Kentucky Legislator Seeks to “Floridarize” Assignment of Benefits
It’s no secret that certain auto glass businesses in Florida were highly aggressive in their solicitation of business. These companies have also been aggressive in having customers in Florida (a no-deductible state) sign a document called an Assignment of Benefits (AOB). The assignment of benefits turned the insured’s right to their insurance claim for a windshield replacement over to the auto glass company. Insurance companies have long howled at the volume and alleged inflated costs of these windshield claims. When insurers did not pay, attorneys for the auto shops sued for payment.
Last year, the Florida legislature cracked down on this practice, enacting a comprehensive auto-glass reform law that eliminated the assignment of benefits and prohibited auto glass companies from offering “anything of value” in exchange for the auto glass claim. The state also opened the door for insurance companies to get around zero-deductible requirements.
One Bad Actor Ruins for All
One of us ruins it for all of us. This old saying holds for most auto glass shops that operate ethically and use the AOB to get paid fair rates and provide a seamless customer experience for insureds.
It remains to be seen how the new Florida law will affect the auto glass industry in the long term. The new law also had provisions that required specific notices to consumers, especially regarding the calibration of ADAS-equipped vehicles.
The immediate effect was that some auto glass operators who utilized these aggressive tactics left the state. There are reports that some relocated to Kentucky, a zero-deductible state.
As we enter 2024, Kentucky is now trying to address the practice Florida banned. Kentucky Senator Brandon Storm introduced legislation on January 2, similar to the 2023 law enacted in Florida.
Under the legislation, Kentucky would end the practice of assignment of benefits for auto glass claims and, therefore, curtail the litigation that results from that practice. The bill also seeks to end the widespread solicitation of auto glass claims by prohibiting shops from offering rebates, gift cards, cash, or “any other thing of value” for those claims.
The Kentucky legislature operates on a 90-day legislative session that will conclude in early April, so if the bill is to become law this year, it will have to be on a fast track. The legislation has been assigned to the Senate Commerce Committee and the Senate Banking and Insurance Committee for review.
S.B. 29 specifically prohibits the assignment of benefits for auto glass repair and replacement insurance claims and the offering of anything of value to solicit glass-related insurance claims. The assignment-of-benefits ban broadly applies to all property, casualty, or property-and-casualty insurance contracts.
The Kentucky bill explicitly allows an insured to use a glass-services company of their choice but also expressly allows insurers to maintain a network of glass-services shops.
The bill also imposes consumer-information requirements on auto glass businesses, including calibration information. It prohibits auto glass services companies from engaging in various fraudulent practices.
Under the bill, the “calibrating or recalibrating an Advanced Driver Assistance System (ADAS) when incident to a repair or replacement of damaged motor-vehicle glass” is included in the definition of repair or replacement of damaged motor-vehicle glass.
To contract for services with a customer, a glass shop will have to obtain the customer’s insurance-claim number or waiver of an insurance claim and notify the customer whether the vehicle has ADAS and whether the ADAS will be recalibrated in a manner that makes the ADAS operable.
Reasonable Charges
The shops must also provide an invoice with an estimate of fees, the shop’s standard rates for glass work, and a statement that the shop is prohibited under Kentucky law from charging more than is “reasonable and customarily charged in Kentucky.”
The bill also prohibits glass shops from committing a variety of fraudulent practices or making false statements to the customer or the insurance company about such items as the geographic location and date of the repair/replacement work or that the work will be fully covered by insurance if that is not the case.
However, unlike the new Florida law, Kentucky would continue to be a zero-deductible state for auto glass repair and replacement.
AGSC will continue to track this legislation and other state legislation that arises during the 2024 legislative season that might affect its members and the auto glass services industry.
Seth Maiman is the director of public affairs for the Auto Glass Safety Council.
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