In a case similar to body shops taking “assignment of proceeds” action against insurers, the Minnesota Supreme Court heard arguments this week from both glass repair shops and insurers regarding the court of appeals’ 2008 ruling that a “non-assignment” clause in an insurance policy protects insurers from having to deal directly with auto glass shops.
The glass shops’ attorney Chuck Lloyd of Livgard and Lloyd argued that the assignment of benefits clause is an underwriting issue, rather than one involving auto glass claims.
“What the anti-assignment clause is designed to protect is to protect [policyholders] from not doing business with those they don’t want to do business with,” Lloyd said.
Collision repair industry attorney Erica Eversman has made the same argument in the past, saying that these non-assignment clauses in insurance policies only prevent a scenario in which a consumer with, say, a good driving purchases a policy at a discount and then assigns it over to a family member or friend who has a poor driving record and would otherwise have had to pay higher premiums.
The insurers’ counsel argued that the real issue in the case is short payments – and a “concern over cost containment.”
“The adjusted loss has already been paid,” the company’s representative argued. “The dispute is the amount over [this].”
In his counter argument, Lloyd argued that whether or not the invoice and what the insurance company might pay is inapplicable to whether the assignment of proceeds should be allowed.
“They want to dispute the amount, but that doesn’t change the assignment of the debt,” Lloyd said.
In an assignment of proceeds or assignment of benefits case, a glass repair or collision repair facility accepts, in lieu of full payment from the consumer, an “assignment of proceeds” owed to the insured/consumer for the repair of the vehicle. In other words, the insurer paid an amount insufficient to cover the repair, and the shop then tries to recover the difference in a court of law.
The Minnesota case originated from four different cases, three of which involved arbitrations related to short payments. In these cases, the arbitrators ruled in favor of the glass shops in the short payment disputes, but the insurers filed arbitration afterwards arguing that the assignment of payment to the glass shops had been invalid due to the non-assignment policies present in the insureds’ policies.
In the fourth case, a glass shop attempted to arbitrate short payments against an insurer; in turn, the insurer filed a declaratory-judgment action “seeking a declaration that the non-assignment clause in its insurance contract prevented the customers from assigning the payment to Star Windshield."
For more on assignment of proceeds as it relates to collision repair, click HERE.
