Originally published by Andrew G. McCabe on LinkedIn. Read the original on LinkedIn →
If you are a restoration contractor who performs insurance work, you need to understand the Assignment of Benefits. Not just what it is, but how and when to use it. This article is the first in a series where I will break down the AoB (also called an AoR, or Assignment of Insurance Rights) and show you how to use it as a powerful collections tool in your business.
What Is an AoB?
When a homeowner has a covered loss, they have rights under their insurance policy. The right to collect payment. The right to dispute the carrier’s estimate. In some states, the right to sue the carrier for breach of contract or bad faith. Those rights belong to the homeowner, not to you. You are a stranger to the insurance contract.
An AoB changes that. It is a legal document where the homeowner transfers their insurance claim rights to you, the contractor, for the portion of the claim that covers your work. Once you hold a valid AoB, you are no longer on the outside looking in. You step into the homeowner’s shoes. The carrier now has to deal with you directly.
Think of it like the doctor’s office. When you check in, you sign a form that lets the doctor collect payment straight from your health insurance. Nobody thinks that is weird or adversarial. It is just how it works. An AoB does the same thing for restoration contractors.
The Timing Problem Nobody Talks About
Most contractors who use an AoB get it signed at the very beginning of the project, right alongside the work authorization and contract. That makes sense on the surface. Get all your paperwork signed up front, get to work.
But a contractor I work with in Washington and Idaho learned something that should change how you think about this.
This contractor uses Assignments as a core part of their collections process. When a carrier refuses to pay an invoice, they file suit for breach of contract. It is not a threat. It is their business model. And it works.
In a recent case, however, the carrier pushed back on the AoB itself. Their argument was creative, and it almost worked. They said: “The homeowner signed this Assignment before any work was performed. At the time of signing, there was no completed work. There was no invoice. There were no ‘benefits’ in existence to assign. You cannot transfer ownership of something that does not exist yet.”
Let that sink in.
The carrier was not arguing that Assignments are illegal. They were not arguing that the homeowner did not consent. They were arguing that the Assignment was empty. That at the moment the pen hit the paper, there was nothing real to transfer. No work had been done. No money was owed. No benefits existed. You cannot hand someone a box and call it a gift if there is nothing in the box.
The Fix
When the AoB is signed after the work is performed, that argument falls apart completely. The work is done. The documentation exists. The invoice has been generated. The homeowner has a concrete, existing right to payment for services that were actually rendered. That is what gets assigned. There is nothing empty about it, and the carrier loses their angle of attack.
What This Means for Your Process
This does not mean you ignore the AoB until the end of the job. Your process on Day One stays the same. You get the contract signed. You get the Insurance Information Release signed. You notify the carrier. You stay visible and involved throughout the claim.
The only thing that changes is when the Assignment itself gets signed. My recommendation is to present the AoB to the homeowner at the same time you deliver the invoice. The work is done. The amount is documented. The benefits being assigned are real. While you are at it, get a Certificate of Satisfaction signed at the same time. This accomplishes two things at once: the homeowner confirms they are satisfied with the completed work, and they execute the Assignment that transfers their insurance rights to you for that work. On a multi-phase project, do this at the completion of each phase.
It is a small change in procedure. But if you are using Assignments to collect and you ever end up in front of a judge, this one adjustment removes a line of attack that carriers are already using.
In the next article in this series, I will dig deeper into how AoRs work, what rights they actually transfer, and why Ed Cross stopped calling them “Assignments of Benefits” altogether.
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