What is an Assignment of Benefits (AOB)?
The Assignment of Benefits (“AOB”) is a written instrument executed by an Insured assigning to the Contractor all or part of the Insured’s right, title, and interest in insurance policy benefits and proceeds, including the right to be paid directly, arising from a Covered Property Loss.
In simple terms:
The insured transfers the right to receive insurance claim payments to the contractor.
This allows the contractor to: • invoice the insurance carrier directly • negotiate the claim scope and pricing • pursue supplements • demand appraisal • file suit if necessary • receive claim proceeds directly.
When Blackwater purchases the claim receivable, those same rights transfer to Blackwater.
The AOB is different from a direct payment authorization. A Direct Pay Authorization is only a payment instruction. It does not transfer ownership of the claim rights. Blackwater generally requires a true AOB, not just a direct pay form.
Why It Matters for Restoration Invoice Factoring
If you plan to factor restoration invoices with Blackwater, the most important document in your job file is the Assignment of Benefits (AOB).
An AOB allows you to legally receive payment directly from the insurance carrier and allows Blackwater to purchase the claim receivable associated with your work.
Without a valid AOB, most insurance claims cannot be factored.
Why AOBs Are Required for Factoring
Blackwater purchases insurance claim receivables, not traditional invoices. For a receivable to be valid, the contractor must first hold the legal right to collect payment from the carrier. That right comes from a properly executed Assignment of Benefits.
Without an AOB:
• the contractor does not own the claim proceeds
• the invoice may only be payable by the property owner
• the receivable cannot be transferred to Blackwater
This is why every claim submission must include a signed AOB.
What a Proper AOB Should Contain
A strong Assignment of Benefits should include:
1. Identification of the Insured: Name of the property owner(s) and policyholder.
2. Contractor info: Name, address, and contact information.
3. Carrier Identification: Insurance company name and claim number.
4. Description of the Loss: Property address and date of loss.
5. Assignment Language: Clear language assigning post-loss insurance benefits and claim proceeds.
6. Enforcement Rights: Including the right to:
• negotiate claim scope
• pursue supplements
• demand appraisal
• file suit if necessary
7. Direction of Payment: Instruction to the carrier to issue payment directly to the contractor.
8. Insured Signature: Signed and dated by the property owner.
Best Practices for Contractors
To ensure your claims can be factored quickly:
✔ Obtain the AOB at the start of the job
✔ Ensure the insured signs and dates the document
✔ Include the property address and policy information
✔ Upload the AOB with your estimate package
✔ Keep the AOB in your permanent job file
Use large (sometimes required) font sizes and ensure that the Insured understands what they are signing and how the AOB will impact the loss and their involvement.
Sample Assignment of Benefits
Below is an example of a basic AOB structure commonly used in restoration claims. We do not represent to be your legal experts. Consult your own attorneys to draft your own AOB applicable to your state and requirements.
SAMPLE ASSIGNMENT OF BENEFITS
Contractor: ______________________________
Contractor Address: ______________________
Contractor Phone: ________________________
Insured: _________________________________
Property Address: ________________________
Insurance Carrier: ________________________
Claim Number: ___________________________
The undersigned insured property owner and policy holder (the “Insured”) hereby assigns all post-loss insurance rights, benefits, proceeds, causes of action, including the ability to file a lawsuit or demand appraisal directly against the Carrier, under any appliable insurance policies, to _____________________________________ (the “Company”) for all services rendered or to be rendered in behalf of the Insured by the Company in relation to the claim(s) listed herein (the “Services”).
By executing this agreement, the Insured intends for all rights, benefits, and proceeds for the Services to be assigned solely and exclusively to the Assignees. This post-loss assignment is made in consideration of the Assignees performing the Services and/or not requiring an upfront down payment from the Insured for the Services, and/or for securing payment for the Services directly from the Carrier.
This is not a transfer or assignment of any of the Insured’s insurance duties or obligations. The Assignees do not agree to accept any of the contractual obligations between the Insured and Carrier. As such, those duties and obligations remain with the Insured.
The Assignees are hereby authorized to supply information regarding claim(s) listed herein to Carrier, and Carrier is hereby directed to communicate directly with the Assignees for the purpose of obtaining actual benefits to be paid by Carrier to the Assignees.
Immediately upon the sale by the Company to Blackwater of any receivable estimate created to recover the cost of the Services, the Company directs that all rights, benefits, and proceeds for the Services be assigned solely and exclusively to Blackwater.
Signature Block
When Blackwater Becomes Involved
If a contractor sells a claim receivable to Blackwater:
The contractor first obtains the AOB from the insured.
The contractor submits the estimate package to Blackwater.
Blackwater may purchase the receivable.
If purchased, the contractor assigns the receivable to Blackwater.
Blackwater settles and collects the claim directly from the carrier.
This structure allows contractors to convert insurance receivables into immediate working capital.