Podcast 275: Never Sign an AOB for Insurance Claims

With the threat of Hurricane Dorian underway we thought it would be a good idea to revisit why you shouldn’t sign an AOB for insurance claims.

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An AOB is an assignment of benefits where you give a third party contractor the right to deal with your insurance claim and receive direct payment. We explain why these are not a good idea!

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Resources Mentioned in this Episode


#182 Filing Insurance Claims On Rentals with Kim and Scott Hampton


Show Transcription:

Speaker 1: (00:00)
Hey everybody. Welcome back to another episode of RentPrep for landlords. This is episode number 275 and this week we are going to be talking about assignment of benefits, what that is and why you should know about it. In the case of a hurricane such as Dorian, if it were to affect your rental properties and why you should never sign an assignment of benefits. How we’re also going to be talking about a recent news story coming out of mountain view. So the San Francisco area have a landlord mastermind who, uh, we’re using that term mastermind loosely, uh, who created a home invasion to evict tenants. We’re going to get back to that right after that. Yeah,

Speaker 2: (00:38)
yeah, yeah, yeah. Welcome to the rent prep for landlords podcast and now your hosts, Steven White and Eric Worral. All right.

Speaker 1: (00:47)
First we will get to that juicy story out of San Francisco. Uh, the title of this is mountain view landlord, masterminded home invasion to evict tenants. Police say so, uh, this is by Maria Medina or Medina. Hopefully I’m saying that right. Uh, we’ll play a little bit of the audio clip for you here and this coming courtesy of KBC w so let’s take a listen. [inaudible] we begin with that elaborate scheme. The police, they was masterminded by a landlord to force her tenants to move out.

Speaker 2: (01:18)
Maybe it’s Marie Medina is in mountain view for us with how it ended with five people in handcuffs. The family of four, including two children were inside the rental home when the suspect showed up, ultimately running out of back door as a suspect’s tried to force their way in and one man watched it all unfold across the street.

Speaker 1: (01:37)
You know, you take her to the courts, you know, you don’t, that’s ridiculous. No

Speaker 2: (01:41)
[inaudible] police say renew sign. Eenie is the mastermind behind a home invasion at her own property,

Speaker 1: (01:47)
pounding on the door or shouting. I heard it, you know, there was there, you know, there, there were yelling.

Speaker 2: (01:51)
Dave Murphy lives across the street and says he watched as the suspects tried to break in last night just after eight.

Speaker 1: (01:57)
It’s the first I yelled at him and say, hey, knock it off every kicking on our metallic gate to get to the front door. Okay. But

Speaker 2: (02:02)
Chris Banta says, mountain view police surrounded the rental, finding c Ini and the other suspects in the front yard. That whole block was path with cops, police ac and you became frustrated with her. Tenants were late on their rent and according to investigators, her idea of an eviction involved calling four of her friends, including this man, Steven Carling of San Jose. Police say when the group of suspects arrived at their rental, the family of four refused to leave. So one of the suspects turned off the power before Carling is accused of using a knife to try and pry open the front door, which is insane. The family escaped through a back door as officers arrived, arresting all five suspects, including the landlord who now has a temporary new home herself, a jail cell. You weren’t expecting this though? Oh No, not at all. This is crazy and Cyani and curling are expected in court on Thursday. Both of them refused a request for a jailhouse interview. On the night beat. I’m Maria Medina. [inaudible].

Speaker 1: (03:03)
Yeah, pretty a pretty crazy story. Uh, again, a, another example of why you do not want to do what’s called a self-help eviction. So that’s when you take things into your own hands and you think, you know what, I’m going to get this tenant outta here. Clearly this lady is a little, a little bit absurd, a little over the edge, a little, you know, maybe crazy and that she got four friends to try and do a home invasion to kick out her tenants. And if you do, click on the link that I’ll provide in the show notes here to San Francisco, that CBS local.com, uh, you will see the mugshots, uh, they’re pretty terrifying, eh, one, they look like they’re right out of a movie scene. Uh, some of these individuals that she rounded up to get these tenants out. Uh, you know, so many things like they mentioned to, uh, the cutting off the a power, uh, to the unit and then breaking down the doors.

Speaker 1: (03:51)
I mean, this is obviously a very extreme, uh, example of, of self-help eviction. Uh, but anything like that, uh, again, always a good reminder to look at the stupidity of others and realize, you know, what, uh, obviously all of us know you should never do something like this where you’re actually creating a criminal act and, uh, breaking into their house and trying to invade it. Uh, but things like, uh, cutting off their power, uh, changing the locks on the a unit or, uh, you know, putting some sort of a, uh, some sort of stop on their utilities, whether it be water, power, gas, electric, whatever. Uh, you never want to do that. You want to follow the proper process. Uh, I will link to our guide on evicting a tenant properly. I, you guys can check that out. Uh, but unfortunately these new stories do creep up and they do pop up and it’s a sad to hear, uh, but they, uh, should get the publicity that they get because it’s ridiculous.

Speaker 1: (04:46)
So, uh, with that aside, I do want to take some time here today, uh, to talk about assignment of benefits. So we’ve talked about this before on the podcast. We had, uh, Kim Hampton and Scott Hampton on of Hampton Hampton out of Florida. So if you listen to that podcast, it’s a number one 82 on filing insurance claims on rentals. Uh, we got into this because they were actually talking about hurricanes that came up before in the past and they have over a thousand units that they manage in central Florida. So this is certainly something that they had to deal with. Um, but there were some really good show notes on that, uh, episode. And one of the things that they had talked about was the idea of assignment of benefits. So what is assignment of benefits? Well, according to Citizens Property Insurance Corporation of Florida, and assignment of benefits, AOB is a contract between you and a third party, typically a contractor, Roofer, or water mitigation company, giving them the right to deal directly with citizens and receive payment for your claim.

Speaker 1: (05:45)
So you sign an AOB, you give up your right to manage your claim and ensure it is resolved to your complete satisfaction. In 2019 the Florida legislature passed common sense reforms aimed at bringing balance to the AOB process. As a result of these reforms, AOB vendors must adhere to certain legal requirements to receive payment for your claim. In addition, policy holders have been given the right to cancel on assignment agreement under certain circumstances and take back control of their claim. I thought this was really a worth bringing up and highlighting right now as a hurricane Dorian is coming up the coastline. Hopefully by the time this podcast airs on Thursday, uh, it is going to be far enough off the coast that there’s not going to be substantial damage. I know that there has been a absolute tragedy in The Bahamas and, uh, we are still, uh, unsure of what’s gonna happen in the states.

Speaker 1: (06:32)
Um, but as far as the AOB reform, if you do end up signing one of these, it does seem like you do have more on your side to be able to get out of it. Um, and what I’ll do here is I will let Scott Hampton, uh, explained that I’m going to play a little bit of a clip. Uh, from our episode one 82, uh, where a Scott’s explaining what an AOB is and why you should avoid these at all costs. And again, that, that episode one 82 is a great one to listen to if you’re worried about, uh, filing insurance claims here coming up due to the hurricane damage. So, uh, I’m gonna bring it over to a previous episode number one 82, and we’re going to listen to us. Scott, explain this for us. So, uh, Scott, one of the, uh, another bullet point here as, so thankfully you put these together for us, but you, uh, you talked about not signing any kind of assignment of benefits or an AOB contract. Can you explain that a little bit more for our listeners?

Speaker 3: (07:20)
Yeah, we went ahead and put that in a, in there. And we also put a link as to when you hear citizens that is a state run, uh, insurance pool here in Florida because a lot of insurance companies here in Florida left because they feel it was kind of high risk. So the state runs one called citizens. And uh, we put the website in there and the link to the AOB and AOB is an assignment of benefits. And what happens is you’ll have contractors come in to the areas where there may be, and again, you had this in California, fires in Houston, you had floods in here. We had a hurricane and you know, I hate to say it, but this year was a tough year for everybody. Um, and they will come into an area and they’ll have you thing called an assignment of benefit. And what that does is basically they’ll say, hey, I can get your house fixed for deductible $1,000 or something and you won’t cost you anything else, sign this. That allows them now to basically act as you go to your insurance company and file a claim. And they, as they roofing contractor will now say, I am putting a roof on for x dollars. They get the money to put the roof on and basically become you. And, and, and, and it, it’s not fraud, but it’s Rad.

Speaker 4: (08:34)
I know. Yeah. Reminds me of a, like car dealerships kind of similar, right? I mean, you hear about a lot of car dealerships doing the same thing when they’re trying to replace something and they have full control to go back to the insurance company say, Oh yeah, and we’re also going to need to replace the radiator or this and that. Um, so yeah, you’re, you’re putting it in the hands of people whose income

Speaker 1: (08:56)
and livelihood depends on it as well. So,

Speaker 3: (08:58)
well, you know, and, and going back in and you’re gonna put that website I’m sure on there too, that affects everyone’s insurance rate. The insurance companies, and believe me, they’re going to give them an inflated price on that roof and it’s not going to be competitive where we’re getting two or three bids and then basically insurance companies going to pass those costs along to you. You’re going to get a higher rate.

Speaker 1: (09:16)
Now, if somebody was listening in, they already have signed in assignment of benefits. Do you think it’s Kinda too late for them and they’re kind of stuck with that contractor they’re working with or,

Speaker 3: (09:23)
well, we just did one of these actually. Um, you can go back and again, I don’t know at each one and said the one that one of our clients signed, um, we were able to actually get to write a letter. We used our attorney write a letter to him saying he wanted to cancel it. So what they did though, they came back and said, look, we put a tarp up there. You need to pay us for this.

Speaker 1: (09:46)
Here’s 30 bucks. Yeah.

Speaker 3: (09:49)
Other than that he was able to cancel it. They usually, and again, depending on what each one says, and I’m not an attorney, but you need to get your attorney to look at it. Don’t sign it first and they’ll tell you not to sign it. Your attorney will tell you not to sign it. Um, is that basically you are usually allowed to go back and cancel it. They’ll fight you on it too. So

Speaker 1: (10:10)
be ready for a battle. Well that just about does it for today’s episode. Again, if you want to check out episode one 82 on filing insurance claims, I also posted that a video of that, a conversation to the Facebook group, uh, send, trying to tag some, a, any Florida landlords out there. And, uh, that Facebook group is a great resource for things just like this. When things pop up like a hurricane threat, uh, this is a great opportunity for people to share knowledge, share information, and be prepared for situations like that. So if you’re not part of the rum prep or landlord’s Facebook group yet, be sure to head over there and a request to join the group. And, uh, yeah, if you guys got any questions, you can always ask them in the group where you can email us here at rent prep. We’re always here to answer your guys’ questions. So until next week guys, have a great week and take care.