Beware of the AOB…..Assignment of Benefits….Avoid this at all cost.

   

“What is an Assignment of Benefits?”

“An Assignment of Benefits (AOB) is a contract between you and a contractor (such as a plumber, water remediation firm, roofer, etc.) where you give the contractor control of your claims benefits. They file a claim for their services and direct the insurance company to pay them directly.

What’s in it for the contractor?

Once you sign an AOB, you lose control of the direction of your claim. The contractor takes control, and can submit whatever they like to your insurance company, sometimes billing the company two, three, four, five times the going market rate for their services, and sometimes including work that was never performed. You don’t see this, and you can’t verify what they did.

What are the potential pitfalls in signing an AOB?

  • You have committed to this contractor, and you have little to no recourse if you’re not satisfied with their work.
  • You can no longer comparison shop if you are not satisfied with their work. Even if they walk off the job with their work incomplete, they can still claim compensation from the insurance company which gets deducted from your benefits.
  • Both you, and the contractor, are still bound by the terms and conditions of the policy, and if the contractor violates those terms and conditions, those actions could potentially jeopardize coverage for your entire loss.

What’s in it for the contractor?

This is where the age old mantra of “if it seems too good to be true, it probably is,” comes into play.  Has the contractor done any of the following?

  • Solicits a job from you unannounced for damages you didn’t even know were allegedly present?
  • The contractor is offering you something for nothing, such as a free roof or kitchen.
  • Wants to start work immediately and advises you to delay contacting your insurance company?
  • Offered to “take care of” your deductible.

Any of these issues could potentially lead to a fraud investigation which could jeopardize your coverage.

Possible Litigation:

As mentioned above, there is no standard for what the contractor can submit to the insurance company, and if the company questions the scope and/or the pricing submitted by the contractor the company can be sued directly by the contractor.  And while you may not be a party to this lawsuit, more likely than not you will end up being a witness.

What should you do if you have a claim?”

Contact your insurance agent to report the claim.  He can guide you through the process.  Some insurance carriers will have contractors that they have vetted and will recommend.

This article is compliments of Federated National and SWFL Insurance Agency.

Questions or need a Homeowners or Property coverage quote, call 239-265-9577 or email joshw@swflagency.com.  We are Your Insurance Answer People in SWFL.

Avoiding Water Damage Losses in Your Home or Condo….Must Read

water-damage-home“From torn washing machine hoses to burst pipes, it’s no wonder that water damage is among the leading causes of homeowners’ claims across the country.

Anyone who has ever dealt with a water issue at home or been involved with a water loss claim can speak to the devastation. The loss is typically greater than the property that is destroyed.”

With so many SWFL homes and condos sitting unoccupied for various lengths of time, it is important to have your customers understand the risk associated with not shutting off the potable water supply to the plumbing system of their home. Water damage claims from a plumbing break can be devastating and can happen at any time. Losses are more likely to happen when you are not home and the damage will typically be more extensive.

Help your customers understand where the main water shut off for their home or condo is located. Make sure they know where the shut off valves for each plumbing fixture and appliance is located, Being able to get to the shut off quickly can reduce damages. This is particularly important for multi story homes and condos.

If the home or condo is 10 years or older, always recommend that the shut off valves be inspected and replaced. The quality of the water can cause deposits in shut off valves causing them to not operate. These valves are typically not turned at all, unless there is an emergency or a fixture needs repair. These valves are typically the weakest link in the plumbing system.

The condensate drain and catch pan for the air conditioning system is another potential cause of water damage. This system should be cleaned and inspected at least once per year to avoid problems. Many condensate systems utilize a shut off switch to monitor excess water in the drain catch pan and shut the system down. This switch should be inspected and replaced if not working. This switch can make the difference in avoiding water damage, which can be serious depending upon where system is located.

Technology advances have created devices to shut off the main water supply when a major drop in pressure is detected. Some devices can send a text alert to your phone. Learn more at Auto Shut Off Devices. Condominium associations with multi story buildings should consider having auto shut off valves installed in all units due to the potential for extensive losses affecting multiple units.

Your Homeowners Insurance Policy may have water damage coverage, check closely. If coverage is included or endorsed to the policy, the limit of coverage will typically be $5,000. This being the case, it is even more important to be pro active in preventing a water damage loss.

Questions…Need a Homeowners Policy competitive premium quote… Call SWFL Insurance Agency, Inc., 239-265-9577 info@swflagency.com………www.SWFLAgency.com

 

Accidental Water Damage…What is covered by My Homeowners Policy?

Plumbing Leak

First let’s look at definitions.  

A back-up is an accumulation caused by a stoppage in the flow; (Typically not covered)

  • Something prevents the water from continuing down its path
  • The flow is forced to reverse direction and go back the other way.
  • A collapsed drain pipe or blockage can cause a back-up.

An overflow is when the water exceeds its boundaries;

  • The space is filled to capacity and water then spreads beyond its limits.
  • A bath tub left running creates an overflow.

A discharge is a flowing or issuing out;

  • Water coming from a pipe.
  • A leaking pipe discharges water from the hole in the pipe;
  • It is not a back-up or an overflow.

Discharge or Overflow?

The Homeowners Form HO3 and HO6 provide coverage for water damage that is the result of a discharge or overflow of a plumbing, heating, air conditioning, or household appliance if it is on the residence premises.

This covers

  • pipes that leak behind walls, floors, or ceilings including AC drip pans,
  • washing machines and dishwashers that overflow,
  • toilets or bathtubs that overflow, or
  • storm drains off premises that overflow due to high rains or floods.

It is important to note that a sump, sump pump or related equipment, or a roof drain, gutter or downspout or similar equipment is not considered a plumbing system or household appliance.

  • A discharge or overflow caused by a storm drain, water, steam, or sewer pipe is covered as well if it is off the premises.

The coverage is for repair of the damaged property—the walls, floors, tiling, and carpet, areas that got saturated and need to be repaired or replaced. Even the tear out of a wall, for example, to get to a leaking pipe is covered.

What is not covered is the leaking pipe itself; a pipe leak is often caused by simple wear and tear or age of the system, and that is a maintenance item. However, even if the insured is hanging a picture and pokes a hole in a brand new home and new pipes, the damage to the pipe is not covered. The exclusion for damage to the item causing the loss is all encompassing, and has no exceptions.

The policy specifically excludes water that backs-up through sewers or drains, overflows from sumps, sump pumps, or related equipment.

But wait…….. this is where a lot of losses occur. 

To provide coverage for this occurrence there is the Water Back-up and Sump Discharge or Overflow endorsement, HO 04 95.

  • This provides $5,000 of coverage for back up through a sewer or drain or
  • Overflow or discharge of a sump, sump pump or related equipment,
  • Even if the equipment suffers a mechanical breakdown.
  • This coverage does not, however, increase the limits of liability for coverage A, B, C, or D in the homeowners’ policy.

This takes the problem of defining back-up or overflow out of the equation of certain losses, since the endorsement provides the coverage that is excluded in the main policy itself.

Make sure to ask for this coverage to be added to your Homeowners Policy.

Call SWFL Insurance Agency at 239-265-9577 for a full review of your present coverage and a competitive quote.

Note:   Damage caused by repeated leakage of water, such as rot, fungi, mold, deterioration are covered under a specific peril with conditions.  See Fungi, Mold.