Last month, Florida State Sen. Linda Stewart (D-Orlando) filed a new piece of legislation with the potential to bring much-needed relief to the state’s auto insurance market. That market has been the target of ongoing abuse by self-serving trial attorneys and crooked window repair shops seeking to make a quick buck off insurance companies.
The bill, SB 1002, and its companion bill, HB 541, which was approved by the Florida House Banking and Insurance Committee this week, are intended to end the abuse of Assignment of Benefits (AOB) agreements. AOBs are agreements that occur when a person signs over their policy rights to a contractor who handles their claims, makes repairs and is reimbursed by insurers. While originally intended to help protect policyholders and streamline the insurance claims process, these agreements have frequently been co-opted by attorneys acting in bad faith. That’s why last December, during Florida’s special legislative session, lawmakers enacted serious reforms related to property insurance through the passage of SB-2A. However, they left the issue of AOB abuse in the auto insurance market unresolved.
SB 1002 and HB 541 attempt to rectify this situation by amending Florida Statue 627.422 to prohibit motor vehicle repair shops and their employees from “offering anything of value to a customer in exchange for making an insurance claim for motor vehicle glass repair” and employees from entering “assignment agreements of post-loss benefits” for vehicle window replacement or other repairs on or after July 1, 2023.
Reforms like these are badly needed.
Consumers, insurance companies and advocacy groups all agree that over the last few years, Florida has experienced an explosion of auto glass lawsuits that’s quickly destabilizing the auto insurance market. These lawsuits are driving up the cost of insurance premiums for millions of Floridians because insurance companies must raise rates to be able to afford mounting legal fees. Between 2011 and 2021 alone, the number of auto glass lawsuits in Florida increased by more than 4,000 percent, rising from just 591 lawsuits in 2011 to 28,156 by 2021. Last year, over 37,000 lawsuits were filed in the state, with that number likely to climb further if legislators don’t act soon to remedy the situation.
According to a recent National Insurance Crime Bureau (NICB) analysis of insurance industry data, these statistics make Florida the second worst offending state in the nation when it comes to auto glass litigation.
Yet, strangely, the number of lawsuits attorneys file isn’t evenly distributed. Research conducted by the Florida Justice Reform Institute (FJRI) indicates that only a handful of attorneys are responsible for filing the majority of lawsuits. Last year, just 20 Florida lawyers filed 95 percent of all auto glass lawsuits, with some counties filing more than others. Orange County filed 28 percent of all auto glass lawsuits in 2022, despite having just six percent of the state’s total population.
The data reveals that not all parties are equally to blame for the sorry state of Florida’s auto insurance market. Rather, a small group of trial attorneys and auto glass vendors is responsible for exploiting a loophole in the legal system to enrich themselves at the expense of everyone else. They do so by using manipulative techniques to lure unsuspecting victims into their trap, with the promise of a free windshield replacement and other incentives like rebates, gift cards and cash.
Frequently, this scheme involves representatives of windshield repair shops approaching motorists to inform them that their windshield has sustained damage and is need of immediate attention. They point to a small crack somewhere in the glass and warn that this crack could spread across the entire windshield at any moment. They then offer to take care of this problem at no cost to the motorist so long as they agree to sign over their AOB policy rights.
Once the driver gives their approval, an attorney working with the repair shop then files a lawsuit against the insurer of the vehicle, frequently without the policy holder’s knowledge or consent. More often than not, these lawsuits inflate the true cost of the window repair — typically around $200-400 — by taking advantage of Section 627.428 of Florida’s one-way attorney fee statute, which awards attorneys all legal fees associated with the lawsuit. These fees are “one-way” because even if the insurance company prevails, it isn’t reimbursed for its defense costs. This statute provides attorneys with a perverse incentive to file future lawsuits.
What was once intended to “level the playing field between insureds and economically powerful insurers” is now regularly abused by predatory trial attorneys and their windshield repair shop allies. The exploitation of legal loopholes that perpetuate the sue-to-settle system makes this entire scam possible. Lawmakers must address these loopholes if Florida is to have any hope of cracking down on windshield bullies.
Passing SB 1002 and HB 541 would go a long way toward achieving this. The bills would deny these bullies the tools they need to file excessive claims by prohibiting AOBs for glass replacement and banning the types of incentives used to lure motorists into these agreements. SB 1002 would also require repair shops to provide motorists with adequate notice when their vehicle needs costly calibration following the replacement of their windshield, something they frequently fail to do.
Other bills under consideration by Florida lawmakers may also prove helpful. SB 236, and its companion bill, HB 837, would further expand tort reform and eliminate Florida’s one-way attorney fee provisions.
Whatever lawmakers decide to do with each of these bills, they must not forget that the state’s auto insurance market needs immediate help. The status quo is simply unacceptable when the ongoing abuse of AOBs by trial attorneys and their windshield repair shop allies is harming millions of Floridians. Lawmakers should be bold and enact meaningful tort reform that addresses these abuses.