Florida laws proposed final week would forestall the state’s motorists from assigning their authorized rights in auto insurance coverage claims to restore outlets.
Assignment of advantages (AOB) is a typical 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 1000’s of Floridians, conduct pointless or unnecessarily costly work, then file tens of 1000’s of lawsuits towards insurers that deny or dispute the claims.
Legislation accepted 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 didn’t have an effect on auto-related AOBs.
Intended to assist shoppers
Florida’s auto glass regulation – initially supposed to encourage drivers to restore or change 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 automobile homeowners to join “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 outcome is 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 drive a settlement.
Hope for the longer term
“What started as a small regional situation a decade in the past with a number of legal professionals and a few auto restore outlets has blown as much as turn into a significant drawback all through the state,” mentioned Mark Friedlander, Triple-I’s director of company communications and a Florida resident. Between 2011 and 2021, the quantity of auto glass lawsuits in Florida rose greater than 4,000 %, 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 – which means each events in an accident submit claims to their very own insurer, regardless of fault – it ranks excessive for legal professional involvement in accident claims, the Insurance Research Council (IRC) has discovered. Attorney involvement is related to greater prices, and IRC additionally has discovered Florida to be among the many least inexpensive auto insurance coverage markets.
The 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.
Fraud, Litigation Push Florida Insurance Market to Brink of Collapse
Florida’s AOB Crisis: A Social-Inflation Microcosm