From a Small Chip to Sweeping Tort Reform

• In June 2026, the insurance carrier USAA announced another round of dividends for its policyholders along with additional reductions in auto insurance premiums.
• Almost $1 billion will be returned to Florida members between December 2025 and July 2026.
• The reason? Improved insurance market conditions resulting from Florida’s recent tort and litigation reforms.

What Happened?

In March 2023, Florida enacted House Bill 837 (HB 837), a tort reform bill intended to reduce excessive litigation and thereby, legal costs. The bill introduced significant changes such as reforms to comparative negligence rules, bad-faith claims, attorney fee recoveries, and statutes of limitations.

A few months later, Florida enacted Senate Bill 1002 (SB 1002), known as the “windshield repair bill.” This law focused on assignment-of-benefits practices in auto claims with the goal of reducing litigation related to windshield repairs.

Why Did Windshields Turn into Minefields?

Windshields play a significant role in a driver’s safety, because, well, they provide visibility of the surroundings. To state the “visible”. A cracked windshield can create a safety hazard and replacing one can cost anywhere from a few hundred dollars to well over $1,000.

Florida law requires insurers that provide comprehensive coverage to replace damaged windshields without applying a deductible. This encourages drivers to report even small chips before they develop into larger cracks. It also makes sense from an insurer’s perspective: Repairing a small chip today is usually much cheaper than replacing an entire windshield next month. Windshield claims are frequent, relatively small-dollar, easy to identify, and generally do not involve any out-of-pocket cost for the policyholder.

Before SB 1002, some auto glass repair shops would obtain assignments-of-benefits (AOBs) from policyholders, which allowed the shops to handle payment disputes directly with insurers on the policyholders’ behalf. If the dispute resulted in a lawsuit and the repair shop recovered even little more than the amount originally offered by the insurer, attorneys could often recover their legal fees under Florida’s fee-shifting rules. As a result, disputes over small and frequent windshield claims could (and did) generate legal fees that exceeded the value of the repair itself.

HB 837 and SB 1002 changed this environment by restricting assignment-of-benefits arrangements in auto glass claims.

Consequences

As a result, insurers’ litigation-related expenses, included in what we in the insurance accounting realm call the Defense and Cost Containment Expense (DCCE), are expected to decrease. Lower legal costs may eventually be reflected in lower premiums and a more stable insurance market. A more stable insurance market is expected to attract new insurers, increase competition and (fingers crossed) decrease the insurance premiums even more (or at least not contribute to the ever-increasing inflation).

We reviewed earned premium and DCCE incurred data reported in USAA’s statutory filings, the company mentioned at the beginning of this article, and drew the trendline below.

What does a 5.0% ratio in 2017 mean? Simply put, for every dollar of earned premium, the insurer spends approximately five cents on defense and cost containment activities. That may not sound like much, but property and casualty insurers operate on relatively thin margins. Every cent matters. In some years, it is investment income, not the underwriting results, which helps insurers keep their net results in the black.

Conclusion

The enaction of HB 837 and SB 1002 have clearly been a promising change for the thousands of Florida property policyholders to benefit from a more stable insurance market. Point in fact, multiple other U.S. states are now pondering employing this 2023 Florida model into their insurance statutes.  It is hoped that these changes won’t reduce ability of policyholders to challenge insurers but rather stop opportunistic litigation that enriched attorneys more than policyholders.

We’re Here to Help

If you would like to discuss how this might impact your insurance entity, contact your JLK Rosenberger team member, call 818-334-8646, or click here to contact us. We look forward to speaking with you soon.