Florida Proposed Act Last week the state barred motorists from asserting their legal rights in auto insurance claims to repair shops.
Allocation of benefits (AOB) is a standard practice in the insurance world. However, in Florida, this efficient, customer-friendly way to settle claims has long served as a magnet for fraud. The state’s legal environment encourages vendors and their attorneys to obtain unwanted AOBs from tens of thousands of Floridians, perform unnecessary or unnecessarily expensive work, and then file tens of thousands of lawsuits against insurers who deny or deny claims.
Act approved In the final weeks of 2022 several key steps were taken to resolve the state’s property/casualty. Insurance crisis, including the elimination of state AOB laws related to property claims. But this does not automatically affect the corresponding AOBs.
Intended to help consumers
Florida’s auto glass law — the first to encourage drivers to repair or replace damaged windshields by preventing insurers from charging deductibles for windshield damage — is used by windshield repair shops across Florida. Unscrupulous sellers hire workers to canvas neighborhoods, prompting vehicle owners to sign up for “free” windshield replacements. They get car owners to sign an AOB contract that gives the owners legal rights to the repair shop.
If the store doesn’t pay the claim, the store can sue the consumer’s insurer. The result is a lawsuit by the seller on behalf of the consumer.
Lawyers have a strong incentive to file lawsuits because if they lose in court, the insurer will have to pay their fees. This has resulted in a “litigation-settlement” system in which lawyers file lawsuits for very small disputes in order to force a settlement.
Hope for the future
“What started as a small regional issue with a few lawyers and a few auto repair shops a decade ago has become a huge statewide problem,” said Mark Friedlander, director of corporate communications for Triple-I and a Florida resident. Between 2011 and 2021, the number of auto glass lawsuits in Florida increased Over 4,000 percent591 to 28,000. This has been found in a National Insurance Crime Bureau (NICB) study Florida had the largest number Suspicious auto class claims in 50 states in 2020.
Florida is a “no-fault” state — meaning both parties to an accident submit claims to their own insurer, regardless of fault — and it ranks high for attorney involvement in accident claims. The Insurance Research Council (IRC) found that. Attorney involvement is associated with higher costs, and the IRC has identified Florida as one of the lowest-cost auto insurance markets.
The new measure, filed for the 2023 legislative session that begins March 7, offers hope that Florida is finally serious about addressing decades-old mechanisms that have fed the state’s current insurance crisis. Taken together, the two laws will help stabilize Florida’s insurance market, but the effects of fraud and legal system abuse will take years to seep out of the system.
Fraud, the lawsuit pushed the Florida insurance market to the brink of collapse