What is a post-loss assignment?
A contract signed by the homeowner granting a contractor all rights and duties of the claim under an insurance policy. Once signed, the contractor owns and controls the claim without any input from the insured.
When is a post-loss assignment signed?
The steps for post-loss assignments go as:
- Damage Happens
- A covered event like wind, hail, or a tornado causes damage to your home (roof, siding, gutters, windows, etc.)
- You File a Claim
- You notify your insurance company about the damage.
- Insurance Company Sends Estimate
- An adjuster inspects the damage and creates an estimate of repair costs
- You Hire a Contractor
- You choose and sign a contractor for repairs
- You Sign a Post-Loss Assignment
What the assignment means
This form lets the contractor deal directly with your insurance company but may limit your involvement in the claims process.
Before signing a post-loss assignment, ask what it means as you may be signing away control of your claim. YOU DO NOT NEED TO SIGN A POST-LOSS ASSIGNMENT.
Potential Concerns to Know
If your contractor and insurer disagree on payment, the contractor can sue your insurance company using your name without asking you. You won’t be told about the lawsuit, but it may affect your insurance rates or ability to get coverage in the future. If your insurance company does not pay the full amount the contractor wants, you might have to pay the rest out of your own pocket. The
contractor could even put a lien on your home to collect it. If you’re unhappy with how your insurance company handled your claim, you can’t sue them as that right belongs to the contractor. If you decide to fire your contractor, the assignment still gives them control over the claim including the right to any payment from your insurance company.
Tips
A homeowner is not required to sign a post-loss assignment. Talk to an attorney before signing the agreement, read everything carefully, and understand what you are agreeing to before signing. Your policy could say "no assignments" but a 2016 Nebraska court ruling says these contracts can still be legally valid.
Choosing a Contractor
When choosing a contractor, make sure to:
- Ask around and get recommendations
- Get multiple quotes from several contractors
- Check their reputation by looking them up on the Better Business Bureau. Make sure to ask if they use post-loss assignments as many do not
- Make sure they are registered with the Nebraska Department of Labor
