Arizona House Representative David Livingston (R) has proposed House Bill 2500, “Unlawful Practices: Auto Glass Repair.” The bill is designed to amend the insurance statute to regulate the marketing of automobile glass, according to Dennis Hall, attorney for the Arizona Automotive Glass Association.
The proposed bill is designed to amend statute 26-463.01.
The statute starts out by stating: It is an unlawful practice for a person who sells or repairs auto glass, an auto glass repair or replacement facility or any agent, contractor, vendor, representative or anyone acting on behalf of the person or facility to knowingly …
And the proposal adds the following, saying it will be unlawful to:
- Threaten, coerce or intimidate an insured for the purpose of inducing the insured to file a claim for auto glass repair or replacement.
- Induce an insured to file an auto glass repair or replacement claim if the damage to the auto glass is insufficient to warrant auto glass repair or replacement.
- Waive or offer to waive the insured’s deductible or offer a rebate, gift, gift card, cash or coupon or anything of value to any person in exchange for either a referral of an insured to the auto glass repair facility in connection with an auto glass repair or replacement claim under an insurance policy or to induce the insured to file an auto glass repair or replacement claim under an insurance policy.
- Represent verbally, electronically or in any other way, including an advertisement or website or any marketing materials, that a claim for windshield repair or replacement under an insurance policy is free.
- Perform auto glass repair or replacement services in this state without obtaining a transaction privilege tax license number issued by the department of revenue pursuant to section 42-5005.
- Perform auto glass repair or replacement services under an insurance policy without first obtaining the insured’s and insurer’s approval for the specific work to be performed.
- Transpose or duplicate, either electronically or in any other form, an insured’s signature onto a document that is required to authorize the repair or replacement of auto glass. For the purposes of this paragraph, duplicate does not include making copies of a document for record retention purposes.
- Bill the insurer for more than the repair or replacement cost agreed on with the insured, a third-party administrator of the insurer or an agent representing the insurer for the written estimate.
Further, the bill proposes that:
If the person repairing or replacing the auto glass does not accept the insurer’s rate, they must provide a written estimate to the insured before the work begins that includes all of the following:
- A statement whether the person repairing or replacing the auto glass agrees to accept the insurer’s rate for parts, kits and labor.
- The actual rate that will be charged for that work and the difference between that rate and the insurer’s rate.
- A statement that the insured may be financially responsible to pay the difference between the actual rate that will be charged for that work and the insurer’s rate.
- The signature of the insured.
- The businesses’ transaction privilege tax license number issued by the department of revenue pursuant to section 42-5005.
And finally, the bill if passed would make it unlawful for a person who sells or repairs and replaces auto glass to fail to make the vehicle available for inspection at the request of the insurer before performing auto glass repair and replacement services on an insured vehicle.
“I understand that the prime mover behind the bill is Safelite, in conjunction with certain glass shop owners,” writes Hall in an analysis of the proposed legislation to Arizona Automotive Glass Association members. “The primary backer of the bill is Safelite.”
Hall says the proposed changes would create criminal liability for behaviors he has not seen present in the marketplace.
“The terms ‘coerce’ and ‘intimidate’ are, to me, vague,” he writes.
Hall also takes issue with how damages are defined.
“There is a grey area about what is ‘damage to the auto glass insufficient to warrant glass repair or replacement,’” writes Hall. “This pits the glass shop’s opinion against the insurance company’s, or its third-party administrator’s, opinion, or that of the Department of Insurance or law enforcement.”
Hall says the section cutting incentives, when read literally, “would apply to paying marketing company or perhaps a car wash for referring claims, which might be an unintentional, but serious implication for third parties, including independent contractors.”
Other proposed changes could impact cash customers, according to the attorney.
“It is an unlawful practice to: Perform auto glass repair or replacement services under an insurance policy without first obtaining the insured’s and insurer’s approval for the specific work to be performed.”
“This appears to restrict a shop from performing a repair or replacement without first obtaining insurance company approval if a claim is to be made,” says Hall. “It may have the unintended effect of making unlawful a cash transaction without approval if the customer makes an independent claim to the insurance company and no approval has occurred.”
A violation of these statutes with the requisite intent is a crime, notes the attorney.
“A person who violates section 20-463 or 20-463.01 with the intent to injure, defraud or deceive an insurer is guilty of a class 6 felony,” he writes.
In addition to being charged with a felony, there are potential civil monetary penalties associated with violation of these statutes.
In response to the proposed changes, Kerry Soat, owner of Fas-Break in Chandler, Ariz., has written a letter to Rep. Livingston.
“The insurance industry is upset we have a zero deductible glass coverage in Arizona,” he writes. “Mind you, I pay extra for that coverage and in Arizona it is necessary to make sure windshields are kept in safe condition. … We have ‘desert landscaping’ [to blame] for our auto glass damage. Every time it rains, the rain washes the ‘desert landscaping rocks’ into the streets to be picked up by the tire threads. Then at 75 to 80 miles per hour, the rocks get thrown into the air and the oncoming cars ‘run into the rocks.’ This is why this is covered under ‘comprehensive’ coverage and not ‘collision’ coverage. If the rock hit you and could be proven it hit you instead of you running into the rock, then a collision would have occurred thereby establishing liability.”
He goes on to point out that advertising is an important factor for any business.
“How we attract clients is what advertising is all about,” writes Soat. “If I, an auto glass vendor, decide to provide my client with an incentive to use my shop versus ‘The Walmart of Auto Glass,’ instead of spending thousands of dollars on TV advertising to attract clients, where is the fraud in that? Especially if I have accepted the pricing the insurance company has offered to pay for repairing or replacing the windshield. I am giving away my money, using my profit on the job, to a client, rather than spend it needlessly on advertising which might work or not.”
To read a copy of House Bill 2500, click here.