Can I Sign My Property Insurance Benefits Over to My Contractor?
The assignment of benefits is a process by which your property insurance reimbursement is sent directly to a third party. One potential advantage of assigning benefits is that it can help homeowners with cash flow issues get emergency repairs. But, there are some complications with assigning your benefits to a contractor. Also, you need to be aware of the limitations of assigning benefits under Florida law. You should never assign your benefits without first consulting an experienced Broward County property insurance attorney.
Assignment of Benefits Under Florida Law
The ability to assign benefits allows some Florida homeowners the chance to get property damage repaired more quickly. But, most insurance companies are skeptical of the assignment of benefits. They may try to argue that in these scenarios contractors are more likely to overcharge for repairs. Insurance companies sometimes attempt to deny payment when a homeowner has assigned benefits to a contractor. For the most part, Florida courts have ruled against insurers in these cases. A good example of how Florida courts treat assignment of benefits is the case of United Water Restoration v. State Farm Florida Insurance Company. In this case, a homeowner had about $3,000 in water damage, and in an effort to get it repaired more quickly, assigned his benefits to the repair company. There was a dispute over whether or not the damage was covered on the policy, and State Farm alleged that the contractor, United Water, did not have the ability to recover any benefits. The court disagreed with State Farm’s claim, affirming that assignments of benefits are valid and that it would be unfair to deny homeowners this tool to get their property repaired.
Homeowners Must be Very Cautious
While the assignment of benefits can be a useful tool in some situations. Florida property owners need to be extremely cautious when agreeing to assign their benefits to a contractor. It should not be done without first consulting an experienced attorney. There are several issues that all homeowners need to consider:
- What happens if the insurance company denies coverage?
- Is my contractor charging a fair market price for the repair?
- What am I still responsible for after assigning away benefits?
If a dispute arises between the insurance company and the contractor, the homeowner can be caught right in the middle. This could lead to a bad situation. In some cases, unreliable contractors might decide to abandon work right in the middle of a repair project. In other cases, when insurance coverage is denied, the contractor may come after you for the money. You need to know exactly what your obligations are when you sign an assignment of benefits agreement with a contractor.
Contact an Experienced Florida Property Insurance Attorney
Assignment of benefits can be complicated. Some repairs need to be made quickly, but you need to be very careful when assigning your property insurance benefits to a third party. The experienced Florida attorneys at Geyer Fuxa Tyler can protect your legal rights and make sure that you are treated fairly by insurers and contractors. Contact our office today at (954) 990-5251 to learn more about your legal rights.