Restoration Contractors Should Provide Written Notice of AOB

A recent federal court decision out of Louisiana highlights an important lesson for restoration contractors: If you get an Assignment of Benefits (AOB) from a property owner, you must make sure the insurance company actually knows about it. In Cat 5 Global, LLC v. State Farm Fire & Casualty Company, ¹ Cat 5 Global performed major remediation and demolition work after Hurricane Ida damaged a home owned by Andrew Kessler. Kessler signed a work authorization and an assignment of benefits, giving Cat 5 the right to collect insurance payments directly from his insurer, State Farm. Cat 5 did the work, billed for their services, and expected to get paid under the assignment. But there was a big problem.

State Farm had already paid Kessler directly before it knew anything about the assignment to Cat 5. When Cat 5 sued State Farm to recover the $62,627.36 they were owed, the insurer argued that under Louisiana law, once it paid the policyholder without notice of the assignment, its obligation was fully discharged. Cat 5 admitted that State Farm didn’t have actual notice but argued that because State Farm’s adjuster had worked closely with Cat 5, that should have been enough to put the insurer on notice.

The court didn’t buy it. The judge explained that insurers routinely deal directly with contractors during property claims. Contractors with or without an AOB may have discussions during the normal adjustment process. Just because State Farm’s adjuster talked to Cat 5 about the job didn’t mean State Farm had any reason to believe the homeowner had assigned his insurance rights away.

Cat 5 also tried to argue, late in the game, that State Farm should be held liable based on a theory of detrimental reliance. The court wasn’t persuaded. There was no evidence that State Farm ever made any promises or representations that Cat 5 relied on to their detriment. The court pointed out that State Farm had paid Kessler for the work, meaning State Farm didn’t unjustly benefit at Cat 5’s expense. In the end, Cat 5’s claims were dismissed with prejudice, and the contractor was left without any recovery from the insurer.

This case drives home a crucial lesson: for restoration contractors, having an assignment of benefits isn’t enough. You should formally, clearly, and immediately notify the insurance company about it in writing. Make sure the insurer knows before any payment is issued to the property owner. Otherwise, even if you did the work and even if the assignment is legally valid between you and the customer, you could be completely out of luck when it comes time to collect. It’s a harsh lesson, but it is one that every contractor performing storm-related insurance work needs to take seriously.

Thought For The Day 

“An ounce of prevention is worth a pound of cure.”
—Benjamin Franklin

¹ Cat 5 Global v. State Farm Fire & Cas. Co., No. 23-2124 (E.D. La. Apr. 16,2025).