Assignment of Benefits–Agents & Plumbers; “Get the Picture!”

Several months ago I called a plumber to my home. The supply line behind the master bathroom toilet was leaking and needed immediate attention.

This plumbing firm was well known to me. Its’ technicians had previously installed a tankless gas water heater (that has worked flawlessly for 10 years) and even replumbed an entire residence I rented to tenants.  You may remember my July 2014 blog about this plumbers excellent work repairing a leak beneath my garage slab.  Read the blog I wrote here.  And, see pictures on my Facebook page here.

In fact, after posting the blog and pictures I was contacted by local insurance agents asking for the plumbers’ name, which I gladly provided. They wanted to recommend the firm to their clients. Or, more wisely perhaps, just put the firms name on a list of plumbers and water remediators to give to clients in need of assistance.

Anyway, after my trusted plumber plugged this most recent leak, which had been going on for some time creating a moisture problem behind the walls and on the floor in an adjoining bedroom, it was obvious a complete dry out was needed.  So… I did exactly what I advise everyone else to do when they have a moisture problem… I called Rytech.

But, here’s the rub. When my trusted plumbers’ onsite technician pointed out the hidden moisture, he hastened to recommend a different water firm. One that is not FAIA’s preferred water remediation provider–one, therefore, that had not been fully vetted for AOB and every other important issue.

My first temptation was to just say “I always use Rytech”.  Instead, I paused, and asked a question that really set him back.

“Are you being paid a referral fee for making this recommendation?” I asked.

The look on his face was priceless.  Though obviously stymied, at first, he still mustered the breath to answer, “Yes”.

I followed up by asking if the firm he recommended used Assignment of Benefits or AOB.

Of course, like too many insurance agents and CSR’s, he didn’t know what AOB was.  I lead him to my home office where I showed him the blogs I write and the abuse that he could’ve caused me to suffer by making such a referral.

He got the picture!

But, he quickly assured me he would never recommend a firm simply because they paid him a referral fee.  He said they were professional and always did a good job and the referral fee was secondary.  I did not ask how much the fee was but, to a plumbers’ employee $1500 (in cash) can overcome a lot of bad service or workmanship. I showed him the blog I wrote on that subject as well.

I then asked if his boss knew he was making the recommendation.  And, I followed with the explanation that his boss, the owner of the firm, would be the one responsible for damages that I might suffer due to his referral.

Once again, he got the picture!

My question for insurance agents is… “Do you get the picture?”

Do you insure plumbers? Do you want to insure plumbers? Is it possible their employees are accepting cash payment (referral fees, kickbacks, fee splits, whatever)  while working for the plumbing firm? And, are they doing it without your client firms knowledge?

There is an increase in liability exposure for doing so. I can’t quantify it, but…the world of Assignment of Benefits is expanding and mutating so much, it has become an important question.

My research reveals that plumbing contractors may not have a strong statewide association (like FAIA) that can assist and advise on such matters.  Therefore, they might appreciate any help you, their insurance agent, could provide.

Do you insure any Realtors?  I’m told some of them are actually recommending roofers that promise “free roofs”.  What would be the exposure to a Realtor for recommending the scallywag that DFS just arrested—a roofer that absconded with the insurance money that 19 homeowners needed to fix their roofs after the recent storms.  (See Note#1 below)

What would be an insurance agents exposure for putting that roofer on a “list” and providing that list to clients in need of roof remediation?

I certainly don’t know the answers to these questions. I’m not a lawyer.  It may be just a list.  But, it’s your list and, the liability for putting a bad firm on a “list” grows when the firm uses AOB.  After all that the FAIA has published on this subject, agents should know better.

My plumber is a good plumber; an honest plumber with no idea his employees are accepting cash payments from other firms–water firms he’s never vetted, or even heard of.  (See NOTE #2 below)

That’s why FAIA urges you to recommend Rytech whenever possible, or the vendor your carriers endorse or affiliate with as part of their Managed Repair Programs.

I believe agents may want to consider warning their plumbing firm clients of the possibility that their onsite technicians are being solicited and paid to recommend water remediation firms that use AOB. (See Note #3 below)

Agents should also warn their clients about AOB generally and how to avoid bad results that can ruin their commission bonus and/or expose them to liability for all manner of unintended consequence.  Again, for water losses, an easy way to do this is to simply recommend Rytech which has already been vetted, on your behalf, by FAIA.

Next, I assisted in writing a document (Plumbers Beware!) that is being given to Realtors, plumbers and others. It can be used by insurance agents, too, as a starting point for communicating this issue to their plumber clients.  Take it as is.  Or, modify it with your own logo and language.

Just like the advice in this blog and the plea that you recommend Rytech, it’s all free of charge but could make a big difference to your clients and your agency’s bottom line.

Finally, route it around your office so that all CSR’s and producers, everyone, can “get the picture!”


Note #1:  On June 12, 2018 CFO Jimmy Patronis announced the arrest of roofer, Timothy Mathew Cox for using AOB to scam $140,000 from 19 Florida homeowners who had damaged roofs from recent hurricanes.  Once he got the AOB signed and the insurance money paid to his firm, Nationwide Catastrophe Services, Inc. and Restoration Response Services, Inc., he abandoned the homeowners and spent the money on himself. Now the homeowners still have damaged roofs and no insurance money to make repairs.  Read more here. To learn more about the suffering of some individuals scammed by this roofer, check out “Ripoff Report”.

Note #2: Perhaps I should have but, I didn’t, call the plumbing firm to report the referral made by its’ technician or to advise it about AOB and referral fees generally.   The onsite technician was innocent of intentional wrong doing and I hoped my explanations to him would change his behavior.  He later called me to say that the firm he had been accepting referral fees from did not use AOB, according to the firms owner. Of course, he should still advise his boss he’s accepting referral fees.  Maybe he did.  Or, maybe he stopped accepting them.

Note #3: The Consumer Protection Coalition (CPC) provides a great handbook for consumers and agents called “Protecting Your Pocketbook”.  It explains what AOB is and how it works but, even more important, how to “…avoid being an AOB scam victim?”  Bullet #6 says: “Ask your plumber if they get a referral fee from any water or mold remediation vendor they recommend. If the answer is yes, that is a big red flag.”  The CPC’s brochure is available on the FAIA website here.  You can visit the CPC, sign a petition and join the fight at:


  1. The problem with the absolutely insane referral fee plumbers get is way out of control. It has caused a bigger issue for legitimate water restoration companies. If you don’t agree to pay a plumber their accustomed fee you receive no leads. All of these greedy plumbers/ water extractions companies that do sub par work and then scam the insurance carrier out of as much money possible has made it very difficult for a reputible company to succeed without stooping to the level of paying the outrageous referrals. If you don’t pay them they don’t refer you. 90% of water loss jobs come from plumber referrals. Yes there are programs that many insurance companies are using now that will put you on a preferred vendor list. But the requirements these programs are asking for are just ridiculous for small companies. Essentially they are putting the small business owner out of work.

  2. I believe that the reforms of AOB will go along way to reducing the exorbitant referral fees. They are as high as they are ($1500 & up) because it is easy to hide them in an inflated invoice to a carrier and then sue to get paid. That will not be quite so easy due to the reforms.

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