September 30, 2023

Florida legislation proposed final week would forestall the state’s motorists from assigning their authorized rights in auto insurance coverage claims to restore retailers.  

Project of advantages (AOB) is a typical follow within the insurance coverage world. In Florida, nevertheless, this environment friendly, customer-friendly technique to settle claims has lengthy served as a magnet for fraud. The state’s authorized setting has inspired distributors and their attorneys to solicit unwarranted AOBs from tens of 1000’s of Floridians, conduct pointless or unnecessarily costly work, then file tens of 1000’s of lawsuits in opposition to insurers that deny or dispute the claims.

Legislation approved within the closing weeks of 2022 took a number of essential steps towards resolving the state’s property/casualty insurance coverage disaster, together with elimination of the state’s AOB legal guidelines with respect to property claims. Nevertheless it didn’t have an effect on auto-related AOBs.

Supposed to assist shoppers

Florida’s auto glass legislation – initially supposed to encourage drivers to restore or substitute broken windshields by prohibiting insurers from charging deductibles for windshield harm – is being exploited by glass-repair retailers throughout Florida. Unscrupulous distributors rent employees to canvas neighborhoods, attractive automobile house owners to join “free” windshield replacements. They get automotive house owners to signal an AOB contract that assigns the house owners’ authorized rights to the restore store.

The store then can sue the buyer’s insurer if it doesn’t pay what the store calls for. The result’s a lawsuit by the seller within the shopper’s identify.

Legal professionals have a robust incentive to file fits, because the insurer is required to pay their charges if it loses in court docket.  This has resulted in a “sue-to-settle” system, wherein attorneys file fits over very small disputes to drive a settlement.

Hope for the longer term

“What started as a small regional challenge a decade in the past with a couple of attorneys and a few auto restore retailers has blown as much as turn out to be a serious downside all through the state,” stated Mark Friedlander, Triple-I’s director of company communications and a Florida resident. Between 2011 and 2021, the variety of auto glass lawsuits in Florida rose more than 4,000 percent, from 591 to greater than 28,000. A Nationwide Insurance coverage Crime Bureau (NICB) evaluation discovered that Florida had the highest number of questionable auto-glass claims among the many 50 states in 2020.

WhileFlorida is a “no-fault” state – that means each events in an accident submit claims to their very own insurer, no matter fault – it ranks excessive for lawyer involvement in accident claims, the Insurance Research Council (IRC) has found. Lawyer involvement is related to increased prices, and IRC additionally has discovered Florida to be among the many least reasonably priced auto insurance coverage markets.

The brand new measure, filed for the 2023 legislative session that begins March 7, gives hope that Florida is lastly critical about fixing the decades-old mechanisms which have fed the state’s present insurance coverage disaster. Taken collectively, the 2 items of laws will assist stabilize Florida’s insurance coverage market, however it’s going to take years for the impacts of fraud and authorized system abuse to be wrung out of the system.

Be taught Extra:

Fraud, Litigation Push Florida Insurance coverage Market to Brink of Collapse

Florida’s AOB Disaster: A Social-Inflation Microcosm