It is a common thing in Arizona: companies offering "Cash Back" or "Rebates" with insurance approved auto glass replacements.
Offers range from $50 to $300. How can they do this? Is this above board?
In general, the answer is that it is totally above board, legal, and to the end consumer's benefit.
Just like with medical insurance, when you work with a reputable Auto Glass Shop, the invoice for the repair or the replacement of your windshield (that the Auto Glass company provides) is not sent to you, but rather to your insurance provider. Most Auto Glass companies will invoice based upon pricing recommendations from NAGS (National Auto Glass Specifications), however, the insurance company will only pay their going rate, just like in medical billing.
What the Auto Glass Company is paid by the insurance company is their Revenue; their expenses are the cost of the glass and the labor to install the glass, leaving their Profit. In order to earn your business, some Auto Glass companies are willing to take some of their profit and give it back to the customer. When you receive a "rebate" from an Auto Glass company, it really has nothing to do with your insurance. They are simply giving you back part of the profit they would have made.
Ultimately, it is a marketing decision. Some Glass Companies spend money on radio or television commercials. Some feel they are better served by giving back to the customer, in hopes of generating word-of-mouth referrals and repeat business.
Like any industry, ensure you research the company you are dealing with. Some glass companies make offers that state "Up to $300 Cash Back," but then never really reach those high limits (again, they are paying out of their profits, and more than likely, they don't have the profit margin to give you that much back unless you are driving a Ferrari). Other, reputable glass shops, will offer $100 or $150 cash back "guarantied," regardless of the type of vehicle you drive - those companies are your safer bet.