Contracts and Assignment of Benefits

Searching for a Licensed Contractor

When hiring a Contractor to preform repairs the first thing to do check and see if he or she is licensed to work in the state of Florida. By law anyone performing home improvement work valued at $500 or more in trade specific work is required to be licensed by the Florida Department of Business & Professional (DBPR), this includes Contractrors working in the staet of Florida.
  1. You can search for a contractor's license here: https://www.myfloridalicense.com/wl11.asp?mode=0&SID=
  2. Also check to customer reviews and complaints at the Better Business Bureau https://www.bbb.org/us/fl
  3. You can also check to see judgments and filed complaints against businesses at the State Attorney General’s website: http://myfloridalegal.com/pages.nsf/Main/030e31f06ef0184d85256cc600706904
Hiring a licensed contractor means that the contractor is properly insured and regulated, and has shown they are knowledgeable of Florida Laws and Building Codes. Even out of state contractors must obtain a Florida license to work in the State of Florida. Many kinds of professions and services require a license. To find out you can call DBPR at 850-487-1395 or go online http://www.myfloridalicense.com/DBPR/services-requiring-a-dbpr-license/ If you learn of any unlicensed activity you can report it to DBPR at http://www.myfloridalicense.com/DBPR/unlicensed-activity/ or call 1-866-532-1440. You can also file a complaint through the Florida Attorney General’s office at http://www.myfloridalegal.com/pages.nsf/Main/E3EB45228E9229DD85257B05006E32EC

Perils of Hiring an Unlicensed Contractor:

If a contractor does not pull the neessary permits or doesn't complete the work you will have to hire a licensed contractor to redo or complete the work and may end up paying twice for the same work. If an unlicensed contractor doesn't have insurance and gets injured while working on your home they can hold you liable and sue you for their injuries.

Vetting a Contractor

Be on the look for signs of a scam. Is the Contractor:
  1. Asking you to pay all of the money upfront for the project.
  2. Asking you to “take my word for it” and you don’t need to sign a contract.
  3. Saying they don’t need to pull a permit from the city when a permit is required.
  4. Saying that they have run into unexpected problems and need more money.
  5. Driving a vehicle with out-of-state plates.
  6. Working for a office that has an out-of-state address, or only a P.O. Box or hotel address.
  7. In a vehicle that displays a company name that does not match the name of the company they worked for.
Remember, You have the right to say no and walk away if you don't feel comfortable working with the Contractor.

Out-of-State Contractors

  1. Many contracting companies have offices out of state and travel to Florida to lend a helping hand.
  2. Be sure that the contractor is connected to a local Florida office so that you can follow up with warranty repairs after the job is finished.

Check with your insurance company before you hire a contractor.

  1. The adjuster’s approval is required before the insurance company will pay your claim.

Get multiple estimates.

  1. You should get 3 or more estimates in writing from different contractors.
  2. Each estimate should list all the repairs, the cost of each repair, the labor costs and material costs.

Hiring and Working with a Contractor

Make sure the Contractor is licensed to work in the state of Florida, see above.
  1. You may request the contractor to give you a list of all subcontractors or suppliers that will provide services to your house.

Get a signed contract from your contractor.

  1. Contract needs to be completely filled out.
  2. Make sure you have a copy of what you signed.
If you don’t understand ask the contractor to explain it to you. You can request time to review the agreement before signing.

Paying a Contractor

  1. Never pay the total amount of the bill upfront
  2. Contractor may request a down payment
  3. If the down payment exceeds 10% of the total project price contractor must apply for permits within 30 days after receiving your down payment
  4. And start the work within 90 days after the permits are issued.
  5. You may agree to change these dates, as long as you have it in writing.

Inspect the completed work.

  1. You may withhold your payment until the work is done to your liking.
  2. If you can pay with a credit card because credit cards operate with fraud protection policies.

Check for liens on your property.

  1. If you decide not to pay the contractor, he may file a claim of lien against you or sue you for breach of contract.

What Do You Need to Do

  1. Check their license and insurance coverage.
  2. Report an unlicensed contractor.
  3. Report a contractor that has scammed you.

Before Taking Action

  1. Never pay for an estimate
  2. Do not give out your identification information.
  3. Check for complaints about your contractor, see above.
  4. Do not ignore contractor liens.

Assignment of Benefits Contract

An Assignment of Benefit Contract (AOB) is a contract where you agree to transfer your insurance claim benefits to a third party, typically a contractor, in homeowners insurance claims. It lets the Conractor perform the repairs and then go directly to the insurer to collect payment. There are pros and cons to signing an AOB, but they are not required to file an insurance claim or to repair your home. For general information on AOB contracts visit the Florida Division of Consumer Services:  https://www.myfloridacfo.com/Division/Consumers/AssignmentofBenefits.htm If you have questions on whether a particular AOB includes the provisions required in Florida, you can contact the Florida Department of Financial Services Insurance Consumer Helpline at 877-693-5236.

How to Cancel an AOB Contract

As stated above, the AOB Contract must provide you with an options to cancel in three scenarios:
  1. Within 14 days after signing by submitting written notice to the third-party, i.e the Contractor;
  2. If the AOB does not specify a start date and if the third-party has not begun substantial work on the property, then the AOB must provide option to cancel within 30 days after signing.
  3. If there is a start date within the contract but the Contractor has not "substantially performed" at least 30 days after the start date, the Contract must allow you the option to cancel.
If you opt to cancel the contract, you must contact the Contractor and your insurance company.

AOB Contract Requirements

An AOB Contract must:
  1. include a written itemized per-unit estimate of work to be performed;
  2. can only relate to repairing, restoring, or replacing the dwelling;
  3. any work required to stop further property damage;
  4. Have a notification advising you that by signing the contract you are giving up certain rights; and
  5. Include information on how to cancel the AOB;
  6. Have a provision that requires the third party to not hold you liable if your insurance policy prohibits an AOB;
  7. Include wording that a third-party vendor is required to reimburse you if there is any loss, damage or costs if your insurance policy prohibits the use of an AOB contract;
  8. Provide you with an option to cancel within 14 days after signing by submitting written notice to the third-party, the Contractor.
The AOB CANNOT charge a processing or administrative fee, or a penalty fee for cancellation. Under an AOB contract third-party vendor, i.e. the Contractor or subcontractors, may not seek payment from you for any amount that exceeds your insurance policy deductible, or file a lien on your property unless you have agreed to have additional work performed at your own expense. Third Party assignee (Contractor) must provide your insurer with a copy of the AOB within 3 business days of starting work or executing the AOB, whichever is earlier.

How to Cancel an AOB Contract

As stated above, the AOB Contract must provide you with an options to cancel in three scenarios:
  1. Within 14 days after signing by submitting written notice to the third-party, i.e the Contractor;
  2. If the AOB does not specify a start date and if the third-party has not begun substantial work on the property, then the AOB must provide option to cancel within 30 days after signing.
  3. If there is a start date within the contract but the Contractor has not "substantially performed" at least 30 days after the start date, the Contract must allow you the option to cancel.
If you opt to cancel the contract, you need to notify the Contractor and your insurance company.

Assignment of Benefits Contracts and Insurance Companies

If you sign an AOB Contract you need to notify your insurance company. You should be the one to first contact your insurance company, not a third party. Remember, you do not need to sign an AOB to get an insurance claim processed or to get your home repaired. Tell your insurance company if you have a need of urgent repairs. Best Practices:
  1. Save any receipts on expenses for repairs that your insurer can reimburse you.
  2. Document and Inventory your damages (pictures, contractor estimates, receipts of work you have done).
  3. Keep a record of your claim number for your reference.
  4. Prevent further damage.
  5. Make only temporary or emergency repairs yourself.
  6. Keep the receipts for the repairs.
  7. Do not discard any damaged items without prior approval from the insurance company.
  8. Schedule a visit from the insurance adjuster to inspect the damages.
  9. Make a list of questions you would like to ask the adjuster.
  10. Be prepared to speak with the claim examiner.
If you discover more damages later, reopen the insurance claim by contacting your insurer. Typically you have up to one year after the original damage to file additional claims.