Avoiding Fraudulent Insurance Schemes

Because we are worried about fraudulent claims activities, we urge you to be cautious of anyone asking you to sign an “Assignment of Benefits (“AOB”) agreement or any other third party or organization that claim that they provide vital assistance such as insurance adjusters, emergency/medical personnel and other needed services. Unfortunately, not all these individuals or organizations have good objectives.

Please continue reading to get some more information about these possible risks.

We are here for you if you have any questions.


Assignment of Benefits (AOB) Warning

Often misused, signing an AOB can lead to harmful consequences for the homeowner.

Commonly speaking, Assignment of Benefits (“AOB”) is an agreement that, once signed, transfers the insurance claims rights or benefits of the policy to a third-party. An AOB may give the third-party authority to file a claim, make repair decisions and collect insurance payments without the involvement of the homeowner.

AOBs are commonly used in homeowners’ insurance claims by water remediation companies and contractors.  Be aware that by signing an AOB, you are transferring your insurance rights to the contractor and allowing them to collect money paid-out from your insurance company on your behalf.

We have seen contractors that file fraudulent claims, perform shoddy repair work that is not up to code or not perform the work at all. It is a good idea to always read the contract with a service provider to ensure it does not include AOB language that may limit your rights. Contact us to learn more or if you believe you have signed a contract with such AOB language.

Insurance Fraud

Disreputable vendors or public adjusters may approach you with deceitful schemes. These schemes usually involve kickbacks to the vendor or adjuster. You may also see a contractor or vendor ask you for a large down payment to begin work and repairs, and after they collect your money, you won’t ever see them again.

It is important to be mindful of these situations and know what to do if you encounter them. Here are some useful tips:

How to Avoid Fraud  

Check with your insurer for credible remediation companies, contractors, or vendors.

Beware of high-pressure salespeople. Don’t be rushed into signing a contract. Take the time to get written estimates from multiple vendors.

Know who you are dealing with. Find references, check with the Better Business Bureau, review licenses and make sure that the vendor you select is properly insured. Be wary of anyone who approaches you unsolicited or says they can perform your repairs at a discount with leftover supplies from another job.

Get at least three (3) written, itemized estimates or bids on repairs.

Do not make large down payments. Although down payments are customary, some unethical vendors disappear after receiving the down payment or performing limited work.

Check for proof of insurance and verify with their insurer that their policy is current.

Check to see if the contractor is bonded and verify with the bonding agency.

Do not sign a certificate of completion or make final payment until you are satisfied with the work performed.

We hope that you are not fraud victim; but in the event that you believe someone is committing a fraud scheme or if you fall victim to one, you should contact the NCDF (National Center for Disaster Fraud) immediately. The NCDF is a national coordinating agency within the Department of Justice’s Criminal Division dedicated to improving the detection, prevention, investigation, and prosecution of criminal conduct related to natural and man-made disasters and other emergencies, such as the coronavirus (COVID-19).


Call the Disaster Fraud Hotline at 866.720.5721

Or visit online at: https://www.justice.gov/disaster-fraud


If you suspect an adjuster is working without a license, or if they urge you to overstate an insurance claim or if you otherwise suspect fraud, call 850.413.3089

This material has been prepared for informational purposes only.  Affordable Home Insurance, LLC, and its affiliates, do not provide tax, legal or accounting advice.  Please consult with your own tax, legal or accounting professionals before engaging in any transaction. Please remember that the information contained in this email is general in nature and that coverage under any specific policy of insurance will depend upon the terms and conditions of that policy. This is not a summary of coverage nor should it be interpreted as such. Please refer to your policy for the exact policy terms and conditions afforded. 


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