Assignment of Benefits (AOB)
Also called: AOB, assignment of claim
Assignment of Benefits is an agreement transferring the homeowner's rights under their insurance claim to a contractor, so the contractor can deal with the carrier and be paid directly. It is heavily regulated, restricted or prohibited in some states, and it is not the same as a contingency agreement.
What it means
An assignment of benefits transfers the policyholder’s rights under an insurance claim to somebody else, typically the contractor doing the repair. Once assigned, the contractor can deal with the carrier directly on the claim and be paid directly by it, rather than depending on the homeowner to pursue and pass on the proceeds.
The appeal on the contractor’s side is obvious: it removes the homeowner as an intermediary in both the negotiation and the payment. The concern on the homeowner’s side is the mirror image: they have handed over control of a claim on their own property.
Why it is so heavily regulated
Because the arrangement has been abused, in some markets extensively. Assignments have been used to pursue inflated claims, to litigate against carriers in the assignee’s own name, and to leave homeowners with claims they no longer controlled and work they were unhappy with.
The regulatory response has varied and has changed repeatedly. Some states restrict or prohibit assignments for property claims, some require particular disclosures, formats, rescission periods, or notice provisions, and others leave them largely intact.
That variation is the practical point. There is no general answer to whether an AOB is available or enforceable, and anyone who offers one is not describing the law carefully. It is a question for a lawyer licensed where the property sits.
The confusion with contingency agreements
This is the most common and the most consequential mix-up in storm work.
A contingency agreement says the contractor will do the work if the insurer approves the claim, and typically sets out scope and price mechanics. The homeowner retains their rights under the policy and continues to control the claim.
An assignment transfers those rights. The homeowner does not retain control.
These are different instruments with different consequences, and homeowners regularly sign one believing it is the other, sometimes because the person presenting it used the terms interchangeably. A homeowner who has been told “this just lets us talk to your insurance” and has actually assigned their claim has been misled, whether or not anyone intended to mislead them.
Common mistakes
Using the term loosely is the first, and it is where most of the harm starts.
The second is assuming an arrangement that works in one state works in the next. Multi-state storm chasing has produced a lot of paperwork that is unenforceable where it was used.
The third is presenting any assignment without making sure the homeowner understands what they are transferring. A signature obtained from someone who did not understand the document is worth very little, and deserves to be.
On the call
Never describe a document to a caller as an assignment of benefits unless you know that is what it is. The word carries legal weight, its use is restricted in several states, and a homeowner who believes they signed one when they signed a contingency agreement has been badly misinformed.
This is how our agents handle it on storm appointment calls and day-to-day roofing answering service intake.
Questions people ask about assignment of benefits
- How is an AOB different from a contingency agreement?
- A contingency agreement is a contract to do the work if the claim is approved; the homeowner keeps their rights under the policy. An assignment transfers those rights to the contractor. They are frequently confused, including by people presenting them for signature, and the difference is substantial.
- Are assignments of benefits legal?
- It depends entirely on the state, and the law in this area has changed repeatedly. Several states restrict or prohibit them for property claims, and others impose specific disclosure and format requirements. This is a question for a lawyer licensed in the relevant state, not for a contractor's judgement.
- What does the homeowner give up by signing one?
- Potentially a great deal, including control of the claim and the ability to direct how it is negotiated or settled. That is exactly why the instrument is regulated. A homeowner should understand what they are transferring, and should be encouraged to take advice if they are unsure.
Back to the full roofing claims glossary.