State Farm Issues New O&A Agreement—and It’s a Head Turner

State Farm, on November 15, notified national glass program members of changes to its Offer and Acceptance (O&A) agreement effective December 15.

The Offer and Acceptance (O&A) agreement directs auto glass shops to confirm that the vehicle on dispatch matches the one having the work done, the shop agrees to fulfill requests for its moulding invoices when asked. It also requires prior authorization for calibration when not completed by the company itself, though it also says in another place no work can be done by another company. The new agreement also tightens confidentiality and requires the company to notify State Farm of billing discrepancies first, then agree to arbitration if they cannot be resolved.

One Florida glass company owner thinks the changes are due to “a few bad apples” in the auto glass industry, like so-called “harvesters.” Harvesters approach owners of vehicles with damaged windshields and talk them into allowing the harvester to replace the windshield, after which they send sky-high bills to the insurance carrier. Consumer advocates say the practice contributes to the escalating cost of insurance in the state.

The State Farm O&A agreement bars auto glass shops from subletting services such as camera recalibrations to third-party firms. A relatively new technology, some shops lack the sophisticated and expensive equipment to perform recalibrations after windshield replacements. They send the vehicle to a recalibration shop and add the charge for the service to the invoice submitted to the insurance company.

However, the new agreement seems to contradict itself because while subletting is not permitted, another section says that if the auto glass employs another company to do the recalibration, then the auto glass shop must get prior approval from the insurance company’s program administrator for any amount invoiced by the other company.

The auto glass shop will be responsible for paying for the third-party work and must add the approved charge to the invoice to State Farm. Allowing another company to work on the customer’s vehicle without the customer’s prior approval could result in the glass firm’s removal from the State Farm program.

“I send in all the information, and then I include an invoice from my calibration company that has the information that I attached to the calibration reports,” says one auto glass shop owner. “The invoice also states that the manufacturer requires recalibration with windshield replacement; no authorization needed.”

“I’m going to fight them on this because I don’t need to spend extra administrative time asking for permission,” the owner says. “I don’t know how this will hold up in court. The insurance companies are not the customers. It’s the customer who says who’s going to fix the car.”

Recently, judges in the U.S. 11th Circuit Court of Appeals tossed the question of whether insurance companies may sue auto glass shops under Florida’s Motor Vehicle Repair Act up to the Florida Supreme Court.

A lower court had decided that under Florida law, insurance companies cannot require a person with comprehensive coverage to pay a deductible for windshield repairs. The insured can select the repair shop at “no cost” to them.

“The remedial nature of the Repair Act—to protect consumer customers from oral estimates and misunderstandings—is arguably not designed to protect insurers, such as GEICO,” the court said in an opinion from the Glassco vs. Geico case.

So State Farm’s statement in the O&A agreement might be the insurance company’s attempt to avoid getting stuck in that particular legal swamp like the one in Florida.
The new O&A agreement bars companies from suing the insurance company over billing discrepancies. Instead, the glass company must contact State Farm directly. The parties will enter arbitration or mediation if the issue cannot be resolved.