assignment of insurance claim to buyer

Selling Your Home With An Open Insurance Claim

May 1, 2020

The Importance of Documentation When Selling Your Home With An Open Insurance Claim

By Kyle Hyman

Selling your home during the pendency of an open homeowner’s insurance claim can raise a lot of legal questions. Whether you intend to retain the right to receive insurance benefits under the policy or assign them to the new buyer, it’s important that you document the damages and make necessary disclosures to protect your legal and financial interests.  Here are some pointers on what to document when selling our home with an open insurance claim to ensure you recover what you are owed.

First, it is important to disclose to your realtor that you have an open insurance claim before listing your home. Concealing damage or known problems at your property from potential buyers can land you in hot water. Generally, Florida law requires that sellers disclose facts or conditions which are not readily apparent and that have a material impact on the value and desirability of the property. Therefore, it is good practice to complete a seller’s disclosure form to clearly document to the buyer that there is unrepaired damage to the property.  Notice of an open insurance claim should also be given to the buyer because it may affect their ability to get new insurance while there is an open claim.

If the buyer is aware of the open insurance claim and still wants to move forward with the sale, you have a few options. For instance, you may choose to assign the insurance claim to the new buyer so that they can receive the insurance proceeds directly from the insurance carrier. Post-loss assignments of insurance claims in connection with the sale of a property are not overly complicated, but it is always best to have an attorney review the agreement prior to signing. Failure by the parties to clearly convey their intent to transfer the right to receive benefits could render the assignment unenforceable and take away the buyer’s standing to obtain the benefits owed in court. 

Another option is to maintain the insurance claim in your name and sell the property for a reduced amount. If you decide to go this route, be sure to clearly state in the sale documents how much you are reducing the price of the home for due to the unrepaired damage. This will help establish a more exact estimation of the cost to repair and substantiate the basis for the reduction in price. Once again, a seller’s disclosure form comes in handy to show (1) the buyer was on notice of the damages at the time of the sale and (2) that the cost to repair was contemplated in the reduced sale price. Your realtor should also be able to provide you with comparable sales in your area to help determine the fair market value of your home had repairs been performed. 

You will also want to have a general contractor, professional estimator, or an experienced insurance appraiser evaluate the damages prior to the sale. A detailed, line-item estimate will verify the cost to repair and be useful when trying to determine the actual cash value of the damaged property. Similarly, if your insurance carrier is disputing coverage or the cause of the loss, you may want to have a licensed engineer inspect your property. Determining cause of loss is crucial to coverage disputes and you may not have an opportunity to evaluate the damages again once the home is sold and repairs performed by the new buyer.

As Denzel Washington so perfectly stated in the movie Training Day , “It’s not what you know, but what you can prove.” Properly documenting damage and the terms of the sale agreement can substantially affect the outcome of your insurance claim. When in doubt, consult an attorney to discuss your legal rights and obligations to make sure you are adequately protecting your interests. 

Kyle Hyman, Esq.

Learn more about Kyle here!

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How Does Selling a Property Impact an Insurance Claim?

Consider the following situation which poses what I like to refer to as a “law school exam question.”

The issue at hand arose when an insured had a contract to sell his property, but prior to closing, the building sustained a fire. Your understanding will likely result in a smoother sale of your business or home and get more dollars faster into the account of the “right” party.

The dilemma:

• What happens next?
• Can the property change hands?
• Does the insurance company and claim hold up the transfer?
• Who collects the insurance proceeds — the seller, whose property was burned, or the buyer, whose property is damaged? Perhaps both?
• Does the determination depend on the purchase agreement? What if there is an anti-assignment clause in the insurance policy? Who has the insurable interest?

This particular recent conundrum allowed me the opportunity to don my “legal-eagle” cap and along with my experience as a public insurance claims adjuster, provide bases for possible solutions.

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Well, take out your bluebooks (sorry, that dates me, I know) and begin writing . . .

We all recognize that sales of commercial and residential real estate are daily occurrences. Typically, the title transfer occurs unremarkably regardless if it is business real estate or a house. The same applies to the transition of insurance. The seller insures the property up to the closing.  Upon closing, the buyer insures the property.

Now, let’s assume that one of two events take place or has taken place:

Then what?  Either 1) You have incurred an insured event and now you decide you want to sell your property while your claim is pending; or 2) In the midst of selling your property, an insurance claim occurs.

The key principle in play supports that a loss should not hold up the sale or transfer of property. In fact, the insurance company cannot hold up sale and transfer just because there is a claim pending.

Please be wary of insurers which try to delay or deny altogether the payout of claims when properties with “live” claims are subject to a sale. The maneuver is just part of the insurance company’s own agenda to avoid paying the max of what is rightfully due in a timely manner.

Assignment of the Claim:

There are several scenarios that can occur depending on the language in the purchase agreement. One such scenario involves the seller assigning part or all of the claim to the purchaser. Every insurance policy has some version of an “anti-assignment” clause. That clause simply means that the policy itself cannot be assigned without the insurer’s consent, but a post-loss claim is absolutely assignable, notwithstanding the clause.

Factor in these possibilities.

First, let’s assume the purchase agreement  does not assign  the insurance claim. In such an instance, only the seller could bring a claim for loss or damages under the policy that was in place at the time of the damage,as the buyer would not have standing to bring a claim as it did and does not have an insurable interest. In such an instance, assuming no assignment, a seller would typically reduce its purchase price by the amount of the claim that it stood to recover, in order to put the buyer in the same stead that it would have been had no loss occurred.

Now, let’s assume that the seller  did assign  the claim to the buyer, the buyer would have the right, per the assignment, to collect the proceeds of the claim and make the repairs. In such a case, the sales price would remain as was in the contract for sale.

In both scenarios above, the insurer does not escape any indemnity, which is appropriate.

The Replacement Cost Claim:

Ok, now let’s change the scenario to assume the insured seller already collected the actual cash value under the policy (defined differently in different states, but let’s go with the predominant definition: “replacement cost minus depreciation”) and then sold/transferred the property to a buyer.

Is either the seller or buyer entitled to make a claim for the withheld depreciation (the repair or replacement cost of the property) from the insurance company? The answer, in short, is “Yes,” when the property has been repaired or replaced. But who is entitled to make the claim? Again, that depends on the language in the purchase agreement. If the claim has been assigned, then the buyer would be able to repair or replace the property, and make a claim for the withheld depreciation under the seller’s original policy.

But what if there was no assignment of claim. Can an insured who has already transferred a property make a claim for withheld depreciation, literally, on a property that they no longer own?

That question was addressed several years ago by the Seventh Circuit Court of Appeals in  Edgewood Manor Apartment Hoes, LLC v. RSUI Indemnity Co.,  733 F.3d 761  (7th Cir. 2013). There, the court determined an insured, whose property had been damaged by a storm, could sell the unrepaired property and maintain a claim for replacement cost proceeds.

Without going into any meaningful depth on the court’s reasoning, the insurer paid the actual cash value of the loss caused by Hurricane Katrina to the insured and began negotiating the replacement cost coverage. During those negotiations, the insured sold the property. Following the sale, the buyer repaired the property and eventually both the seller and the buyer sued the insurer for the replacement cost. Both the trial court and the circuit court agreed that, absent an assignment of the claim, the buyer lacked standing to sue.

The question remained: Could a seller still recover the withheld depreciation/replacement cost proceeds?

The insurer argued it had no obligation to pay because the seller sold the property in an unrepaired state, did not incur any expenses to repair the property and it had lost its insurable interest after the sale. The trial court agreed with the insurer and dismissed the claim.

The seller appealed, arguing its right to recover survived the transfer of the property and the policy did not require it to make the repairs to the property, only that repairs be made. The Seventh Circuit agreed, ruling Mississippi law only requires an insurable interest in the property at the time of the contract formation, i.e. when the policy was issued and did not require the insured to maintain the interest while a claim is being negotiated, settled or throughout litigation.

But what about the fact that the seller didn’t even make the repairs?

The Seventh Circuit held that the insurance policy did not require the insured to have made the repairs itself, only that repairs be made. The court stated that replacement cost insurance is A) supposed to be more than an indemnity policy, B) is designed to put the insured in a better position than before the loss (and charging a commensurate premium for this benefit) by compensating the insured for depreciation, and C) that if the insurer intended a “repair it yourself” requirement, it could have drafted the policy language thusly.

In  Edgewood Manor,  the court held that the seller/insured had an insurable interest in the property both when it procured the policy and at the time of the loss, satisfying any legal requirement for standing. Again, the options that the seller has are: A) take a reduced sales price based on the damage and collect the RCV; or B) take a full sale price (as if the property was not damaged) and provide an assignment of the claim to the buyer.

Code Upgrades

As a note, there may be one area where failure to provide an assignment of a claim could result in the cutoff of payment to a non-repairing seller. That is in respect to code upgrades. Typically, code upgrades are only required to be paid by the insurer, in the amount incurred, when incurred.

If there has been no assignment of claim, but the buyer who has taken ownership and possession of the property makes the code upgrades, the buyer would not likely have standing to recover from the insurer (inasmuch as there has not been an assignment) and the seller would also not likely be able to recover from the insurer (as they did not actually incur the cost of code upgrade).

In such a circumstance where a buyer is likely to have to repair, including making code upgrades, the real estate transaction should assign the buyer the claim, so the code upgrades can be recovered. No sales price alteration need be made, however.

Summarizing, don’t let the carrier tell you that you are caught in a “Catch-22” when there is a claim during the sales of real estate. Recovery by either the seller or buyer, depending on the agreement, is viable. And the sales price may or may not have to be adjusted so that both sides are in the position they thought they would be in absent an insured event. Certainly, public insurance claims adjusters, such as the Alex N. Sill Company, can help smooth the way through a claim if this issue should arise.

Contact a Sill public adjuster near you  for help maximizing your business or residential property damage insurance claim.

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Assignment of Claim after a Loss: What Homeowners Should Know

Let’s start with the basics. If you, as a homeowner, sustain property damage or losses because of a covered event (like a fire, for example), you will need your home repaired. You choose a contractor or restoration company to do the work – but the check from the insurance company has not come through yet, and you need them to start right away. So, what can you do?

You can sign an “assignment of claim,” which assigns your rights (as the policyholder) to benefits and proceeds from the loss, to the company or contractors. In the simplest of terms, the assignment of claim allows your contractor to get paid directly from the insurance company.

What is the anti-transfer clause in insurance?

However, many contractors and purchasers of the damaged property have found themselves in a tight spot over the years, because of something called the anti-transfer clause. As explained on the Tennessee Insurance Litigation Blog ,  the anti-transfer clause usually reads something like this: “Your rights and duties under this policy may not be transferred without our written consent except in the case of death of an individual named insured.” Sometimes, the insurance company requires written consent before an assignment of claim can be made.

This clause routinely allows insurers to deny payments to contractors – but it shouldn’t, when an assignment of claim is made post-loss.

What’s the difference between pre-loss vs. post-loss assignments?

The Courts of Tennessee have routinely ruled on behalf of contractors and purchasers who were assigned the claim after the loss occurred. That is because the original assignee – the homeowner – was approved by the insurance company in the first place, and because the damage occurred regardless. There was no additional risk for the insurance company. Therefore, even if the contractor has a long and storied history of rule-breaking (or even criminal activity), the homeowner can assign the claim however he or she chooses; after all, the loss already happened.

Where insurance companies can (and do) have a leg up is for pre-loss assignments. The insurance company underwrote the risk on Bob and Jane Homeowner because it felt confident enough to do so. Bob and Jane cannot assign their policy to another person without the approval of the insurer, even when no loss has occurred.

Even if there is an anti-transfer clause in your policy, the chances are very good that a post-loss assignment cannot be legally denied by your insurer. If it is, seek out an experienced insurance dispute lawyer to help you argue the denial.

One last note for Tennessee policyholders

In some cases, the insurance company may decide that the amount of your loss is worth less than the cost of the renovations for which the contractor is charging. If this happens, you could be on the hook for the remainder of the costs, depending, of course, on the language of the deal with your contractor.

Because of this risk, it’s wise to contact an attorney before making any decisions. Get informed about your rights from the start, and let your lawyer address any potential hiccups along the way. If your insurer lowballs your claim, your attorney can  handle the dispute , to ensure that you are compensated fairly.

At McWherter Scott & Bobbitt, we have spent years fighting against unfair insurance claims policies in Tennessee and Mississippi. Let  Brandon McWherter ,  Jonathan Bobbitt  and  Clint Scott   put their knowledge and experience to work for you. Please call  731-664-1340 or fill out our  contact form . We maintain offices in Nashville, Chattanooga, Memphis, Jackson and Knoxville.

Brandon McWherter has dedicated his practice to assisting insurance policyholders with their claims against insurance companies, including claims for bad faith. He is licensed in Tennessee, Arkansas, and Mississippi. Learn More

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Can You Assign Your Insurance Benefits to Someone Else?

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Most business insurance policies contain a so-called anti-assignment clause. This clause prohibits policyholders from transferring any of their rights under the policy to someone else. This means that the insured business cannot cede its right to collect claim payments to another party. However, laws in most states permit policyholders to transfer their rights to another party under certain circumstances.

Anti-Assignment Clause

In the standard ISO policies , the anti-assignment clause is located in a separate form called the Common Policy Conditions. These conditions apply to all coverages that are included in the policy. For instance, if a policy includes business auto , general liability , and commercial property coverages, the anti-assignment clause applies to all three coverages.

The clause is entitled Transfer of Your Rights and Duties Under This Policy. It includes the following provision:

Your rights and duties under this policy may not be transferred without our written consent except in the case of death of an individual named insured.

The anti-assignment clause prohibits the  named insured from transferring any of its rights or obligations under the policy to someone else without the insurer's permission. The only exception is if the named insured is an individual (sole proprietor) and he or she dies. An assignment is permitted in this case because a sole proprietorship and the individual owner are one and the same. If the individual dies, the business cannot survive unless it is sold to someone else.

An anti-assignment clause is intended to prevent the insurer from unwittingly assuming risks it never intended to take on. Commercial insurers review business insurance applicants carefully. Before they issue policies, underwriters consider the knowledge and experience of a company's owners and managerial staff. If a business is sold to someone else, the new owners may not be as skilled or attentive as the previous ones. From the insurer's perspective, the new owners are an unknown risk.

Post-Loss Assignments Permitted

The anti-assignment clause doesn't distinguish between assignments made before a loss and those made afterward. Even so, courts in most states have allowed policyholders to assign their rights to another party after a loss has occurred. Pre-loss assignments are still prohibited. Here is an example of a post-loss assignment of insurance benefits.

Victor operates a restaurant called Vital Vittles out of a building he owns. Late one January night two water pipes in the building freeze. The pipes subsequently burst, causing considerable water damage to Victor's building. Victor is forced to close his restaurant until the repairs are completed.

Victor hires a water damage contractor called Rapid Restoration to repair the damage to his building. He tells the contractor that he needs the repairs done quickly as he is anxious to reopen his restaurant. The contractor says that the repairs can be expedited if Victor signs over his rights under the policy to Rapid Restoration. The contractor will then proceed with the repairs and negotiate a claim settlement with Vital Vittles' commercial property insurer. Victor agrees to the assignment and the contractor begins the repair work.

While Vital Vittles' commercial property policy contains an anti-assignment clause, Victor has assigned his rights to Rapid Restoration after a loss has occurred. Thus, in most states, Victor's insurer cannot reject the assignment (assuming post-loss assignments are permitted in Victor's state).

Problems With Assignments of Benefits

In recent years, assignment of benefits (AOB) agreements have been problematic in some states, particularly Florida. Unscrupulous contractors have preyed on unsuspecting homeowners and business owners who have suffered water damage . Some contractors work alone while others operate in cahoots with crooked lawyers. In either event, the contractor convinces the policyholder to assign his or her rights under the policy over to the contractor. The contractor then exaggerates the cost of the repairs and collects the inflated amount from the insurer. The policyholder is left with a large claim on his or her loss history. When the policy expires, the insurer may refuse to renew it.

In the previous example, Victor has assigned his rights under the policy to Rapid Restoration. Suppose that Rapid Restoration completes only half of the repair work on Victor's building. The actual cost is $15,000 but the contractor submits a bill to the insurer for $30,000. Alternatively, the contractor never submits a bill but sues the insurer for $30,000. In either case, the insurer may refuse to pay on the basis that the contractor has committed insurance fraud. Victor cannot intervene because he has signed his rights over to the contractor. If the contractor is unsuccessful in its lawsuit against the insurer, it may demand payment from Victor's company.

Avoiding Problems With AOBs

As a business owner, you can avoid problems associated with AOBs and unscrupulous contractors by taking the following steps:

• Report any loss or accident directly to your insurer (or your agent or broker ). Notify your insurer immediately. Don't allow a contractor to do the notification on your behalf.
• Take photos of the damage.
• Don't allow any contractor to begin work until an insurance adjuster has documented the damage
• Vet contractors thoroughly before hiring them. Make sure they are properly licensed. If your area has suffered a natural disaster, watch out for construction scams.
• Don't sign an AOB unless you have reviewed it carefully. If you don't understand it, ask your agent, insurer, or attorney for assistance.
• If your contractor won't do any work until you've signed an AOB, find another contractor.

AOBs in Health Insurance

Assignment of benefit agreements are common in health insurance. Patients are often asked to agree to such clauses before they receive treatment from a physician, hospital, or another healthcare provider. The assignment of benefits clause transfers a patient's right to collect benefits under his or her health policy to the provider. By signing the document, the patent agrees that payments will be made directly to the provider for the services rendered. The clause states that the patient is ultimately responsible for the charges if the insurer fails to pay.

Once the treatment has been performed, the provider submits the AOB along with a claim to the patient's health insurer. The insurer pays the provider for services rendered to the patient.

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Can I Sell My Home With an Open Insurance Claim?

Understanding these factors is crucial for homeowners to make informed decisions and sell their homes fast.

For informational purposes only. Always consult with an attorney, tax, or financial advisor before proceeding with any real estate transaction.

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Legal Considerations and Disclosure Requirements

Legal implications of selling with an open claim.

Selling a home with a pending insurance claim introduces unique legal complexities. You’ll need to make sure you have documentation to clarify the following questions:

• Has the insurance company been informed you intend to sell the house?
• Does your insurance policy allow you to transfer benefits?
• Who will receive the payout from the insurance company?
• Are you repairing the damage before the sale?
• Are you adjusting the sales price in light of the open insurance claim, remaining damage, or any other reason? By how much?
• Is the damage or repair something you’re required to disclose to the buyer?

If your communication with the insurance company, your real estate agent, or the buyer or buyer’s agent becomes muddled, you may find yourself in hot water due to a misunderstanding.

Disclosure Obligations in Property Sales

Transparency is paramount when selling a property with an open insurance claim. In Oregon, as in many states, the seller’s disclosure directly asks about the existence material defects and any related insurance claims. Thus, if you have an pending insurance claim, your disclosure must state the extent of the damage, that a claim has been filed, and whether or not repairs have been performed yet.

While can sell your property with any amount of existing damages, up to and including selling a home with code violations or abandoned repairs , failure to disclose such information can lead to legal repercussions. Sellers must provide comprehensive details about the property’s condition, including any open insurance claims, to potential buyers.

This can scare off potential buyers, but don’t be tempted to lie on your disclosure. While it’s sometimes difficult to prove that a seller had preexisting knowledge of a defect in a home if the damage isn’t immediately apparent, it’s easy for a homebuyer to check for home insurance claims and prove you did.

If you think your seller’s disclosure might make it difficult to find a traditional homebuyer, consider finding a cash buyer instead. Cash buyers don’t have to deal with getting a mortgage lender’s approval, making it far easier for them to buy homes with defects.

Options for Handling Insurance Claims During the Sale

In general, when you’re selling a home with an open insurance claim, you have two main options: transfer the insurance payout to the buyer, or keep the payout and lower the sales price. If you’ve already completed the repairs that were the subject of the claim, this may be a non-issue, since the purpose of accounting for the insurance claim is to help the buyer pay for repairs.

Assigning Insurance Claims to Buyers

One option for homeowners selling with an open insurance claim is to assign the claim to the buyer. Assigning the insurance benefits to the buyer allows the buyer to directly receive the insurance payout instead of you. However, this process requires careful legal consideration. It’s crucial to have the agreement thoroughly reviewed by an attorney to ensure clarity and enforceability.

If your policy has an anti-assignment clause, this option may not be available to you. In most states, if a claimworthy incident has already happened—referred to as a “post-loss claim”—and you simply want to change who gets the payout, you can usually request your insurer to assign benefits to a third party without much trouble. However, Oregon courts may enforce anti-assignment clauses more often. Be sure to read your home insurance policy closely and consult with an attorney before assuming this route is an option.

Retaining Insurance Benefits

Alternatively, sellers may choose to retain the benefits of the insurance claim and adjust the sale price accordingly. This approach often involves reducing the property’s price to account for unrepaired damages.

It’s essential to clearly document how much you’re lowering the sale price in the sale documents. This transparency helps establish the estimated cost of repairs for the buyer and the rationale behind the price reduction.

You home insurance policy may mention “recoverable depreciation,” which refers to the difference between the actual cash value of something versus the cost to replace it. Sellers should be aware that retaining benefits might waive their ability to recover the depreciation amount, as the condition for such recovery often includes completing the repairs and submitting the receipts. If the home is sold before being repaired, this may be impossible, and you’ll be paid only the actual cash value.

Preparing to Sell Your Home with an Open Claim

Consultation with professionals.

Engaging with professionals such as attorneys, real estate agents, and insurance appraisers is vital in preparing for the sale of a home with a pending insurance claim. An attorney can offer legal advice on the implications of the sale or claim disputes with your insurer. Real estate agents can provide insights on market conditions and help in setting the right price, considering the open claim. Insurance appraisers and home inspectors play a crucial role in assessing the damage accurately, which is essential for proper documentation and fair valuation.

Documenting Damages and Price Adjustments

Documenting the extent of damages and any price adjustments is a critical step in the selling process. It involves:

• Recording the condition of the property with detailed descriptions and photographs.
• Providing a clear breakdown of the reduced sale price due to unrepaired damages.
• Using a seller’s disclosure form to inform buyers about the damages and the open insurance claim.
• Ensuring all documentation is precise, transparent, and easily understandable.

Accurate documentation protects the seller’s interests and provides the buyer with a clear understanding of the property’s condition. A common buyer negotiating strategy is to use a clear need for repairs to lower the sale price of a home or obtain a repair credit, so clearly showing that the repairs have been accounted for can preserve your negotiating power.

Skip the Hassle: Selling Your House As-Is for Cash

Need to sell your house fast and want to avoid the legal complications of your open claim? Selling your home as-is means that repairs aren’t a factor in negotiations. Fast, streamlined sales are one of the top reasons to sell to a cash buyer . The majority of these cash buyers, such as Cash is King, are ready and willing to pay for your home as-is.

Depending on the extent of damage, attracting a traditional buyer may be difficult, never mind negotiating an uncertain pending insurance claim. A cash buyer can be your ticket to a smooth, hassle-free home sale.

Are You Selling a House With an Open Claim?

Selling a home with an open insurance claim involves navigating legal complexities, making informed decisions, and ensuring thorough documentation. Understanding the options available, whether assigning the claim to the buyer or retaining it, is crucial. The importance of professional advice and transparent dealings cannot be overstated. However, with the right assistance, you can indeed close a successful sale for your home while an insurance claim is pending.

Can I legally sell my home with an open insurance claim?

Yes, you can legally sell your home with an open insurance claim. However, it’s essential to disclose this to potential buyers and consult with legal professionals and your insurer to ensure the process goes smoothly.

What should I consider when deciding to assign the insurance claim to the buyer?

It’s important that both parties understand the terms and that you determine whether the assignment is enforceable in your state. Assigning the insurance benefits can be used as a negotiating tool, so carefully consider how it may affect the sale price of your home to get the best price.

If I retain the insurance claim, how does it affect the sale price?

Retaining the claim often means reducing the sale price to account for unrepaired damages. This reduction should be documented clearly, reflecting the cost of repairs in the adjusted price. In addition, be aware that you may lose some of the insurance payout because you won’t be able to complete repairs.

What is the role of real estate agents and appraisers in this process?

Real estate agents help set a realistic price for your home as it would be with repairs and manage the sale process. Appraisers and inspectors provide accurate damage assessments, crucial for adjusting the price to account for repairs and insurance claims .

How do I ensure legal compliance when selling with an open claim?

Compliance involves understanding the terms of your insurance policy, disclosing all relevant information to buyers, ensuring legal documentation is in order, and possibly seeking legal advice to navigate the complexities of anti-assignment claims in your situation.

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The Assignment of Benefits & Your Homeowners Claim

Posted on behalf of Gordon & Partners on July 23, 2013 December 7, 2022 in Insurance Claims

What rights does an insured have after assigning any and all insurance rights, benefits, and proceeds under the homeowners insurance policy to a third party?

Homeowners that have experienced the frustration of dealing with a loss to their home, whether by flood, fire or hurricane, can attest to the stressful nature of the re-building process. As soon as practical, the homeowner typically hires a disaster/mitigation crew, contractor, or other repair/mitigation service (hereafter collectively referred to as restoration service(s)).

Most of these restoration services require the homeowner to sign a document called an Assignment of Benefits, prior to commencing any work. Stuck with a limited amount of options and under great stress, the homeowner signs the Assignment of Benefits and the restoration work begins. This assignment essentially allows the restoration service company to perform its work on credit or with no immediate payment by the homeowner, leaving the homeowner with the comforting satisfaction that the restoration company will collect its fee for service from the homeowners insurance company directly.

A typical Assignment of Benefits states, in part, as follows:

I, the Owner/Agent for the job site listed below, authorize RESTORATION SERVICE to enter my property, furnish materials, supply all equipment and perform all labor necessary to preserve and protect my property from further damage.

Assignment of Insurance Benefits and Direct Payment Authorization:

I hereby assign any and all insurance rights, benefits, and proceeds under any applicable insurance policies to RESTORATION SERVICE. I also hereby authorize direct payment of any benefits or proceeds to RESTORATION SERVICE. I make this assignment and authorization in consideration of RESTORATION SERVICES agreement to perform services and supply materials and otherwise perform its obligations under this contract, including not requiring full payment at the time of service.

While it was most likely not the intent of the homeowner to assign all his or her rights to the restoration service, a plain reading of this sample Assignment of Benefits is leading insurance companies to argue that the homeowner has assigned any and all insurance rights, benefits, and proceeds under the applicable policy, including those available for the re-build of the home and under Coverages C and D, to the third party restoration service. Some insurers are taking the position that by assigning any and all insurance rights, benefits, and proceeds under the applicable policy, homeowners have relinquished all claims available under the policy, including Additional Living Expenses and Personal Property. See Schuster v. Blue Cross & Blue Shield of Florida, Inc. , 843 So.2d 909 (Fla. 4 th DCA 2003) (holding that an unqualified assignment served to eliminate the insureds standing to bring a claim against the insurer). It is extremely rare for homeowners to intend to assign their right to be paid for damage to their personal property to a restoration service. Similarly, homeowners usually do not intend on assigning their rights to be paid for Additional Living Expenses they must incur as a result of being ousted from their home. Good business ethics dictates that the restoration service probably did not intend for the assignment to limit the homeowners ability to pursue these benefits from their insurance company. Regardless of the seemingly obvious intent of the parties, insurance companies are using these unqualified assignments (assignments that assign all the rights, benefits and proceeds) to preclude homeowners from obtaining benefits under their own homeowners insurance policy in favor of the restoration service.

Interpreting the assignment in a light most favorable to insured is one way to recover benefits under the homeowners policy after the assignment of benefits has been executed. The two most prominent ways to attack the validity of a properly executed assignment is to (1) find the assignment vague and ambiguous or (2) find the assignment qualified. Where terms of agreement are unambiguous, the parties’ intent must be discerned from the four corners of the document; in the absence of ambiguity, language itself is the best evidence of the parties’ intent, and its plain meaning controls. Fecteau v. Se. Bank, N.A. , 585 So. 2d 1005 (Fla. Dist. Ct. App. 1991). A homeowner can assert that there is no claim number or date of loss identifying the rights or claim that was purportedly assigned. Additionally, the assignment could be vague or ambiguous to the extent that it assigns all rights, but then limits the assignment by stating in consideration of RESTORATION SERVICES agreement to perform services and supply materials and otherwise perform its obligations under this contract. Moreover, this limiting language arguably indicates that the assignment only conveys rights to payment for services rendered by the restoration service company. When the assigned rights are limited by the language of the assignment, then the assignment is qualified and requires the agreement of all parties involved (spouses, co-owners, mortgagees etc) to be valid. In the majority of cases, the intent of the parties to the assignment was to limit the assignment to the right to payment for the services rendered. One last option the homeowner has available is to seek a re-assignment of benefits from the Restoration Service.

After the restoration company has rendered its services, the insured is usually left with a moisture free home that has holes in the drywall, holes in the kitchen cabinets, and no flooring. As the insured still has to pursue its insurance carrier for benefits to rebuild their home, additional living expenses, and possible contents damage, the insured is the real party in interest. That is, the person in whom rests, by substantive law, the claim sought to be enforced. Weiss v. Johansen , 898 So.2d 1099 (Fla 4 th DCA 2005). The insured is the one who is obligated to comply with all policy conditions and is in the best position to pursue the claim.

As the homeowner is the real party in interest, the Assignment of Benefits in favor of a restoration service should not be construed as a blanket assignment that deprives the insured of claims for payments above and beyond the restoration service work performed. The intent of the parties is the fundamental contract principle that may afford the insured benefits under the policy of insurance after an Assignment of Benefits has been executed. The insurer lacks standing to challenge the intent of the parties to the Assignment of Benefits. See Progressive Express Ins. Co. v. McGrath Community Chiropractic , 913 So.2d 1281 (Fla 2 nd DCA 2005). Therefore, there is a strong argument that an insured has not relinquished all benefits afforded by the policy after the insured has signed an Assignment of Benefits related to work performed by a restoration company.

A restoration company is entitled to full and complete payment for services rendered and an Assignment of Benefits is one way to obtain payment. Contrary to the insurance companies’ belief, those benefits do not have to be paid at the exclusion of benefits to the insured, and the restoration company and insured can surely coexist in the realm of homeowner’s insurance.

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Real Property Sales With Open Insurance Claim: Avoiding Closing Delays, Assignment of Claims, Replacement Costs

Recording of a 90-minute premium CLE video webinar with Q&A

Conducted on Thursday, April 14, 2022

Recorded event now available

This CLE webinar will advise real estate counsel on how to proceed with closing during the pendency of an open insurance claim. The panel will guide counsel on the right to retain insurance benefits under the policy, assign them to the new buyer, and document both options properly. The panel will discuss best practices on proceeding with a claim and how an insured seller who has already collected the actual cash value under the policy can file a depreciation claim.

Description

Selling property during the pendency of an open insurance claim can raise many legal questions. The owner must determine whether it intends to retain the right to receive insurance benefits under the policy or assign them to the new buyer. Documentation of damages and necessary disclosures are part of the process counsel must assist to close the deal.

First and foremost, counsel needs to complete a seller's disclosure form to document unrepaired damage to the property to the buyer. Also, counsel must notify the buyer of open insurance claims, although this may affect the ability to get new insurance and affect the closing.

Once a buyer is ready to proceed, both parties must consider the options. Sellers have the right to assign insurance claims to the new buyer, but counsel will need to provide that documentation. Failure by the parties to convey their intent to transfer the right to receive benefits could render the assignment unenforceable and take away the buyer's standing to obtain the benefits owed in court.

Alternatively, the seller can maintain the insurance claim and sell the property for a reduced amount. Again, counsel must document in the sales documents the amount of price reduction that is allocated to the unrepaired damage. This will help establish a more exact estimate of the repair cost and substantiate the basis for the price reduction. Once again, a seller's disclosure form can show (1) the buyer was on notice of the damages at the time of the sale and (2) that the cost to repair was contemplated in the reduced sale price.

Listen as our expert panel addresses the best practices for closing a purchase with a pending insurance claim with expediency and clarity. The panel will discuss the most common issues and solutions when an available property is attached to a damage claim.

• Seller's disclosures
• Assignment of insurance claims
• Retention of insurance by seller
• Best practices

The panel will address these and other key issues:

• How does a pending insurance claim affect the sale of real estate?
• When assigning an insurance claim as part of a property sale, what are the buyer and seller concerns?
• If a seller maintains the insurance claim in a deal, what documentation is necessary and why?

Mr. Thompson has been practicing law for 31 years. He is a top-rated specialist in the field of policyholder-side insurance recovery, including claim analysis, negotiation, settlement, arbitration, and when needed, litigation. He has won many trials and settled dozens of cases. He has experience representing policyholders in all lines of insurance. Mr. Thompson has worked on dozens of major property and business interruption claims, including some of the largest in history arising from 9/11, hurricanes like Katrina, the California fires, and recently for Covid-19 losses. He also has decades of experience in the hospitality industry and construction matters on behalf of owners or managers, including relating to management agreements, loan agreements, construction defects, mold, pollution, legionella, personal liability, theft, and various commercial disputes (both insurance and other disputes).

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Consumer Insight

Sept. 13, 2023

Assignment of Benefits: Consumer Beware

You've just survived a severe storm, or a tornado and you've experienced some extensive damage to your home that requires repairs, including the roof. Your contractor is now asking for your permission to speak with your insurance company using an Assignment of Benefits. Before you sign, read the fine print. Otherwise, you may inadvertently sign over your benefits and any extra money you’re owed as part of your claim settlement.

The National Association of Insurance Commissioners (NAIC) offers information to help you better understand insurance, your risk and what to do in the event you need repairs after significant storm damage.

Be cautious about signing an Assignment of Benefits. An Assignment of Benefits, or an AOB, is an agreement signed by a policyholder that allows a third party—such as a water extraction company, a roofer or a plumber—to act on behalf of the insured and seek direct payment from the insurance company.  An AOB can be a useful tool for getting repairs done, as it allows the repair company to deal directly with your insurance company when negotiating repairs and issuing payment directly to the repair company. However, an AOB is a legal contract, so you need to understand what rights you are signing away and you need to be sure the repair company is trustworthy.

• With an Assignment of Benefits, the third party, like a roofing company or plumber, files your claim, makes the repair decision and collects insurance payments without your involvement.
• Once you have signed an AOB, the insurer only communicates with the third party and the other party can sue your insurer and you can lose your right to mediation.
• It's possible the third party may demand a higher claim payment than the insurer offers and then sue the insurer when it denies your claim.
• You are not required to sign an AOB to have repairs completed. You can file a claim directly with your insurance company, which allows you to maintain control of the rights and benefits provided by your policy in resolving the claim.

Be on alert for fraud. Home repair fraud is common after a natural disaster. Contractors often come into disaster-struck regions looking to make quick money by taking advantage of victims.

• It is a good idea to do business with local or trusted companies. Ask friends and family for references.
•  Your insurer may also have recommendations or a list of preferred contractors.
• Always get more than one bid on work projects. Your adjuster may want to review estimates before you make repairs.

Immediately after the disaster, have an accurate account of the damage for your insurance company when you file a claim.

• Before removing any debris or belongings, document all losses.
• Take photos or video and make a list of the damages and lost items.
• Save damaged items if possible so your insurer can inspect them, some insurance companies may have this as a requirement in their policy.

Most insurance companies have a time requirement for reporting a claim, so contact your agent or company as soon as possible. Your  state insurance department  can help you find contact information for your insurance company, if you cannot find it.

• Insurance company officials can help you determine what damages are covered, start your claim and even issue a check to start the recovery process.
• When reporting losses, you will need insurance information, current contact information and a  home inventory or list of damaged and lost property . If you do not have a list, the adjuster will give you some time to make one. Ask the adjuster how much time you have to submit this inventory list. The NAIC Post Disaster Claims Guide has details on what you can do if you do not have a home inventory list.

After you report damage to your insurance company, they will send a claims adjuster to assess the damage at no cost to you . An adjuster from your insurance company will walk through and around your home to inspect damaged items and temporary repairs you may have made.

• A public adjuster is different from an adjuster from your insurance company and has no ties to the insurance company.
• They estimate the damage to your home and property, review your insurance coverage, and negotiate a settlement of the insurance claim for you.
• Many states require public adjusters to be licensed. Some states prohibit public adjusters from negotiating insurance claims for you. In those states, only a licensed attorney can represent you.
• You have to pay a public adjuster.
• The NAIC Post Disaster Claims Guide has information on the different types of adjusters.

Once the adjuster has completed an assessment, they will provide documentation of the loss to your insurer to determine your claims settlement. When it comes to getting paid, you may receive more than one check. If the damage is severe or you are displaced from your home, the first check may be an emergency advance. Other payments may be for the contents of your home, other personal property, and structural damages. Please note that if there is a mortgage on your home, the payment for structural damage may be payable to you and your mortgage lender. Lenders may put that money into an escrow account and pay for repairs as the work is completed.

More information. States have rules governing how insurance companies handle claims. If you think that your insurer is not responding in a timely manner or completing a reasonable investigation of your claim, contact your  state insurance department .

About the National Association of Insurance Commissioners

As part of our state-based system of insurance regulation in the United States, the National Association of Insurance Commissioners (NAIC) provides expertise, data, and analysis for insurance commissioners to effectively regulate the industry and protect consumers. The U.S. standard-setting organization is governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer reviews, and coordinate regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally.

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Insurance disputes sometimes arise out of transactions.  Those of you who are involved in transactions, including transactions arising out of insolvencies, might be interested in a cautionary tale from a recent Illinois appellate court case addressing the assignment of insurance policies as part of an asset purchase agreement.  This drafting lesson may help avoid future litigation.

In  The Premcor Refining Group Inc. v. ACE Insurance Company of Illinois , No. 5-18-0210, 2019 Ill. App. Unpub. LEXIS 1539 (Aug. 12, 2019), the purchaser of a refinery from a Chapter 11 debtor sought to obtain the benefits of all the insurance policies issued to the seller and its predecessors by various insurance companies to cover various environmental contamination lawsuits and proceedings.  The refinery was sold via an asset purchase agreement.  The question before the court was whether there was a valid assignment of all the insurance policies from seller to purchaser.

The court concluded that there was no valid assignment of all in the insurance policies in the asset purchase agreement, just the potential assignment of only those policies listed on a particular schedule.  The case was remanded to allow the purchaser to amend its complaint to address only those insurance policies scheduled.

The asset purchase agreement, in the section describing the assets purchased, provided that the purchaser would acquire, among other things, all right, title and interest of the seller in “all proceeds payable under any insurance policy covering the Purchased Assets by reason of any and all occurrences occurring prior to the Closings Date.”  In the section entitled Insurance, the agreement provided that any rights that the seller may have against their insurers with respect to the Purchased Assets shall at closing be assigned to the purchaser.

The court held that neither provision constituted a valid assignment of the rights of the seller under the relevant insurance policies.  The court pointed out that these sections of the asset purchase agreement did not mention liability insurance rights, but evidenced a promise to convey to the purchaser any proceeds from pending claims covering the purchased assets. The court opined that where a purported assignment does not specifically identify an insurance policy, and does not mention liability coverage at all, the subject of the assignment is not described with sufficient particularity to be a valid assignment of all the assignor’s rights under all of its past liability insurance policies.

The court referenced another case where an assignment was found valid by using language that clearly referenced the subject of the assigned liability policies.  In that case,  Illinois Tool Works, Inc. v. Commerce & Industry Insurance Co. , 2011 Ill. App. (1st) 093084 (Dec. 12, 2011), the purchase agreement sufficiently stated what was assigned:

“The benefits, including all rights to defense and indemnity coverage, under any and all policies of liability insurance issued to [Seller] prior to the closing Date . . . with respect to insurance coverage for accidents, occurrences, claims, suits, actions or proceedings arising from the operations, activities, or conduct of the [Seller’s] Business prior to the Closing Date; provided, however, that such benefits shall transfer to [Buyer] to the extent liabilities for such accidents, occurrences, claims, suits, actions, or proceedings are threatened against, transferred to, or otherwise imposed upon [Buyer].”

To avoid litigation over assignment of insurance policies in a corporate transaction requires that if the intent is to assign existing insurance coverage from seller to buyer, the assignment clauses in the purchase agreement must be crystal clear that the policies—not just the proceeds from the polices—are being assigned.  And to make it crystal clear specificity is necessary as to the policies (on a schedule) and what those policies are being assigned to cover should be made clear.

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The Home Buyer's Guide to Home Insurance

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Can an Insured Assign its Business Interruption Claim After a Loss? – Understanding Business Interruption Claims, Part 21

( Note: This Guest Blog is by Michelle Claverol , an attorney with Merlin Law Group in the Coral Gables, Florida, office . This is the part of a series she is writing on business interruption claims ).

Many business owners consider “pulling the plug” after a loss. Whether emotionally based or a strict numbers decision, business owners want to know if they can sell their business and assign their business loss claim as part of the package.

As a general rule, an assignment of an insurance claim after a loss will give the assignee the right to collect insurance benefits under the insurance policy even though the assignee is not a party to the insurance contract. Couch on Insurance §35:7 (3d ed. 2009). There are, however, limits to the kinds of post-loss claims that can be assigned, particularly when they involve business interruption coverage.

Bronx Entertainment, LLC v. St. Paul’s Mercury’s Ins. Co. , 265 F.Supp.2d 359 (S.D.N.Y. 2003), is illustrative of the type of analysis that courts will engage in when determining the recoverability of assigned claims. In Bronx Entertainment , an insured suffered windstorm losses at its golf driving range facility. The insured made an insurance claim for the property damage and business losses and then sold the business to Bronx Entertainment. As part of the business transaction, the insured also assigned the policy to the buyer. Bronx Entertainment subsequently presented a business interruption claim for its own business losses; the carrier denied the claim and Bronx Entertainment filed a lawsuit.

In Bronx Entertainment , the Court essentially held that the claimant could no longer show actual losses sustained as required under the business interruption provision because the sale reduced the amount of continuing business losses to zero. The Court explained, however, that it may be possible to maintain an action for the losses accrued by the original insured [the assignor] at the time of the assignment.

[i]n the instant case, plaintiff is seeking to collect business interruption damages arising out of a business which did not come into existence until 17 days after the wind damage, and after Family Golf [original insured], the named insured, to whom defendant had issued its policy had ceased to operate the business covered and had transferred the title, ownership and control of the premises to plaintiff. Therefore, plaintiff cannot assert a claim for losses it suffered. Of course plaintiff may maintain an action for Family Golf’s losses that accrued as of the date of the assignment. However, plaintiff is proceeding on the theory that it is also entitled to those business losses which had yet to occur at the time of the assignment. This plaintiff cannot do because it would, in effect amount to an assignment of the entire policy to which defendant did not consent.

In other words, a business owner may assign the rights and benefits of an insurance claim to a potential buyer as part of the deal. The buyer, as assignee of the insurance claim, cannot pursue a claim in his or her own right, but rather make a derivative claim as if standing in the shoes of the original insured. It is also important to note that, as a matter of assignment law, the buyer [or assignee of the claim] will also be subject to any defenses that the carrier had or could have had against the original insured [assignee], i.e. , normal policy exceptions and exclusions.

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Introduction to Faye Travel Insurance

• Types of Policies Offered
• How to Purchase and Manage Your Policy

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Faye Travel Insurance Review 2024

Affiliate links for the products on this page are from partners that compensate us (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate insurance products to write unbiased product reviews.

At its core, Faye Travel Insurance is the first fin-tech startup providing a modern take on travel insurance. Our Faye travel insurance review finds the company prides itself on offering a fully digital experience. This digital push means its consumers can buy a policy, submit claims, and receive payouts seamlessly through a mobile app.

Faye puts your travel insurance options in the palm of your hand. However, everyone's travel insurance needs differ. Online access is only one of the things travelers look for. So it's essential to read the fine print before you pay for the best travel insurance for your needs. Here's a closer look at what you need to know before buying a Faye travel insurance plan.

• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Customers love the product and claims process
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Easy online quoting process
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Add-ons including pet care, rental car coverage, and cancel for any reason
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Easy debit cards for claims payment on your trip
• con icon Two crossed lines that form an 'X'. Only available to US citizens
• con icon Two crossed lines that form an 'X'. May be harder for non-tech savvy travelers
• con icon Two crossed lines that form an 'X'. Younger travelers can find cheaper travel insurance elsewhere

Faye is a fairly new competitor in the travel insurance industry, operating since 2019. It offers one base travel insurance policy with quite a few additional coverage options, such as pet care expenses, vacation rental damage protection, and adventure sports protection. You'll manage your policy, file claims, and communicate with customer service and travel assistance through Faye's mobile app. 

Faye's "whole trip" travel insurance policy covers all the fundamentals with fairly high coverage limits. That said, its premiums are on the high side. It has particularly high rates for younger travelers relative to its competitors, which is a shame, since its tech-focused approach to travel insurance seems geared towards younger travelers.

Types of Policies Offered by Faye Travel Insurance 

Faye starts with one base plan, boasting that it provides "whole trip" travel insurance to protect "your trip, your health, and your stuff." It also offers riders to customize your coverage for a fee.

Here's what's included in the base plan:

Additional coverage options from Faye

In addition to the base plan, Faye offers a robust selection of riders or supplemental policies buyers can add to the plan for an additional cost. The riders are the same in the U.S. and abroad.

These include:

• Adventure and extreme sports protection: up to $250,000 (international trips) or $50,000 (domestic trips) for accident and sickness expenses. Users should read the policy to ensure their plans qualify.
• Vacation rental damage protection: applicable for short-term rentals like Airbnb and VRBO or other rentals. Faye will reimburse you up to $3,000
• Cancel for Any Reason: up to 75% of the nonrefundable insured trip cost when purchased within 14 days of initial trip deposit
• Pet Plan Bundle: up to $2,500 for vet expenses and $250 for kenneling if your trip is extended unexpectedly
• Rental car care (for cars renting within the U.S. and Canada only): up to $50K in coverage for accidental damage by collision, vandalism, natural disaster or theft related to your rental car

Always check your other insurance policies if you're looking for specific coverage types not included in this list. You might be surprised at the coverage automatically available to you. For example, U.S. auto insurance will extend to rental cars in the U.S. You can talk to your auto insurance company about any international travel.

Additionally, some credit cards offer travel protections , which are generally along the lines of basic travel cancellation insurance. If you have a travel credit card, it may be worth double-checking the protections that credit card provides. You can find our guide on the best travel credit cards here.

Faye Travel Insurance Cost

The premium you pay will depend on various factors, including the age of the travelers, destination, and total trip costs. The  average cost of travel insurance  is 4% to 8% of your travel costs.

After inputting some personal information, such as your age and state of residence, along with your trip details, like travel dates, destination, and trip costs, you'll get an instant quote for  plans available for your trip. And from there, it's easy to compare each option based on your coverage needs and budget.

Now let's look at a few examples to estimate Faye travel insurance coverage costs.

• 23-year-old from Illinois taking a week-long, $3,000 trip to Italy: $162.18
• 30-year-old from California on a two-week vacation to Japan for $4,000 trip: $173.17
• Texas family consisting of two 40-year-old parents with a 10-year-old and 4-year-old on a two-week trip to Australia for $20,000: $919.70
• 65-year-old New Jersey couple traveling to for Mexico for two weeks for $6,000: $436.52

With these estimates, Faye isn't the cheapest travel insurance policy . However, these costs are roughly in line with what you should expect to pay for an average travel insurance policy. 

How to Purchase and Manage a Faye Policy

To purchase a Faye policy, you'll need to give them the following details about your trip:

• Destination
• Travel dates
• Number of travelers, their birthdays, and email addresses
• State of residence

Once you get your quote, you can input your trip cost as well as purchase any riders you qualify for. 

How to File a Claim with Faye

The easiest way to submit a claim with Faye is through its mobile app. The app has a 24/7 chat feature to ensure you get the assistance you need as quickly as possible.

You can also contact Faye via phone or email. Domestic travelers should call +1-833-240-7056, while international travelers should dial +1-804-482-2122. If you wish to contact the company via email, [email protected] is the best address.

Notably, one thing that sets Faye's claims process apart from other travel insurance providers is that any payouts you receive will be deposited directly into your Faye Wallet. The Faye Wallet works similarly to an Apple Pay account, allowing Faye's team to process claims faster. You can immediately access the money to pay for things like dog kenneling, replacing everyday toiletries and clothes, and more.

Customer reviews report that a claim might take a while to process on their own but calling Faye's customer support line can expedite the claims process.

Although Faye is relatively new in the travel insurance industry, it's built an excellent reputation among its customers. It has an average rating of 4.7 stars out of five on its Trustpilot page. Reviewers spoke highly of the buying process and customer service team. The claims process received mixed reviews, with some extended wait times, but reviews on the claims process were still positive overall. 

Faye's mobile apps on Android and iOS play a significant role in your coverage, allowing you to manage your policy, file claims, and communicate with Faye's customer service team. Faye's Android app received 4.0 stars on the Google Play store, and its iOS app received 4.2 stars. 

In addition to positive reviews, it's also worth mentioning that Faye regularly responds to reviews on Trustpilot as well as its mobile app. That said, contacting customer service directly is still the most reliable way to get assistance, as review response times from Faye range from same-day to two-weeks from when the review was made.

Learn more about how Faye Travel Insurance compares to some of the best travel insurance companies.

Faye vs. AIG Travel Insurance

While both Faye  and AIG offer apps for travel insurance customers, AIG's app is currently only available to those with corporate bookings. In short, vacationers lack access to the app. Faye, on the other hand, has apps for both IOS and Android users.

Faye may be the way to go if you're more comfortable navigating the insurance process on your phone or don't plan to take a computer. Still, AIG may provide more options if you want more control over your claim limits.

AIG offers three levels of comprehensive travel insurance with varying limits. The company also has annual travel insurance plans, which may be a good fit if you plan to go on multiple trips this year. Overall, premiums are similar between the two companies.

Read our AIG Travel Insurance review here.

Faye vs. Allianz Travel Insurance

One of Faye's main benefits is that it offers a large selection of add-on options that allow you to tailor your coverage to fit your needs. These include riders like a pet policy or an adventure sports rider.

At this time, Allianz only offers supplemental rental car insurance policies in addition to its comprehensive insurance plans.

However, Allianz may present a more straightforward and comprehensive option if you're not in the market for hyper-specialized coverage. Both companies include emergency medical transportation and costs in base plans. Overall, Allianz is typically the more affordable option between the two.

Read our Allianz Travel Insurance review here.

Faye vs. World Nomads Travel Insurance

On the whole, Faye and World Nomads travel insurance are relatively similar. Both offer comprehensive insurance plans, coverage for extreme sports, and 24/7 claims assistance. However, it's the finer details that set the two companies apart.

For its part, Faye's most significant selling point is its mobile app and quick transfer of funds to its card. It also has the option to add on those tailored additional coverage riders, such as its pet plan bundle, cancel for any reason coverage, and vacation rental damage protection.

In contrast, World Nomads has two comprehensive plans, which means you can select your claim limits. Plus, the company allows you to extend your coverage if you stay away from home longer than you'd planned.

World Nomads premiums may also be more competitive depending on where you're going.

Read our World Nomads Travel Insurance review here.

Faye Travel Insurance FAQs

Yes, Faye offers travel insurance for international trips, making it suitable for international travel, but it's always important to check specific destination coverage in the policy terms.

Yes, Faye offers an adventure and extreme sports protection rider, though it will significantly increase the cost of your travel insurance policy.

Faye handles COVID-19 like any other illness when it comes to trip cancellations and medical emergencies.

Faye's claims process is reportedly simple, with no paperwork required. Reports of claim wait times vary, but getting in touch with customer service is a reliable way to expedite the process.

Faye stands out for its digital approach to travel insurance with its mobile apps for iOS and Android.

Why You Should Trust Us: How We Reviewed Faye Travel Insurance

While reviewing Faye, we compared its offerings to other reputable travel insurance providers. Specifically, we compared the available plan options, add-ons, claim limits, coverages, exclusions, and typical policy costs.

Choosing the best policy for you and your co-travelers is about finding a policy with the right type of coverage and sufficient claim limits. Of course, price is a significant factor for many consumers. But specialty riders for daredevils and other details help consumers make the right decision. As such, we take all that into account.

You can read more about how we rate travel insurance products here .

Editorial Note: Any opinions, analyses, reviews, or recommendations expressed in this article are the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any card issuer. Read our editorial standards .

Please note: While the offers mentioned above are accurate at the time of publication, they're subject to change at any time and may have changed, or may no longer be available.

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