Our Positions | Assignment of Benefits

An assignment of benefits, or AOB, is a legal tool that allows an insurer to directly pay a third party for services performed rather than reimbursing a claimant afterwards. In recent years, insurers have experienced an increase in fraud and abuse of assignment of benefit provisions, resulting in higher costs.

Assignment of rights to collect under an insurance policy after a loss are common. In many cases, homeowners will assign the right to collect to contractors or other service providers following a loss. Vendors soliciting AOBs from policyholders are typically associated with property insurance, auto repair, and personal insurance claims. While such assignment may allow policyholders to make emergency repairs more quickly, the practice has resulted in many homeowners becoming the victims of scam artists and other unscrupulous service providers. Contractors have sought to unilaterally establish the value of the claim and demand payment for inflated invoices. Many contractors also work with attorneys that then sue the insurance company over the claim.

State legislatures have sought to protect insurance consumers from AOB abuse by imposing common sense limitations, and 2019 finally saw some progress. For example, for the past several years, the Florida legislature has sought to put some parameters around the use of assignment of benefits to curtail the explosion of lawsuits filed by contractors and attorneys allegedly on behalf of consumers who knew nothing about the lawsuits. The only beneficiary of such fraud were the unscrupulous lawyers and contractors. In 2019, AOB reform legislation finally passed the Florida legislature, and was signed into law by the governor. Among other things, the new law gives policyholders the right to rescind the contract, and mandates that the assignment include an itemized description of the work to be done. Similarly, governors in North Dakota, Kansas, and Iowa all signed into law NAMIC-backed legislation to protect consumers from abusive assignment of benefit practices.

NAMIC Position

NAMIC believes in fairness when it comes to the litigation process and supports efforts to protect policyholders from unscrupulous third-party service providers. Given the significant potential for fraud, which raises costs for all consumers, NAMIC is supportive of legislation in the states that prevents the abuse of the assignment of benefits practices.

Utah: Session Ends; AOB Bill is Highlight

March 17, 2020 Utah’s legislative session ended on schedule on March 12, just as state legislatures around the country began considering altering or delaying their proceedings in response to the coronavirus pandemic. The main highlight of session for industry was... Read more

Utah: NAMIC-Supported AOB Bill Given Final Approval

March 3, 2020 The Utah Legislature has given final approval to House Bill 199, also known as the Insured Homeowners Protection Act. Passage of this bill followed several months of work before and during the legislative session, and NAMIC was heavily involved in this.. Read more

Utah: Litigation Lending Bill Advances in Modified Form, AOB Bill Out of Senate Committee

February 25, 2020 The Utah House Business and Labor Committee on Feb. 20 advanced HB 312, a bill to regulate litigation funding in the state. Litigation funding is an increasingly widespread and controversial practice in which third-party investors buy a share of a... Read more

Utah: AOB Bill in Senate; Bill Blurring Commercial, Personal Lines Delayed Again

February 19, 2020 The Utah House has passed HB 199, a bill that addresses assignment-of-benefit abuses for residential repair contracts. The bill would require disclosures of the cost of repairs and an itemized list of repairs, preserve the ability of the insurer and... Read more

Utah: AOB Bill Advances; Bill Blurring Commercial, Personal Lines Delayed

February 5, 2020 The Utah House Business and Labor Committee on Feb. 3 advanced House Bill 199, which addresses assignment of benefit abuses for residential repair contracts. The bill would require disclosures of the cost of repairs and an itemized list of repairs... Read more


Andrew Pauley
Government Affairs Counsel