Arizona Legislator Draws Fire for Proposed Zero Deductible Repeal

Arizona State Senator Karen Fann (R-Dist. 1)

The sponsor of a bill that would effectively repeal Arizona’s “zero-deductible law” spoke publicly about the bill’s provisions January 25 on a Phoenix radio station, and her comments drew swift reactions from some in the auto glass industry.

State Sen. Karen Fann and Rep. Noel Campbell are co-sponsors of the bill, SB 1169, which amends the language of the current law to read “may offer,” rather than “shall offer.”

Specifically, the bill reads: “Any insurer writing private passenger automobile insurance that includes comprehensive coverage for motor vehicle damage may offer coverage for the repair or replacement of all damaged safety equipment that may be subject to a deductible offered by the insurer and selected by the insured.”

Several Arizona auto glass business owners have spoken out against the bill.

Fann answered questions during a 17-minute interview on the podcast “Reality Check with Darin Damme.”

Fann said the legislation is needed because the current law “ … has created a very large fraud problem.”

“You’ve seen the billboards and the people at the car washes,” she said. “They say I can get you a brand-new windshield, and I’ll give you $200 cash. The fraud is ridiculous.”

But Kerry Soat, CEO of Fas-Break, an Arizona automotive glass company, refuted Fann’s claim in a letter he drafted for Arizona legislators. Soat provided a copy of the letter to

“It is not fraud to replace a broken windshield,” he said. “It is fraud to replace a windshield which  isn’t broken and increased enforcement would stop this. Insurance companies do windshield claim inspections now and have not turned in any numbers for ‘rampant fraud’ or we would have seen more criminal charges.”

When asked by Damme how the bill would help her constituents, Fann replied that insurance premiums would go down.

“It’s just like if you go into a store and they have a huge theft rate, they raise their prices to cover the theft that’s going on.”

Both Soat and Damme seemed skeptical of this response.

“Have you ever seen an insurance company lower its premiums?” Damme asked.

“I’ve been working with the companies and they tell me that’s one of the reasons they would like to get rid of this [law], it’s not just the fraud, but they want to be competitive.”

Soat disputed this assertion.

“Premiums will go down to consumers because the insurance companies will no longer offer the coverage,” he said. “Deductibles will apply to auto glass. Deductibles already apply to anyone who “doesn’t buy the full glass coverage. The lower premium will be the $8 or $10 you pay now for the zero deductible glass coverage because it will not be available.”

When Damme asked specifically how taking away the zero deductible would “take away the fraud,” Fann compared auto glass insurance to health-care insurance.”

“It’s just like any other deductible, whether it’s on your vehicle, whether it’s health-care insurance,” she said. “It’s a proven fact that zero deductibles or no buy-in from the consumer causes those costs to go up. That’s why medical companies have co-pays. If you have a $50 co-pay to go see your doctor, some people are going to think twice about going to see the doctor.”

Soat equated this assertion to gambling on health and safety.

“A consumer forced to pay a deductible will probably ‘gamble’ on the safety of their family by not replacing a broken, cracked windshield,” he said. “That’s why sick people do not go to the doctor, they gamble with their lives by trying to save $40 to $150 copay at the doctor or emergency room.  Arizona consumers will ‘gamble’ also on their windshields, which is a safety feature of the vehicle. If it wasn’t a safety feature of the vehicle, insurance companies would not provide coverage for the auto glass. Safety will be lost in Arizona by not offering the zero deductible coverage.”

Damme also asked Fann who drafted the legislation, to which Fann responded, “a number of the stakeholders,” which she described as “insurance companies and some auto glass companies.”

When pressed to name Safelite as a stakeholder, Fann replied, “I’m not going to comment on who it was, but I’m going to tell you it was more than one.”

Damme also noted that Safelite is owned by American Family Insurance, which contributed more than $10,000 to her political action committee. He cited filings with the Arizona Secretary of State’s office as the source for the numbers.

“When you have an insurance company that’s given you $10,000, and the insurance company writes the bill that you put into the Senate, don’t you think that could give a bad impression to people?” Damme asked.

“No, because, first of all, it takes money to run a campaign,” Fann said. “It’s not cheap to run campaigns. I get a lot of individual contributions. I get contributions from just about every industry … and I’m proud to say it’s because everybody says, ‘You know, Karen, you don’t always agree with us, you vote no on our bill sometimes, but we totally appreciate the fact that you … always listen to both sides.”

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