Triple-I Weblog | Florida Auto Laws, on Heels of 2022 Reforms, Suggests State is Critical About Insurance coverage Disaster Repair

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

Project of advantages (AOB) is a typical apply within the insurance coverage world. In Florida, nonetheless, this environment friendly, customer-friendly option to settle claims has lengthy served as a magnet for fraud. The state’s authorized atmosphere 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. However 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 exchange 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, attractive automobile homeowners to enroll in “free” windshield replacements. They get automobile 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 identify.

Legal professionals 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, through which legal professionals file fits over very small disputes to drive a settlement.

Hope for the long run

“What started as a small regional situation a decade in the past with just a few legal professionals and a few auto restore retailers has blown as much as develop into 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 legal professional involvement in accident claims, the Insurance Research Council (IRC) has found. Lawyer involvement is related to larger prices, and IRC additionally has discovered Florida to be among the many least inexpensive auto insurance coverage markets.

The brand new measure, filed for the 2023 legislative session that begins March 7, gives 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 would 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 coverage Market to Brink of Collapse

Florida’s AOB Disaster: A Social-Inflation Microcosm