What is an Assignment of Benefits?

You may find yourself having to explain industry terms to your clients. For instance, a homeowner may not fully understand an insurance Assignment of Benefits. To help your customer, you will need to be able to explain the insurance payment process in laymen’s terms and to do that you will need to fully understand the subject yourself. To that end, we are going to look at what an assignment of benefits is and what does it mean for you?

Defining an AOB

An assignment of benefits is a written agreement that allows a third party to stand in the place of an insurance policyholder. In many cases, a policyholder pays for something (like a car wreck or medical work) out of pocket and is later reimbursed by their insurance company. In the case of an AOB, the company or individual receiving payment obtains it directly from the insurance company, while the policyholder pays only a small amount or sometimes nothing out of pocket.

Independent Contractors and Assignments of Benefits

So, what does an AOB have to do with independent contractors? While not all independent contractors handle jobs covered by insurance, many do. Generally speaking, independent contractors who fix household or asset damage (fire, water, mold, etc.) have to deal with insurance claims. Rather than dealing with the homeowner, consider working directly with the insurance company for payment.

How Does an AOB Benefit You?

Whether you are an independent contractor or a hiring homeowner, an AOB has the potential to make your life a lot easier. Finances often ruin the relationship between client and contractor because each wants to wrestle with the other. In the case of an AOB, the third party contractor goes directly to the insurance company without having to involve the policyholder. Generally, this allows the client and contractor to interact with little strain.

Are There Any Disadvantages to an AOB?

Your client may have had a bad experience with a dishonest contractor. Some homeowners have had legal issues with contractors who inflated repair claims and raised the eyebrow of the paying insurance company. In these instances, there is a lot of legal interaction between the policyholder, the contractor, the insurance company, and lawyers. Make sure you protect the interests of your customers while working with their insurance companies.

What Customers Look for When Choosing a Contractor

Here are some tips for getting insurance referrals or for catching the attention of homeowners needed services.


1. Cultivate reviews, recommendations, and referrals.

When you have successfully completed a job, ask for a referral. Provide a convenient link to your Google Business listing so that the homeowner can easily provide feedback.

2. Ask plenty of questions.

Try to get a feel for your customer’s knowledge of the process. Provide them information about your schedule, the cost, exactly what work needs to be done, and how you intend to fix their problem.

3. Provide a written estimate.

No matter your work relationship, most insurance companies are going to require a written estimate. Quotes, promises, etc. are easily forgotten or ignored. A homeowner will also appreciate having a written estimate.

4. Communicate expectations.

Not only should you let your customers know what they can expect from you, but you should also let them know what you need from them. For the benefit of your working relationship, make sure you are both on the same page.

Remember that Independent Contractors are Just People!

RAF’s purpose is to protect the rights and make heard the voices of honest, hard-working, independent contractors. We advocate for professionals in the mold, fire, water, and wind damage industry. If you are interested in becoming a member of RAF or have any further questions, call us today.

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