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Florida lawmakers seek to prohibit auto insurance assignment of benefits

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A bill has been filed in the Florida House that would prohibit auto insurance policyholders from assigning benefits to repair shops that would potentially make it more of a challenge for repairers to work with insurers on their customers’ behalf.

Assignment of benefits allows third parties, such as a repair shop, to file an insurance claim, make repair decisions, and directly bill a carrier for the policyholder. As a third party, AOB allows shops to pursue insurers to collect charges that carriers refuse and otherwise owe to the policyholder.

HB 541 states, “A policyholder may not enter into an assignment agreement under a motor vehicle insurance policy issued on or after July 1, 2023. Any attempt by a policyowner to enter into such assignment agreement is void and unenforceable.”

Assignment agreement is defined as “post-loss benefits, including claim payments, under a motor vehicle insurance policy are, in whole or in part, assigned or transferred to, or acquired in any manner by, a person providing services, including, but not limited to, inspecting, protecting, repairing, restoring, or replacing the motor vehicle or mitigating against further damage to the motor vehicle.”

In December 2020, two state Supreme Courts, in Florida and Oklahoma, reversed lower court rulings that prohibited the use of AOB.

The Oklahoma Supreme Court reversed a lower court ruling holding that a CSAA clause forbidding assignment of a policy also forbade assigning post-loss claim payments. The next day, Florida’s 3rd District held that Lloyd’s couldn’t use an anti-assignment declaration during the policy application process as an exception to Florida’s ban on such restrictions in contracts.

In 2019, the Florida legislature approved a bill enacting assignment of benefits restrictions — including the right to sell policies forbidding AOBs — for homeowner insurance but joined the House in declining to set new rules for auto windshield claims.

Jeff Johnston, lobbyist for the Florida Independent Glass Association, told Florida Politics at the time that carriers were only paying independent shops as little as 50% of what they charged forcing shops to sue to get their money — lawsuits that were usually successful.

Johnston told the news outlet he offered to back off on AOB lawsuits with some insurers if they agreed to pay the prevailing rate but was turned down. That led to lawmakers removing glass from the legislation, Johnston said, according to Florida Politics.

A hearing hasn’t been scheduled yet for the newly proposed bill.


Featured image credit: hapabapa/iStock

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