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 Glass and the Law 

August, 1999

South Carolina Insurance Co. Sues Auto Glass Installers

From the Assoicated Press:

Automobile glass-replacement companies are offering bribes and inflating prices to reap business, an insurer alleges in a lawsuit filed Friday.

South Carolina's auto insurers for years have complained of being ripped off by glass-replacement business. State law won't let insurance companies charge deductibles on auto-glass claims under comprehensive policies.

Insurit Casualty Group sued 12 glass companies after finding differences of as much as 300 percent in what customers with cash would pay for the same repairs insurance covered, Insurit President Jay Specter said.

The Columbia-based company has about 15,000 customers. The lawsuit said his company pays about $20,000 in glass claims monthly. Insurit has asked the Court of Common Pleas in Richland County to make the case a class action.

One glass installer named in the lawsuit defended the price difference, saying it takes time to process insurance claims. "Most companies offer discounts for cash up-front," said Fred Price, who owns Ace Glass in Columbia. "It has nothing to do with deeper pockets. It's the fact that we have to wait 90 days to get paid."

Insurit alleges unfair trade practices and misrepresentation. The lawsuit alleges that auto-glass companies:

Mislabeled parts as original equipment and put them in cars without telling owners.

Encouraged drivers to insure cars after glass was damaged and then file claims.

Offered coupons, credits, rebates and bribes to encourage insurance agents and claims adjusters to use their company.

Specter said he wants to test a state law that says companies can't charge insurance companies more than they would charge uninsured customers for the same work.

"The practice is not new. The law is not new. It's just that nobody has paid attention to it," Specter said.

Replacement glass and the state's laws addressing the issue have long been a rallying point for insurers in South Carolina.

It's usually cheaper to repair windshields than to replace them, said Phil Love, executive vice president of South Carolina Farm Bureau Mutual Insurance Co. But a zero-dollar deductible on glass means fewer consumers choose to make repairs.

Love said about 20 percent of his company's claims involve glass replacement.

The no-deductible law can create opportunities for questionable practices, Insurit says.

The South Carolina Department of Insurance won't comment on the lawsuit, said Jim Byrd, the agency's consumer services director. Consumers who insure cars with broken windshields and make glass claims are "not in keeping with the standard of good faith we have in buying a policy," Byrd said.

While Insurit says the state's law helps build glass-replacement businesses in South Carolina, it isn't likely to change soon. A bill that would allow deductibles didn't get a hearing before House lawmakers this year.

"I really don't see the problem," said Rep. Harry Cato, chairman of the House Labor, Commerce and Insurance Committee.

The Travelers Rest Republican said legislators haven't wanted to change the law because it helps consumers while it encourages them to repair glass. That enhances safety, Cato said.

Also see US Glass Magazine Article for more information

source: The Assoicated Press