Assignment Of Benefits

What Does Assignment Of Benefits Mean?

Assignment of benefits (AOB) is the official way an insured person asks their insurance company to pay a professional or facility for services rendered.

Insuranceopedia Explains Assignment Of Benefits

Assignment of benefits is a document that directs payment to a third party at the insured’s request. It becomes legitimate once both the insured party and their insurer have signed the AOB form. AOB is used in a number of insurance contexts, such as paying physicians or clinics through health insurance or paying contractors for repairs through a homeowner’s insurance policy. A common example is signing an AOB so a restoration company can bill the insurer directly for water damage repairs from a homeowners policy after a burst pipe or roof leak.

Usually, AOBs are issued when the third party pursues it in the hopes that payment from the insurance company will be more certain and delivered more quickly than it would be from the insured. This is why AOB forms come up so often when homeowners are filing a hurricane insurance claim, since contractors want assurance that they will be paid before starting major repairs. Some insurers handle these assignments more cleanly than others, so it is worth checking how a company manages third-party payments when shopping for homeowners coverage.