Florida legislation proposed final week would forestall the state’s motorists from assigning their authorized rights in auto insurance coverage claims to restore retailers.
Assignment of advantages (AOB) is a regular observe 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 surroundings has inspired distributors and their attorneys to solicit unwarranted AOBs from tens of hundreds of Floridians, conduct pointless or unnecessarily costly work, then file tens of hundreds of lawsuits towards insurers that deny or dispute the claims.
Legislation permitted within the closing weeks of 2022 took a number of essential steps towards resolving the state’s property/casualty insurance disaster, together with elimination of the state’s AOB legal guidelines with respect to property claims. But it didn’t have an effect on auto-related AOBs.
Intended to assist shoppers
Florida’s auto glass legislation – 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 retailers throughout Florida. Unscrupulous distributors rent staff to canvas neighborhoods, engaging automobile homeowners to enroll in “free” windshield replacements. They get automotive homeowners to signal an AOB contract that assigns the homeowners’ authorized rights to the restore store.
The store then can sue the patron’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.
Lawyers have a robust incentive to file fits, because the insurer is required to pay their charges if it loses in courtroom. This has resulted in a “sue-to-settle” system, through which legal professionals file fits over very small disputes to pressure a settlement.
Hope for the longer term
“What began as a small regional issue a decade ago with a few lawyers and some auto repair shops has blown up to become a major problem throughout the state,” mentioned 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 greater than 4,000 p.c, from 591 to greater than 28,000. A National Insurance Crime Bureau (NICB) evaluation discovered that Florida had the best quantity of questionable auto-glass claims among the many 50 states in 2020.
WhereasFlorida 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 legal professional involvement in accident claims, the Insurance Research Council (IRC) has discovered. Attorney involvement is related to larger prices, and IRC additionally has discovered Florida to be among the many least reasonably priced auto insurance coverage markets.
The new measure, filed for the 2023 legislative session that begins March 7, affords 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 can take years for the impacts of fraud and authorized system abuse to be wrung out of the system.
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Fraud, Litigation Push Florida Insurance Market to Brink of Collapse