The assignment of benefits reform package passed in the 2019 Legislative Session was a major win for insurers, but not all of them.
Assignment of benefits, or AOB, allows policyholders to sign over their insurance policy benefits to a third party in exchange for quick repairs. Many times, contractors and attorneys on the other end of the AOB take insurers over inflated repair costs.
The bill signed into law by Gov. Ron DeSantis earlier this year was aimed at curbing AOB litigation by putting additional requirements on contractors and by allowing insurers to offer policies with limited AOB rights, or no AOB rights at all.
But the law only applies to home repairs, not auto glass repairs, which insurers say has become rife with abuse, upcharges and shady sales tactics, all to the detriment of their bottom line as well as the customers they cover.
“Recently I was at a car wash and I had a small chip, maybe the size of the end of a pencil. The sales associate there said ‘you may be suffering from microcracks.’ I said, ‘thank you, not interested,’ but those are the types of sales tactics being used,” State Farm SIU Team Manager Steve Bright said during a panel at the Florida Chamber of Commerce Insurance Summit.
Mike Yaworsky, the Chief of Staff at the Florida Office of Insurance Regulation, said Bright’s experience is a common one in many parts of Florida.
“You have consumers walking into situations where they’re alerted to a problem with their windshield and handed [an assignment of benefits] document to sign to get it fixed. If I were a consumer, I might go along with that without any idea of what I’m signing on to,” he said.
Yaworsky added that there’s a lot more wiggle room in home repair costs than auto glass. If a homeowner gets estimates from two contractors to repair a flooded kitchen, the prices could vary wildly. With windshields, that’s not the case.
“These are off the shelf parts,” he said. “We’re litigating over small dollar amounts and it’s causing a crisis in the industry.”
Just because auto glass AOB suits aren’t costly on a one-to-one basis doesn’t mean they’re not a major problem. Holland & Knight’s Adam Hodges, the panel moderator, likened it to death by a thousand cuts.
In a home repair claim, Hodges said, insurers may not put up much of a fight if a bill is only a few hundred dollars off the mark. And if they do, they’re not looking to skip out on paying the whole bill over a small discrepancy. With auto glass, however, a few hundred dollars over the limit could be double the book rate on the repair.
“Now, imagine that’s happening several hundred times a month,” Hodges said.
“The insured are being exploited. The insurers are being taken advantage of. The government is also being taken advantage of by the false representation bad actors use to get these claims.”
Hodges said overcharges aren’t the only worry in the auto glass market. Some salespeople have made two claims for the same job in the case of spouses who have separate car insurance policies.
He added that most windshield jobs are full replacements even in cases where a simple repair would suffice, but since the salespeople encouraging customers to get the repair are independent contractors rather than employees, installers are able to avoid liability for those kinds of shady sales tactics.
“If every person out there is getting a replaced windshield instead of a repair, I’m going to ask questions,” Hodges said.