnecessary if insurers would simply pay fair costs for repairs, but this is not what is happening in the majority of cases.

Roofing contractors contact property owners after a storm but before the claims are reported to the insurer and the contractor sells the property owner on the idea of hassle-free repairs where the contractor will make all repairs and take an assignment to deal with the insurance claim.  Insurers are learning of the roof damage for the first time after repairs have been completed, after an inflated repair bill generated, when a lawsuit is filed against the insurer (triggering the additional expense of feeding the attorneys on both sides of the case).  The score comes out with the attorneys winning large fees, the consumer getting the repair they were entitled to (and would have received if they had involved their insurer in the process of getting the roof repaired), and the additional cost for attorney fees are passed on to consumers by the insurer in the form of higher rates.

The trial attorneys make a feeble and somewhat unsubstantiated argument that insurers leave homeowners and contractors with no choice but to sue by failing to pay what’s necessary to return damaged homes to their pre-loss conditions.  No doubt there are some instances where this occurs, but the insured has an effective remedy without the AOB.  The insured in those rarely occurring cases can sue their insurer for breach of contract, and the insurer who is truly in the wrong will have to pay the correct amount and pay the insured’s litigation expenses, including attorney fees.

In recent years the Legislature has tried to enact laws barring homeowners from assigning claims without insurers’ permission, but trial attorneys and their large war chest blocked those efforts.  The leadership in the Florida Office of Insurance Regulation favor an end to this abuse by these less reputable roofing contractors and the trial bar, but without legislative support they are not empowered to do much about it.  This abusive AOB practice that the roofing contractors and their attorneys are engaging in is unethical.  I pray that in this next legislative session that our elected Florida representatives can find their moral compass and bring an end to the AOB abuses.  (See related article in