Module 2: Contract Fine Print
What to look for in a contract
Reading the fine print isn’t exactly fun, but it is the best way to protect yourself. To make it easier, we’ve created a What to Look for in a Contract Guide. It highlights exactly what to look for and what needs to be included so you can sign with confidence.
Beware of "Assignment of Benefits"
This detail is so critical to your protection that it deserves its own dedicated section. When you’re reviewing a contract, keep a close eye out for a phrase called "Assignment of Benefits" (or AOB). What it actually means: If you sign this, you are handing over your legal rights to your insurance claim. Your contractor gets to talk to the insurance company and bill them directly without you ever seeing the invoice or the check.
The Risk: When you sign an AOB, you lose your leverage. In the worst-case scenario:
A contractor could bill for work they never actually did.
They could overcharge the insurer, hitting your policy limits too early.
They could take the money and disappear before the job is finished.
And unfortunately, you are still legally responsible for the outcome, even if the contractor scammed the system.
The Risk: When you sign an AOB, you lose your leverage. In the worst-case scenario:
The Solution: Ideally, you should ask the contractor to remove that language entirely. If they insist on having some protection, suggest this compromise instead:
"Owner agrees that any insurance money received for this specific work will be endorsed and delivered to the contractor once the work is completed."
This ensures the contractor gets paid, but you stay in charge of the money until you’re happy with the work.
A Note on "Preferred Contractors": If you use a contractor recommended by your insurance company, they often have a direct-pay setup. Even then, you should insist on the right to review every bill before the insurance company sends the payment.