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.
What do you think about the proposed changes to the statute? Email your thoughts to email@example.com or share them on the glassBYTEs.com™/AGRR™ magazine forum here.
This legislation seems illegal to me. How can the government stop a small shop from giving away a dinner coupon for say $50.00 as an incentive to do business with me. I’m already giving the insurance the pricing dictated to me so who gets harmed besides Safelite and me? This part of the legislation looks like it was written by Safelite Attorney’s. We have been installing windshields for a $100-150 dollar gross profit for insurance company’s for over 15 years now without a raise in their pricing structure ever since the networks came to be. I don’t know how long I’m going to keep doing this. If this comes to pass in Washington I will be done with Insurance Windshields. Just what Safelite wants I expect.
I attended a meeting last night with the AZ Auto Glass Association ( I am not a member) to discuss their thoughts regarding this proposed Legislative change. There was no unified direction with the group. Some would agree to end all gift carding and cash spiffs, especially for the Insurance Agents that require incentives to refer a glass company. Some felt that their only edge was to offer consumers cash & gift cards as Marketing for their success. Others expressed concern for the possible felony charges that the bill would deliver. Only a few mentioned the crux of the issue. Safety First, Consumer Protection and a Fair and Level practice for commerce with Insurance Companies / Third Party Administrators / National Auto Glass Companies and Independent Shops.
There’s no doubt that SOMETHING needs to be accomplished in Arizona to curtail the Underground Economy that exists and provide an atmosphere of clear & cogent communications and practices for ALL PARTIES’ concerns.
ITS A MESS, AND NOT JUST IN ARIZONA, ITS ALL OVER THE US. GIFT CARDING IS NOT A GOOD MORAL BUSINESS PRACTICE. ANY ONE CAUGHT GIFT CARDING SHOULD BE FINED, JAILED AND THERE BUSINESS CLOSED. ALSO ANY INSURANCE AGENT WHO IS ACCEPTING THIS BRIBE SHOULD LOSE THIER LICENSE AND NEVER BE ABLE TO RETAIN THEM AGAIN IN ANY STATE. THEY SHOULD BE FINED AND JAILED. IF YOU BRIBE A POLICE OFFICER WOULDN’T YOU BE? EVERY INSURANCE LAW I HAVE EVER READ SAYS IT IS UNLAWFUL TO WAIVE DEDUCTIBLES OR TO PAY SOME ONE FOR A REFFERAL OR ECT… NOW THATS PART OF THE PROBLEM. WE HAVE GLASS WHOLESALER WHO SELLS GLASS TO A PERSON THAT DOES NOT HAVE A LEGITAMENT GLASS FACILITY , TAX INFO, LIABILTY INSURANCE, OR A STORE FRONT SHOULD STOP SELLING THEM GLASS. THAT MEANS WALK IN CASH CUSTOMERS. AND THEY ALL DOIT!!! TO ME THAT ALSO INCLUDES THE MOBILE ONLY GUYS WHO DRIVE STATION WAGONS AND PIECES OF CRAP THAT DONT EVEN HAVE A NAME ON THEM. ITS BAD BUSINESS AND MAKE THE WHOLE INDUSTRY LOOK LIKE A BUNCH OF HILLBILLYS. IF YOU ARE MOBILE ONLY AND HAVE AN OFFICE WITH A WAREHOUSE TO STORE GLASS I FEEL YOU ARE SOMEWHAT OK. BUT HOW THE HELL DO YOU WORK IN THE ELEMENTS SAFELY. I GUESS YOU DONT CARE ABOUT THAT EITHER. OUR SUPPLIERS WHO HAVE ANY DIGNITY SHOULD DO THIS IMIDEATLEY. WE HAVE AGSC WHO PRESSES US ALL ABOUT SAFTEY INSTALLS. BUT DOES ANY BODY TRULY CARE? I DONT THINK SO. if THEY DID THESE PRACTICES WOULD STOP. I HAVE BEEN IN THE GLASS INDUSTRY FOR 34 YEARS IT HAS TURNED INTO THE MOST CORRUPT HORRIBLE POOR PRACTICING BUSINESS I COULD EVER IMAGINE. ITS TIME OUR INSURANCE COMMISSIONERS DO THERE DAMN JOB INSTEAD OF ACCEPTING MONEY THEMSELVES. SAFELITE DOES SOME THINGS I DONT LIKE THATS FOR SURE, BUT THIS CRAP THAT ITS WRITTEN BY SAFELITE IS BULL POOP. ITS TIME YOU SO CALLED GLASS GREW SOME NUTS AND DID YOU JOB LEGALLY AND MORALLY YOU MIGHT SLEEP A LITTLE BETTER AT NIGHT.
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Do we still live in America? It amazes me after being in the business for 25 years how rediculous the auto glass industry has become. As a small independent glass shop that provides service in AZ and has been dealing with TPA’s for years for the life of me what will people come up with next. Its always bordered on anti-trust business practices on how the industries biggest auto glass repair and replacement company can also be financially affiliated with the majority of insuance companies auto glass claim services or network. Wouldnt it be nice for every independent shop to have the same information regarding pricing to insurance companies that they have agreed upon. With that being said the majority of us that have marketed to insurance companies over the years and established relationships based on the professional service we provide have no choice to be on these networks because the insurance companies send reports and intimidate agents because of the savings they may have realized through only using the major chain that is financially affiliated with this TPA. Ive watched through the years as scripts have been read to basically scare the insured. Its really sad what has become of the industry. Now they want to control how a glass company markets their business and make it illegal to offer incentives. How convenient to tie our hands as the biggest chain continues to flood the market with national commercials. Some of the people behind pushing this bill should be very careful with what they are trying to get passed here ….the old saying..People in glass houses shouldn’t throw stones. The most amazing fact that isnt realized is that the iindependent glass shop owns the market. Even the biggest chain out there barely holds a 20% market share. Which by no means is small, but do you realize how much stregnth in numbers there are in the independent shops? Problem is there has never been a strong alliance of independents. Weve tried over the years but the level of committment just isnt obtained. Could you imagine just for one moment what would happen if every independent shop got off these networks. Or what if we used their tactics and lowballed the pricing so it backfired on their service centers? They have a pretty big wheeel to grease every week. Ever noticed when it slows down in the industry…inspections go up. Hmmmm wonder why that is? Think maybe random inspections bring more work into this national chain?
Its too easy enrty into our industry just as all the trades have become in similar fashion. Today I got an Extractor…now I am an auto glass technician. I still take great pride in my companes ethics and professionalism. The one thing I know for sure is that enacting a law regarding how you market your company is absolutely redicuous. Picture this!
Youre sitting in a jail cell when you are asked, “What are you in for?” You respond…” I took an insurance agent out to play golf, I waived a deductable…I put a coupon in the mail…
What a joke. Wake up! There is a reason why the biggest chains lobbyist are behind this bill.
As a consumer, this bill has been much needed. People constantly complain, myself as well, about their auto insurance premiums continuing to increase, but they do not understand that these “gifts” and “rebates” they get from glass companies are actually costing them money in the long run.
No one is innocent in this mess and the first glass company that tells you they are full of it. Over the last 3-4 years the consistent phone calls have been extremely tiresome. Even worse are the visits at your house, or being solicited on a public street! Obviously the glass companies make good money on these “repairs” or else they would not be fighting this as much. I have had 2 windshield repairs, and I mean small chips, in the last 6-7 years and both times the shop told me that they could get me a a new windshield without a cost to me.
The glass companies rip off the insurance companies, the insurance companies raise our rates, and in the end we get to pay for this whole mess. A change is much needed.
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I have had several experiences of pressure sales for a new windshield. It happens at the car wash most of the time. The rep will follow me into the waiting area, talking all the time, trying to convince me that he/she has seen the terrible condition of my windshield. The sales rep actually tells the potential client what to say to the insurance agent in order to gain the necessary approval. I have often wondered about this practice because it really feels shady.
If a company is being honest, they will continue to bring in the business. My windshield is, like many Arizonan’s, constantly being pitted by sand storms, stones, rocks and debris from passing trucks.
I have zero-deductible glass replacement in my policy, and I don’t hesitate to use it when my windshield needs to be replaced. This alone is a huge incentive for me to replace, and not drive with, a pitted, scratched or cracked windshield. I don’t need a gift card, a cash incentive, their claim to repair my headlamp to “new” condition, or anything else.
If this bill doesn’t impact the insurance company’s offer of zero-deductible on glass, I am all for it.
I’m just going to point out that the last time I was at the Olive Garden , walmart , or any store for that matter have I ever been tipped for being their customer . One of my biggest struggles as a small company is refusing to pay my customers to come to me . Everyone else either pays you, or does the job nearly for free . This is a great industry, but there are so many issues that this bill was never going to cover . I’m so glad it went away.