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Glossary · Insurance

Assignment of Benefits (AOB)

The contractor-claims mechanism Florida spent a decade fighting over, and largely ended in 2023.

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Quick definition
An assignment of benefits was an agreement transferring a policyholder's insurance-claim rights to a contractor (commonly water-remediation or roofing), letting the contractor bill and sue the insurer directly. AOB litigation became a defining driver of Florida's property-insurance crisis — and the 2022–23 legislative reforms prohibited assignments of benefits on residential property policies issued after their effective date, alongside broader litigation changes. Older claims and other assignment types can still exist, but the classic AOB era is closed.

How the mechanism worked

After a loss — typically water — a contractor obtained the homeowner's signature assigning claim rights, performed work, then pursued the insurer for payment, litigation included. The homeowner was often out of the loop while a dispute in their name ran on. Florida's outsized share of the nation's homeowners-insurance lawsuits during those years traces substantially to this channel and the fee statutes around it.

What the reforms changed

The December 2022 special session and related legislation prohibited AOBs on residential policies going forward and reworked the one-way attorney-fee regime that made volume litigation economical. Regulators now cite the results — Florida's share of U.S. homeowners insurance lawsuits falling from 79% in 2020 to 41% in 2025 — as a driver of the rate decreases filed since.

What homeowners should do now

Post-loss: notify your carrier first, document everything, and be wary of any document a contractor asks you to sign at the kitchen table — direction-to-pay forms and contracts deserve reading even though classic AOBs are barred on newer policies. Legitimate emergency mitigation doesn't require signing away claim rights.

Common questions.

Are assignments of benefits still legal in Florida?
Not on residential property policies issued after the 2022-23 reforms' effective dates — new AOBs are prohibited. Assignments under older policies and other contexts follow the law in force when made.
What should I sign for emergency water mitigation?
A work authorization and direction-to-pay can be appropriate; read anything that purports to transfer your claim or litigation rights. Loop your carrier in immediately — most have emergency-mitigation protocols.
Did the AOB reforms actually lower rates?
Regulators connect the litigation reforms to the market's turnaround — carriers returning, and rate decreases in 51 of 67 counties in 2026 per the OIR. Our insurance data page tracks the county-level record.
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