By obtaining an assignment of insurance proceeds and putting the insurance company on notice of an assignment from the property owner, however, a restoration contractor is legally entitled to payment directly from the insurance company.
Explained differently, the insurance company is legally obligated to pay the contractor—instead of the property owner—for covered remediation or restoration work.
In some situations, property owners would pay for restoration work but insurance companies have wrongfully denied benefits or otherwise wrongfully withheld payment.
In these cases, property owners may not have the financial means to pursue their insurance companies.
Anti-assignment clauses generally state that insured property owners may not assign or in any way transfer any rights or benefits of their insurance policies to third parties without prior written consent.
Assignment Of Proceeds
Insurance companies commonly rely upon these provisions to argue that insurance assignments to restoration professionals are ineffective.
The property owner—the party who traditionally enters into a contract with a restoration professional—is then obligated to pay for remediation and restoration work.
If the property owner misuses insurance proceeds or refuses to pay after work has been performed, restoration contractors often find themselves with little recourse.
Professionals who obtain insurance assignments avoid the potential for the misappropriation of insurance proceeds and the possibility of performing work for “judgment-proof” property owners.
Although property owners continue to be liable in accordance with the terms of their restoration-services contracts, assignments of insurance proceeds open the door to recovery directly from the insurance company.