If you’ve ever dealt with property damage from a storm or loss event, you may know how burdensome and time-consuming the insurance claims process can be. Some homeowners look to an Assignment of Benefits (AOB) as a way to streamline the claim negotiation and repair process.

An AOB is a contract under which homeowners assign their right to insurance payouts for a specific repair job directly to a repair contractor. From a policyholder’s perspective, this can allow you to focus on your day-to-day life rather than haggling with adjusters over payments. The contractor handles both communications with the insurance company and coordination of repairs.

But in Nebraska, AOBs are limited and regulated by the Insured Homeowners Protection Act. This law sets clear rules that contractors must follow to keep an AOB valid, including:

  • The insurance company must be notified of the AOB within five business days of the agreement.
  • The AOB must provide a detailed breakdown of the repairs and costs.
  • The AOB must include prominent warnings explaining what rights have been transferred.
  • The contractor can be included only as a co-payee and must keep the homeowner listed on any payments.
  • The AOB cannot prevent an insured from talking directly with their insurer.

Failure to comply with any of these requirements may render the AOB unenforceable and deprive both the homeowner and the contractor of the protections the Act is intended to provide.

Recently, some Nebraska legislators have signaled their intent to revise the laws governing AOBs in the state.

On February 3, 2026, the Nebraska Legislature held a hearing on LB1137, a draft bill that would ban AOBs for residential contractors and prohibit them from negotiating with insurance companies on behalf of homeowners. Supporters, including insurers and insurance‑industry advocates, contend that such a ban would reduce inflated claims, fraud, and litigation. Critics caution that it could leave homeowners with fewer avenues for assistance in presenting claims, resulting in underpaid benefits and delayed repairs.

For now, LB1137 remains in legislative committee and has not advanced, meaning Nebraska’s existing AOB framework still applies.