A state law intended to give homeowners recourse in disputes with their insurers is instead being used by some repair vendors and their lawyers to generate a windfall.
The “one-way attorney fee” allows policyholders to collect legal fees from their insurer if they win a claims dispute. But if the policyholder loses in court, they don’t have to pay the insurer’s legal fees.
Some repair vendors are tricking policyholders into signing an assignment of benefits, or AOB, allowing the vendor to seize control of the policyholder’s rights, file a claim and sue the insurer, often without their knowledge or consent.
This scheme has become an incentive for lawyers and their vendor clients to clog the courts with lawsuits and generate profit.
AOB litigation increased by over 66 percent from 2010 to 2011, fell briefly after the 2012 auto insurance reforms, and then started rising again, according to the Florida Department of Financial Services. From 2014 to 2015, AOB litigation increased 10.7 percent, and then 21 percent from 2015 to 2016.
This problem isn’t confined to home insurance claims. Auto glass claims saw an almost 3,000 percent increase in five years — from 591 claims in 2011 to 19,558 claims in 2016.
This rampant AOB abuse and litigation is driving insurance costs up. Insurance Commissioner David Altmaier had it right when he told the governor and Cabinet that there’s no explanation other than the one-way attorney fees.
It’s time to pass meaningful reforms to keep consumers in control of their insurance policies and stop the abuse that’s hiking up insurance rates.
William Large, president, Florida Justice Reform Institute, Tallahassee
