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

Assignment of benefits (AOB) is a normal apply within the insurance coverage world. In Florida, nonetheless, this environment friendly, customer-friendly approach 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 crisis, 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.

Meant to assist customers

Florida’s auto glass regulation – initially meant to encourage drivers to restore or change broken windshields by prohibiting insurers from charging deductibles for windshield harm – is being exploited by glass-repair outlets throughout Florida. Unscrupulous distributors rent staff to canvas neighborhoods, attractive automobile house owners to enroll in “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 title.

Attorneys have a powerful 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 legal professionals file fits over very small disputes to pressure a settlement.

Hope for the long run

“What started as a small regional problem a decade in the past with a number of legal professionals and a few auto restore outlets has blown as much as develop into a significant drawback 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 – which means each events in an accident submit claims to their very own insurer, no matter fault – it ranks excessive for legal professional involvement in accident claims, the Insurance Research Council (IRC) has found. Lawyer involvement is related to greater 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, affords hope that Florida is lastly severe 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 is going to take years for the impacts of fraud and authorized system abuse to be wrung out of the system.

Study Extra:

Fraud, Litigation Push Florida Insurance Market to Brink of Collapse

Florida’s AOB Crisis: A Social-Inflation Microcosm