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Restoration professionals are well advised to review applicable insurance policies, if available, for specific notice provisions.If the insurance company is not put on proper notice, the assignment will have no effect. Restoration contractors are always entitled to payment, usually from the property owner, pursuant to the terms of their contracts.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.
In these cases, property owners may not have the financial means to pursue their insurance companies.Under Ohio law, assignments of insurance executed after a covered loss are valid notwithstanding an anti-assignment clause in an insurance policy.This means that even though the policy may have an anti-assignment clause, it is ineffective to prevent an insured from assigning the benefits of the policy to a restoration professional. Protecting your Right to Payment It is important to consult with knowledgeable legal counsel if you are considering using assignments of insurance benefits to protect against non-payment.And it is important to remember that insurance assignments to do increase or change coverage.Restoration contractors are only entitled to payment in accordance with the applicable insurance policy.If the insurance company refuses to acknowledge the assignment and continues to pay the property owner, or otherwise refuses to pay the contractor, the restoration professional has the right to enforce the assigned insurance policy and the insurance company can be held liable for non-payment.Liability exists even if the insurance company has already paid the owner, for example, in situations where the property owner refuses to release funds to the restoration contractor.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.Assignments should be properly worded, proper procedures should be followed, and insurance companies should be put on proper notice.Additionally, mortgage companies, banks, and other third parties may have competing claims to insurance proceeds.