For several years before 2023, assignment of benefits (AOB) agreements were at the center of Florida's property insurance crisis. Contractors who obtained AOBs from storm-damaged property owners could file inflated claims and sue insurers without the policyholder's further involvement -- and the one-way attorney fee structure made even frivolous litigation profitable. The reforms that followed changed the legal landscape significantly. Here is what property managers need to understand about AOBs today.
What an Assignment of Benefits Is
An AOB is a legal document in which a policyholder transfers their insurance claim rights to a third party -- almost always a contractor. Once signed, the contractor can file the claim, communicate directly with the insurer, negotiate the settlement, and sue the insurer if the claim is disputed. The policyholder is largely removed from the process after signing.
In theory, AOBs were designed to streamline the repair and payment process -- the contractor does the work and gets paid directly, without the policyholder needing to manage the insurance interaction. In practice, the Florida AOB market was characterized by inflated estimates, unnecessary work, and litigation that prioritized the contractor's financial interest over the policyholder's.
What the 2023 AOB Reform Changed
Florida HB 837, signed into law in March 2023, made two fundamental changes to the AOB landscape. First, it eliminated one-way attorney fees in property insurance litigation. Previously, a contractor who obtained an AOB and sued an insurer could recover attorney fees if they prevailed -- even partially -- making small disputed claims into profitable litigation targets for plaintiffs' attorneys. Without this fee-shifting mechanism, AOB-based litigation became far less financially attractive.
Second, HB 837 strengthened the requirement for insurer consent for AOBs on property insurance claims. Contractors can no longer simply obtain a policyholder's signature and proceed without the insurer's knowledge. The practical effect has been a dramatic reduction in new AOBs and AOB-related litigation across Florida's property insurance market.
What AOBs Look Like Today and What to Watch For
AOBs still exist and are still legal, but the legal environment for using them has fundamentally changed. A contractor who approaches you after a storm and asks you to sign an assignment, a "work authorization and assignment," or any document that purports to give them the right to deal with your insurer on their own behalf should prompt careful review before signing.
Red flags to watch for:
- A contractor who asks you to sign paperwork before providing any estimate or explaining the scope of work
- Documents that use "assignment" language rather than simply authorizing the contractor to begin work and submit payment documentation
- Contractors who tell you they will "handle everything with the insurance company" and that you do not need to be involved
- Pressure to sign quickly, before you have time to review what you are signing
If you want to allow a contractor to be paid directly from your insurance settlement, use a direction to pay rather than an AOB. A direction to pay instructs the insurer to include the contractor on the payment check or pay the contractor directly from the settlement funds -- without transferring your claim rights. You retain the right to negotiate the claim, dispute items with the insurer, and control the claim process. Your insurance agent or attorney can provide a direction to pay form. If a contractor insists on an AOB rather than a direction to pay, that is a significant red flag.
What Changed for Contractors -- and Why It Matters for Property Managers
The post-2023 environment means that most reputable contractors no longer use AOBs for routine storm damage work. The litigation model that drove AOB abuse is no longer financially viable. Contractors who continue to push for AOBs after the reforms are either operating on an older model, unfamiliar with the current law, or have specific reasons for wanting to control the claim process. None of these situations benefit the property manager.
The more significant practical implication for property managers is that you should now expect to be more involved in the claims process -- not less. The contractor does the work, but you manage the claim. Having documentation systems, understanding your policy, and knowing how to communicate with the insurer's adjuster are skills that matter more in a post-AOB world than they did when contractors routinely took over the entire process.
After a storm, property managers may receive multiple contractors seeking work authorization. Establish a standard process: review all paperwork before signing, do not sign anything that uses "assignment" language without having your insurance agent or attorney review it first, and confirm that any payment authorization you sign is a direction to pay rather than an AOB. If a contractor cannot explain the difference between their paperwork and a direction to pay, that is a reason to pause and get clarification before proceeding.
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Start Free -- No Card Required ->The Bottom Line
Florida's 2023 AOB reform significantly changed the landscape for property insurance claims, but property managers still need to understand what AOBs are, why they were problematic, and what to watch for when contractors present paperwork after a storm. The direction to pay remains the appropriate tool for allowing contractor payment from insurance proceeds without transferring claim rights. For related guidance, see emergency repair authorization for Florida property managers, why Florida property insurance claims get denied, and how to document hurricane damage for insurance claims in Florida.