Do you have to sign an assignment of benefits to have your home restored or roof replaced? No. But here is some reasoning as to why you may want to:
First, back when Florida went through three (3) hurricanes including Charlie, homeowners were expected to pay 3 deductibles. Then, the Florida legislature stepped in and changed the rules stating that there could only be one deductible in a hurricane season. Along with that came some others changes designed to protect homeowners. Specifically, policyholders with HO3 coverage policies were now given replacement cost coverage.
Second, in the days and years since, homeowners have had the option of selecting a roofing contractor to do the work. At the same time, some insurance companies have been working hard to try to change the rules so that homeowners have to ask insurance companies for permission on which contractor to use, or, that the insurance company will replace the damaged property for them.
Enter the Assignment of Benefits Conversation
According to Harvey Cohen of the Cohen Law Group, “Contractors using Assignment of Benefits, ‘act in the shoes of the homeowner' to discuss the cost of replacement with the insurance carrier directly.” This is nothing new as hospitals and doctors have been using Assignment of Benefits for decades to receive compensation for the work they've done on behalf of patients. And legal pioneers like Harvey Cohen have been instrumental in helping homeowners receive the benefit of using Assignment of Benefits to have insurance companies pay correctly, as the contractor understands the costs associated with the work at hand better than anyone.
Of course, many homeowners have been advised by their insurance companies NOT to sign assignment of benefits, claiming that the contractor can then charge the insurance carrier whatever they want. However, this is not in line with reality as contractors use the same estimating software solution that the insurance carriers use. In fact, everyone is using the same source of materials and labor costs as the software prices everything at the local level and even uses specific moment in time pricing. Meaning, the software will track the prices of things before the storm and after. The difference of course is: how the adjuster's opinion treats or refers to the damage. For example, if an adjuster's opinion states that the roof is “repairable,” then the insurance carrier will pay for a repair and not a complete roof replacement.
Assignment of Benefits Enables Acting In The Shoes Of
Alternatively, if the homeowner has signed an Assignment of Benefits giving their contractor the ability to “act in their shoes” and talk with the carrier directly, the contractor can then inform the carrier that the recommendation for repair is incorrect. For example and according to Harvey Cohen, “if a home has a roof damaged and the shingles cannot be matched or if there is more than say 25% of damage on the slopes, the carrier, under an HO3 policy with Law and Ordinance provisions should pay for the roof.” When a homeowner is not aware of this and accepts the adjuster's repair opinion, that homeowner may be faced with a sooner than expected future replacement but at their own expense.
So does a homeowner have to to sign an Assignment of Benefits? No. A homeowner does not have to sign an Assignment. However, a contractor, being in the field and seeing materials and labor costs more frequently than an adjuster, knows and understands better what a restoration will cost. A homeowners obligation is their deductible. Everything else is the responsibility of the insurance carrier when the cost to replace the damaged property is documented and justified. Of course, the insurance carrier may not like that a Contractor is having a say in the cost to replace, but whom would be the best advocate for the homeowner if not the contractor?
Assignment of Benefits and Payment of Claim
When a homeowner accepts an insurance loss amount, it should be for the appropriate amount after deductible obligations, and an Assignment of Benefits is but a tool a homeowner can use to ensure the carrier is being fair in costing the replacement. After all, according to Harvey, “that was the purpose of the change in the law mandating ONE deductible per Hurricane season, Law and Ordinance homeowner protections, and the reasoning behind HO3 replacement coverage.
Are you faced with damage and not sure what to do or have questions? Let us know by reaching out to us today.
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