Assignment of Benefits, commonly known as AOB, was once one of the most controversial practices in Florida’s property insurance system. For years, AOB agreements allowed homeowners to sign over their insurance policy rights to contractors and vendors, who would then file claims and collect payments directly from the insurer. What started as a convenience for policyholders became, according to the Florida Office of Insurance Regulation, a vehicle for inflated repair bills and excessive litigation that drove up insurance costs statewide. Florida’s legislature responded with a series of reforms between 2019 and 2022 that fundamentally changed how AOB works, and in many cases eliminated it entirely. If you own property in Florida, understanding these changes is essential to protecting your rights after storm damage or any covered loss.
What Is an Assignment of Benefits in Florida Insurance?
An Assignment of Benefits is a written agreement in which a policyholder transfers their right to file an insurance claim and collect insurance benefits to a third party, typically a contractor, roofer, water extraction company, or other repair vendor. When a homeowner signs an AOB, the contractor “stands in the shoes” of the insured. The contractor can then negotiate directly with the insurance company, endorse claim payments, and even file lawsuits against the insurer on behalf of the policyholder.
Before Florida’s reforms, AOB agreements were common after hurricanes, tropical storms, and water damage events. A homeowner would call a restoration company, the company would assess the damage, and before beginning work, the company would present the homeowner with an AOB document to sign. Once signed, the homeowner stepped out of the claims process, and the contractor took over. In theory, this spared the homeowner the hassle of dealing with their insurance company. In practice, the Florida OIR documented widespread abuse: contractors would inflate repair costs, perform unnecessary work, and file lawsuits against insurers when they disputed the inflated bills.
The financial impact was staggering. Florida accounted for roughly 9% of all property insurance claims nationwide but generated approximately 79% of all homeowner insurance lawsuits, according to data cited by Florida lawmakers during the reform process. The Governor’s office described AOB abuse as contributing to “exponential growth” in litigation that was pushing insurance premiums higher for every Florida homeowner.
What Did the 2019 AOB Reform Law Change?
Governor DeSantis signed House Bill 7065 on May 23, 2019, effective July 1, 2019. The law created Section 627.7152 of the Florida Statutes and established the first comprehensive set of rules governing AOB agreements in property insurance. The legislation did not ban AOBs outright, but it imposed significant requirements on how they must be executed and enforced.
Under HB 7065, AOB agreements had to be in writing and signed by both the assignee (the contractor) and the assignor (the homeowner). Homeowners gained the right to rescind an AOB agreement without penalty within 14 days of signing, or within 30 days if the contractor had not substantially begun work. Contractors were required to provide written estimates of the services to be performed, send a copy of the AOB agreement to the insurance company within three business days, and indemnify the homeowner against any liens on the property. The agreement also had to include a prominent notice in bold, uppercase text warning the homeowner that they were giving up rights under their insurance policy.
The law also reformed attorney fee provisions. Before HB 7065, Florida’s one-way attorney fee statute allowed contractors who filed suit under an AOB to recover their attorney fees from the insurer if they won any judgment at all, regardless of the amount. HB 7065 replaced this with a sliding scale tied to the difference between the pre-suit settlement offer and the judgment obtained. If the judgment was close to the insurer’s offer, fees could be reduced or eliminated entirely. This change was designed to discourage litigation over small differences between what the insurer offered and what the contractor demanded.
HB 7065 also allowed insurance companies to offer two types of policies: one that permitted AOB assignments and one that restricted or prohibited them. Policies that restricted AOB had to be offered at a lower premium than unrestricted policies, and insurers had to notify policyholders annually about their coverage options regarding assignability.
How Did the 2022 Reforms Change AOB Further?
Despite the 2019 reforms, AOB-related litigation remained a significant cost driver in Florida’s insurance market. The legislature acted again during a special session in May 2022, passing Senate Bill 2-D. Governor DeSantis signed SB 2-D on May 26, 2022, calling it part of “the most significant reforms to Florida’s homeowners insurance market in a generation.”
SB 2-D built on the 2019 law by eliminating the ability for assignees to recover attorney fees in AOB litigation. Under the new law, attorney fees in AOB cases could only be recovered under Florida Statute Section 57.105, which applies to frivolous claims and defenses. This effectively removed the financial incentive that had driven much of the AOB litigation. The law also restricted fee multipliers in property insurance disputes to “rare and exceptional circumstances,” reversing case law that had allowed inflated attorney fee awards in routine cases.
The definition of “assignment agreement” was also expanded to include inspecting services, meaning that engineers and diagnostic vendors who received assignments were now required to comply with all of the strict AOB statutory requirements.
Did Florida Ultimately Ban Assignment of Benefits?
Yes. In December 2022, the Florida Legislature passed Senate Bill 2-A during another special session focused on property insurance reform. Governor DeSantis signed SB 2-A on December 16, 2022. This law went further than any previous reform by effectively banning AOB in property insurance claims.
SB 2-A amended Florida Statute 627.7152 to eliminate the ability for property owners to assign their post-loss insurance benefits to third-party contractors. The law also eliminated Florida’s one-way attorney fee provision across all property insurance statutes. Under the previous system, if a policyholder (or an assignee) sued an insurer and won any amount, the insurer had to pay the policyholder’s attorney fees. SB 2-A removed that provision, meaning homeowners who sue their insurance companies now bear the risk of paying their own attorney fees if they do not recover more than a pre-suit settlement offer.
The law also shortened the deadline for filing property insurance claims from two years to one year from the date of loss, tightened the process for bad faith claims against insurers, and created the Florida Optional Reinsurance Assistance (FORA) program to provide subsidized reinsurance to struggling insurers.
These reforms were among the most aggressive property insurance changes in Florida’s history. Supporters argued they were necessary to stabilize a market where insurers were leaving the state, premiums were skyrocketing, and litigation costs were consuming a disproportionate share of premium dollars. Critics, including the Florida Justice Association, argued that removing one-way attorney fees and banning AOB left homeowners at a significant disadvantage when insurance companies improperly deny or underpay claims.
What Does This Mean for Florida Homeowners Today?
For homeowners filing property insurance claims after December 16, 2022, AOB is no longer an option. You cannot sign over your insurance benefits to a contractor and have them handle your claim. Instead, you must file the claim yourself, work with the adjuster your insurance company assigns, and manage the claims process directly.
This means homeowners need to be more actively involved in every step of the claims process. You should document all damage with photos and video before any cleanup or repairs begin. Get your own independent repair estimates from licensed contractors. Review the adjuster’s estimate carefully and challenge any items that are missing or undervalued. Keep detailed records of all communications with your insurance company.
The elimination of one-way attorney fees also changes the calculation when deciding whether to pursue legal action against an insurer. Before the reform, homeowners could sue knowing that if they won even a small additional amount, the insurer would pay their lawyer. Now, attorney fee recovery in property insurance disputes is governed by the offer of judgment statute, which means homeowners may be responsible for the insurer’s fees if the final judgment does not exceed the insurer’s pre-suit offer by a certain percentage.
This does not mean homeowners have no recourse when an insurer acts unfairly. Florida law still allows policyholders to file bad faith claims against insurers, and courts can still award attorney fees under certain circumstances. Homeowners can also hire public adjusters (who charge a percentage of the claim, not attorney fees from the insurer) to help document and negotiate their claims.
How Do Florida’s AOB Reforms Affect Roof Damage Claims?
Roof damage claims were at the center of the AOB controversy. Before the reforms, roofing contractors frequently used AOB agreements to file inflated claims with insurers, sometimes demanding full roof replacement when only partial repairs were warranted. The combination of AOBs and one-way attorney fees created a financial incentive for contractors to litigate rather than negotiate.
Under SB 2-D, the legislature also passed companion legislation (SB 4-D) that addressed roof claims specifically. The law allows insurers to pay for roof repairs rather than full replacement in certain circumstances. This was a significant change because many contractors had used AOBs to insist on full roof replacement even when the damage was limited to a small area.
For homeowners with legitimate roof damage from hurricanes or storms, the reforms mean you need to be proactive about documenting the damage, getting independent estimates, and communicating directly with your insurance company. If your insurer offers to pay for repairs but you believe the damage warrants replacement, you have the right to challenge that determination. An attorney experienced in Florida property insurance claims can help you evaluate whether the insurer’s position is reasonable.
What Should You Do If Your Insurance Claim Is Underpaid?
Even without AOB, Florida homeowners still have options when an insurance company underpays a property damage claim. The first step is to review the adjuster’s estimate line by line and compare it against independent contractor estimates. If items are missing or repair costs are undervalued, submit a written dispute to your insurer with supporting documentation.
If informal dispute resolution does not work, you can invoke the appraisal process outlined in your insurance policy. Appraisal is a quasi-arbitration process in which each side selects an appraiser, the two appraisers select an umpire, and the panel determines the amount of loss. Appraisal is typically faster and less expensive than litigation.
If the dispute involves a coverage denial rather than a valuation disagreement, appraisal may not be appropriate, and you may need to file a lawsuit. Before filing suit, Florida law requires you to send a pre-suit notice to the insurer, giving them an opportunity to resolve the claim. An experienced personal injury attorney can advise you on whether litigation is likely to be cost-effective given the changes to attorney fee recovery under the 2022 reforms.
How Can Ilabaca Law Help with a Property Insurance Dispute?
Property insurance disputes in Florida have become more complex since the AOB reforms. Homeowners are now responsible for navigating the claims process without the option of assigning their benefits to a contractor. Insurance companies, meanwhile, continue to deny and underpay legitimate claims. If you are dealing with a denied, delayed, or underpaid property insurance claim, Ilabaca Law can help you understand your rights and pursue the compensation your policy promises.
Contact Ilabaca Law at (407) 917-2087 to discuss your situation and explore your options.
This blog post is for informational purposes only and does not constitute legal advice. Every case is different, and outcomes depend on the specific facts and circumstances involved. If you need legal assistance, contact Ilabaca Law at (407) 917-2087 to schedule a consultation.