Assignment of Benefits 

Assignment of Benefits (AOB) is a major issue in the insurance industry. Why? Since 2000 there has been a 90,000% increase in Assignment of Benefits lawsuits, driving up home insurance costs for Floridians due to unnecessary litigation. This has ultimately culminated in Florida's Legislature recently passing a law to help regulate these contracts. This law went into effect on July 1, 2019.

Below is an overview, via news articles and other resources, of the Assignment of Benefits issue and ways you can be vigilant as a homeowner.

Have additional questions, or maybe you have already signed an Assignment of Benefits? 


News Clips

Water Damage and AOB in the News
Water Damage

Roof Damage and AOB in the News   
Roof Damage

News Articles

Florida lawmakers must end Assignment of Benefits (AOB) abuse

News-Press - by Steve Pociask, Guest Contributor on Feb. 26, 2019

A loophole in Florida’s insurance laws allows shady contractors and trial lawyers to milk the claims process for excessive bills, and consumers are paying at least $2.5 billion in higher premiums as a result -- $120 for every Florida resident.

Unless lawmakers intervene, it’ll only get worse.

Here’s how the racket works: A homeowner calls a contractor to fix some non-weather-related water damage. The contractor gets the homeowner to sign an “assignment of benefits” (AOB) form, which gives the contractor the right to recover payments directly from the insurer. The contractor then submits an invoice for far more than the damage is worth and threatens to sue the insurer (usually without the homeowner’s knowledge or consent) when the claim is denied.

Because of a unique provision in Florida law, contractors have the upper hand in disputes with insurers, which encourages inflated claims and outright fraud. Plaintiffs who prevail in an insurance dispute (including third-parties suing under AOB) are entitled to have their attorney’s fees paid for by the insurance company. But it doesn’t work the other way; if the insurer wins the lawsuit, it must still cover its legal costs.

This one-way attorney’s fees rule was originally intended to level the playing field between big insurance companies and the “little guy,” but it’s been hijacked by third-parties, including powerful law firms representing deep-pocketed contractors. Some unscrupulous contractors submit preposterous claims to insurers, knowing that insurers are likely to settle. A small water leak under a kitchen cabinet can turn into a $30,000 remodel, while putting a tarp on a roof can cost $18,000.

For a small group of lawyers, it’s become big business. From 2013 to 2016, a single attorney filed nearly 50,000 AOB lawsuits, an average of about than 33 suits every day. Some law firms even offer classes to teach contractors how to abuse the system.

Once they sign an AOB, homeowners lose control over the repairs to their property. Prosecutors around the state are going after contractors who have used AOBs to collect exorbitant fees from insurers and left repair jobs undone.

The number of AOB-lawsuits has skyrocketed. In 2017, there were 129,781 AOB-related lawsuits in Florida -- an 829% increase since 2007.

According to Citizens Property Insurance Corporation, the government-backed insurer of last resort, litigated AOB claims for non-weather water damages cost six times more than claims without litigation or an AOB. Considering that 56,000 more AOB-related lawsuits were filed against Citizens in 2018 than in 2013, the insurer had to charge $1.4 billion more in premiums than if the amount of AOB litigation had remained constant.

Homeowners are footing the bill.
Continue reading here

Owner of TSK Exteriors accused of insurance fraud, investigators say

WFTV Channel 9 News
Feb 14, 2018 

OSCEOLA COUNTY, Fla. - A woman who runs a St. Cloud roofing company faces charges in three different insurance fraud cases targeting home owners and insurance companies, said investigators with the State Division of Investigative and Forensic Services.

Investigators said Michele Krisle, who also goes by the name Shelly, is accused of placing liens on properties for work her company, TSK Exteriors, didn’t do.

The roofing and siding company has been a registered business since 2012, state records showed.

Channel 9’s Jeff Deal went to Krisle’s work and home for comment, but she was nowhere to be found.

Investigators said customers would pay to have the roofs repaired, but Krisle would try to get them to sign an "Assignment of benefits form" that would give her company power to deal directly with an insurance company. Krisle would then fraudulently bill the insurance companies for services TSK Exteriors didn’t do, investigators said.

Investigators told Eyewitness News that Krisle would put liens on the customers' properties for work her company didn’t do. In one case, it was a $54,000 lien on a property for a roof that only cost around $14,000, investigators said.

Investigators believe she could be responsible for between 20-25 cases.

“The fraudulent use of an assignments of benefits (AOB) agreement is a category five hurricane bearing down on Florida’s policyholders,” said Chief Financial Officer Jimmy Patronis. “Storms bring out the best in our community leaders and volunteer organizations but they also bring out the worst in others and that’s when we see the post-storm fraud. My investigative team will continue to take swift action against those who intend to exploit vulnerable consumers, especially those who are recovering from yet another active hurricane season, through the fraudulent use of an AOB.” 

ASSIGNMENT OF BENEFITS- The Worst Insurance Crisis Ever!

Opinion by Scott Johnson, Johnson Strategies, LLC
January 22, 2018 

Florida’s House of Representatives just sent the Senate a meaningful AOB reform package (HB-7015 by Rep. Jay Trumbull); one the House had passed by a significant 82 to 20 margin.

The Senate, so far, particularly the Banking & Insurance Committee, hasn’t budged—delaying, and distracting from root causes with proposals that favor the abusers.  Like last year, there hasn’t even been a hearing on the companion reform package by Senator Dorothy Hukill (SB-62).

Understandable then that the ranks of the disgruntled is growing.  The latest from the Consumer Protection Coalition shows 85.1% of voters oppose 3rd party vendors suing insurers without the policyholder knowing and 65.9% want them to pay their own attorney fees.  The media is solid on reforms and in addition to dozens of video expose’s, the Wall Street Journal has floated six nationwide editorials urging Florida Senators to give Senator Hukill’s bill a chance.  “Not a chance” is the apparent response from committee chair, Miami attorney, Senator Anitere Flores.

So, the abusers continue to abuse.  (See Note#1 below)Growth in AOB suits has risen by 90,000% since 2000.  And, the OIR AOB report released just days ago shows the velocity of water losses has tripled in less than twelve (12) months.

By all accounts Assignment of Benefits is the worst insurance crisis of all time. Worse than PIP, worse than the ‘04/’05 storms, worse than medical malpractice, workers compensation, nursing homes, day care centers, et al. Indeed, if it were happening to any other line of business this crisis would’ve been solved because the carriers would’ve left the state. Florida’s property carriers are predominantly domestics with no place else to go.  So, in addition to sending more business to Citizens, they reduce coverage, raise rates and implement managed repair plans.

And, the consumer beat downs are also worsening!

Senators listen up. In addition to all the AOB scams exposed in these pages over the last half dozen years, Irma spawned a new angle. The blue tarp angle.

Hear the nightmare faced by Sandra Carlstrom whose roof repair was $30,000 but whose insurer, thanks to AOB, was invoiced $191,000 by SFR roofing. (See Note# 2 below)

The Calstroms can’t make repairs, can’t live in their home and discovered too late that they can’t cancel the AOB they were tricked into signing—that is, unless they cough up thousands for a flimsy blue tarp that has long since shredded (and was already paid for).  If they don’t pay another $15,000 more, or if they try to get out of the AOB, they could face a lawsuit or a lien and the potential of foreclosure.

Theresa Doherty also had roof damage. After her blue tarp incident, she filed complaints with DBPR (Department of Business & Professional Regulation) and the BBB (Better Business Bureau) and the DFS (Department of Financial Services) against Noland Roofing.   (See Note# 3 below)

Despite the promise of “free estimates” Noland Roofing wants 20% of its’ estimate to release her from the AOB.  And, despite two significantly lower estimates, her insurer can’t send her the check for repairs because the AOB allows only Noland’s name on the check. She already paid for her blue tarp and like the Calstroms it, too, has shredded.  Also like the Calstroms, the Doherty’s can’t make repairs and face the potential of a lawsuit or a lien and, ultimately, foreclosure…


Of course, all are innocent until proven guilty and, as always, I will print any response to these allegations in their entirety, without editing. But…ladies and gentlemen, this isn’t how insurance is supposed to work. In fact, it isn’t about insurance or Irma or roof damage.  This appears to be nothing but a good old fashioned mafioso-style shakedown of Florida policyholders.

That’s why I say this is the worst crisis ever. It’s also why the American Tort Reform Association (ATRA) has just named Florida number one on its list of “Judicial Hellholes.”  ATRA has been around for 16 years and Florida has been near the top but, now it is the worst in America.  Why?  AOB and “…an increasingly aggressive and sometime LAWLESS plaintiffs’ bar”.

This needs to stop.

My sincere prayer is that meaningful reforms are allowed a hearing in the Senate and that industry lobbyists accept nothing less than what’s already passed twice in the House.

The Doherty’s, the Calstroms, and all the others whose nightmares have played out on these pages or in television news programs, deserve nothing less.


NOTE #1: See an editorial published by the American Consumer Institute referencing the “cabal of lawyers” and citing Florida’s one-way attorney fee statute.  Then see the list of the top plaintiff law firms and AOB Contractors as compiled by Caseglide for just last month, December 2017.

NOTE #2: The research and programming on the Calstrom affair and SFR Roofing was provided by Lisa Miller and Associates and distributed by The Consumer Protection Coalition.  See SFR Roofing flyers here. See the roof damage to the Calstrom home here.

NOTE #3: See 2016 information provided by DBPR on Noland Roofing here. Read the Doherty’s entire complaint affidavit submitted to DBPR and BBB, as follows:

Complaint against Noland’s Roofing of Clermont, Greg Noland, owner, license number CCC057611. During Hurricane Irma our house had roof damage. Called Noland Roofing to tarp AND ONLY TO TARP the roof. The rain was imminent. Ronald Mercer, who claimed to be a representative of Noland Roofing, called us. He did not identify himself as a salesman instead spoke as an engineer.  Later I discovered he was a salesman.  He said he was very busy, had to move on to the next house, and we needed to hurry up with a decision.  I asked that a tarp be put on the roof. I paid with my credit card $1000 for the tarp. In text messages with Mr. Mercer he said that he could not guarantee our place in line to get tarped unless we signed an AOB. He said it was not a roofing contract rather a consumer protection form by Florida legislation. He also said it was standard procedure.  My ins. co. said we were to “do what was needed to prevent further damage”.  I understood the AOB was designed to help insure the ins. co. would be held accountable. My husband and I signed it.  I received a call from Chris Jakubowski of Noland Roofing saying he had a note from Mr. Mercer but it was sketchy and he was verifying what I wanted. I was very clear and repeated myself many times saying I only wanted the roof tarped and was not committing to hiring Nolands for the roof repair. I made clear that I needed to speak with my ins. co. and I wanted to get three est.s and that I told Mr. Mercer he could be one of the est.s. I have this in writing to Mr. Mercer in my text message history.  Mr. Jakobowski was nice and continued to reassure me he understood. He took my credit card info and I received a receipt for the tarp charge stamped “paid.” I went ahead to get more estimates from 2 other local companies. After some time I received a check from the ins. co. with Noland’s roofing name, our name, and mort lender’s name. I contacted the ins. co., ASI.  They said the AOB is invalid because the mortgage lender refused to sign it, but they had to honor the “direction of payment.” ASI said we have to get Noland Roofing to write a letter to the ins. co. releasing us from the direction of payment then they will reissue the check. Mr. Mercer refuses to do that claiming he wants 20% of the est. to get out of the contract claiming they had already put so much work into it.  The Noland’s Roofing website clearly states Free Estimates.  Mr. Mercer cannot charge for an estimate. We didn’t sign a roofing contract and Mr. Mercer said the AOB was just a consumer protection form.    This is a scam. I called Mr. Jakobowski about this issue and said he would get back to me. He didn’t rather Mr. Mercer emailed me continuing the scam saying that we signed for the complete roofing claim. We did not. He had been sending letters and an est. to ASI without our knowledge. We did not receive these letters and est. as I instructed. We have emailed Mr. Steve Fortier, general manager of Noland Roofing, Dec. 22 asking to review more information including a contract. No response. We sent a certified letter to him Jan. 5. Noland Roofing signed for it Jan. 8. Still no response. We have discovered the tarping and/or installation was defective, ripped, and has come off the roof. I have video of pieces of the tarp flapping in the wind. A tarp after a hurricane declared disaster should last longer than that. I requested the documentation from ASI. The est. provided them without our knowledge charges ASI $1000 for the tarp. I already paid for that with my credit card. Noland roofing is committing fraud by charging ASI for the tarp. Noland’s Roofing est. is over $16,000. The other 2 estimates I got from roofing companies were approx. $9,000 and $11,000.  Noland’s roofing is price gouging during the Hurricane Irma disaster. I am asking that Noland’s Roofing be investigated and ordered to write a letter to my ins. co. explaining that they were not hired to replace my roof only to put the tarp on.

Homeowner Insurance Abuse Needs to Be Addressed

Commentary by Christian R. Camara, Daily Business Review
June 9, 2017

As Gov. Rick Scott acts on legislation that was passed during the final weeks of this year's regular legislative session, there is one bill noticeably absent from his desk: House Bill 1421. Authored by state Reps. Jamie Grant, R-Tampa, and Rene Plasencia, R-Orlando, the bill would have addressed abuse of assignment of benefits, or AOBs, the driving cause behind the continuing rise of homeowner insurance rates across the state.

It has been over a decade since Floridians were impacted by a major hurricane, so naturally we have legitimate questions about why we continue to pay more every year to insure our properties — a line of questioning further justified by the fact that reinsurance rates are at historic lows and falling.
The principal reason many parts of Florida continue to experience property insurance rate increases rests squarely on the exploitation of laws governing so-called AOB agreements. An AOB permits a policyholder to assign their insurance benefits to a third-party vendor — such as a water remediation company, repair company or contractor — after a loss, allowing the vendor to charge the insurance company for its work directly.

While the arrangement is sensible in principle, it is problematic in practice. A loophole in state law allows vendors to whom benefits have been assigned to sue and have their legal fees paid by the insurer. The arrangement was originally intended as a protection for policyholders, but this "one-way" attorney fee provision has since incentivized unscrupulous vendors to overcharge for services and file frivolous lawsuits. This needless litigation increases the cost of even the smallest claim by thousands of dollars, which in turn is paid for through higher insurance rates.

The situation has become so absurd that many lawsuits are filed even before an insurance company has knowledge of a loss, much less has had time to process a claim. This means that even when an insurer chooses to settle, it must cover the vendor's legal fees.
Payday Scheme This grievously misaligned incentive has led to abuse that amounts to a payday scheme for unscrupulous vendors and their trial lawyers. Their gain is every Floridian's pain as policyholders are compelled to foot the bill for their superfluous legal actions via higher insurance rates.

The problem is only growing. The state Office of Insurance Regulation reported that in 2014, 63 percent of insurance companies filed, and were approved for, rate decreases. A mere two years later in 2016, 73 percent of insurers were approved for rate increases largely on account of the spike in AOB abuse.

Despite years of opposition from trial lawyer lobbyists, the Florida House finally passed a modest, bipartisan bill this session that would have preserved consumer flexibility while also addressing much of the abuse driving rate increases. H.B. 1421 was supported by consumer groups, Citizens Property Insurance Corp., the Office of Insurance Regulation, various business associations, insurance companies, Realtors and even the Wall Street Journal editorial board. Yet it stalled in the state Senate.

Tellingly, the Senate companion measure, Senate Bill 1038, never saw the light of day. It failed to receive a hearing in its first committee chaired, surprisingly, by Sen. Anitere Flores, R-Miami, whose district is ground zero for AOB abuse and, consequently, is experiencing among the largest insurance rate increases in the state.

In response to the AOB crisis, private insurers are pulling out of many South Florida ZIP codes and are nonrenewing policies. As insurers seek to limit their exposure, supply will become restricted. Predictably, as a result state insurance regulators are projecting continued statewide rate increases until the Legislature acts to address AOB abuse.

In 2017, the Florida House did its part. The Senate, not so much. Hopefully all policymakers will be more motivated to act in 2018 — an election year.

Christian R. Camara is a senior fellow with the R Street Institute in Washington.