Assignment Of Benefits — Insurance Claims Definition
A legal transfer of insurance claim rights or benefits from a policyholder to a third party, such as a contractor or restoration vendor.
An Assignment of Benefits (AOB) allows a vendor to bill the insurer directly and sometimes to litigate in the policyholder's name. It is common in water mitigation and roofing in certain states. Abuse led many states to regulate AOB forms, attorney fees, and emergency work caps.
Policyholders should read what rights they sign away and whether the assignee is reputable.
Examples
A homeowner signs an AOB to a water extraction company after a pipe burst; the company invoices the carrier directly for drying equipment and demolition.
Common Mistakes
Signing broad AOBs without scope or price caps invites inflated invoices. Some policies restrict or void assignments without insurer consent.
