A stakeholders’ meeting was held Monday for Arizona House of Representatives Bill 2500, “Unlawful Practices: Auto Glass Repair.” The bill passed the state House and the discussion now revolves around its approval in the Arizona Senate. A glass shop owner risks criminal penalties if he violates the bill’s requirements.
The legislation also would make it unlawful for automotive glass shops to “take an assignment of any claim relating to the repair or replacement of auto glass.”
With the assignment of claims, the glass company receives the contractual rights to receive payment from the insurer. The policyholder signs over his right to the post loss payment and this money goes to the glass company.
“In HB 2500, the Arizona House of Representatives proposes to reverse long-standing Arizona universal insurance law, and a policy that the legislature itself calls an unfair claims practice by making it illegal for automobile glass shops to accept an assignment of claims,” says Dennis Hall, attorney for the Arizona Auto Glass Association. “This rule, allowing assignments, is for the convenience of consumers who have insurance claims and want to allow the service provider to handle the claims work for them.”
In other industries, including the medical and collision repair, the service provider can take the assignment of claims, adds Hall. This bill would reverse this for the automotive glass industry, he says.
“The Arizona courts could not be clearer on this issue,” Hall says. “They stated that ‘[a]fter a loss has occurred and the rights under the policy have accrued, an assignment may be made without the consent of the insurer.’ (St. Paul Fire and Marine Insurance v. Allstate.)
Rex Altree, president of SafePro Auto Glass in Phoenix, Ariz., called the stakeholders meeting a disappointment.
“Every change that was suggested was rejected by the insurance and Safelite lobbyists,” says Altree. “House Rep. Livingston (who sponsored the bill) stated a few times that the bill was passed by a House vote of 53 yes and 7 no … and he expects that there will be a similar percentage of yes to no votes in the Senate.”
While glass companies such as Safelite AutoGlass and Thomas Auto Glass have spoken in favor of the bill, Altree and others remain opposed.
According to Hall, if the bill is approved and becomes law, an automotive glass replacement and repair company owner risks felony charges if he:
- Represents to a policyholder or other person what automotive glass coverage is available under an insurance policy.
- Waives a deductible.
- Offers a value of more than $25 for referral or in connection with a repair or replacement.
- Performs an insurance repair or replacement without the insured’s and insurer’s approval.
- Repairs or replaces an insured’s glass without an inspection if the insurer requests.
- Takes an assignment of claims.
“The speech restrictions here raise genuine commercial free speech issues,” Hall says.
Those in favor of the bill have said it helps to prevent industry fraud.
“We want to thank Rep. David Livingston for his efforts to bring all interested parties together. We continue to support the bill as a means to provide greater consumer protections in the Arizona VGRR industry,” says Scot Zajic, Safelite’s vice president of legislative affairs.
The bill is expected to go before the Senate Finance or Commerce and Workforce Development Committees for a vote within the next two weeks, says Altree. The bill is not on either committees’ agenda yet.
To see the language of the bill that passed the House, click here.
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