Insurance Assignment of Benefits (AOB) reform is coming to Florida. It passed the state legislature and Governor DeSantis said he’ll sign it into law. For years insurance companies have been pleading with the state to do something to curb the abuse that’s become rampant across the state, especially in the wake of hurricanes Irma and Michael.
Florida’s current property insurance system allowing the “Assignment of Benefits” has been widely abused. In 2018, according to the state Insurance Information Institute, there were 134,497 cases of insurance fraud resulting from homeowners signing benefits over to third parties who stole insurance money without adequately completing work. Another common abuse occurred with the assigning of the legal right over to the fraudsters who would then attempt to sue the insurance companies for additional money that also drove up costs in the system.
According to Citizens info regarding the AOB issue, the average Floridian is already paying an extra $300-$400 per year for property insurance resulting from billions in loses per year due to this type of fraud. The estimate is that over the next four years additional losses would have at least doubled to $800 per home without reform.
The new law will limit AOB’s to a $3,000 maximum in the state. That’s a level that doesn’t create near the opportunity or incentive for fraudsters to attempt to take advantage of homeowners. Additionally, it mandates that all Citizens policyholders directly receive the benefit of the savings related to this law. That means that if you’re a Citizens policyholder you’re certain to save money going forward as a result of either cheaper premiums or lower increases than it would have taken place without the reform.
Aside from Citizens, it’s estimated that over 90% of policyholders will have the opportunity to save money on premiums. With this reform in place, it could be a good idea to shop your policy and cost the next time you’re coming up for renewal to obtain the best overall value.
Photo by: Scott Olson/Getty Images