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 outlets.  

Task of advantages (AOB) is an ordinary apply within the insurance coverage world. In Florida, nevertheless, this environment friendly, customer-friendly strategy 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 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. But it surely didn’t have an effect on auto-related AOBs.

Meant to assist shoppers

Florida’s auto glass legislation – initially meant to encourage drivers to restore or substitute broken windshields by prohibiting insurers from charging deductibles for windshield injury – is being exploited by glass-repair outlets throughout Florida. Unscrupulous distributors rent staff to canvas neighborhoods, attractive car 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, during which legal professionals file fits over very small disputes to drive a settlement.

Hope for the long run

“What started as a small regional challenge a decade in the past with a couple of legal professionals and a few auto restore outlets 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 – 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 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, provides 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.

Be taught Extra:

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

Florida’s AOB Disaster: A Social-Inflation Microcosm