Florida May Scrap No-Fault Auto Insurance

Florida’s highly unpopular no-fault auto insurance system is one step closer to biting the dust. A push to repeal the system after nearly half a century swiftly won the majority vote (18-7) during the House Commerce Committee. The next step for the legislation, which has been projected to save drivers up to $80 a year per vehicle, will be the House floor in the January 2018 legislative session.

HB 19, sponsored by Representative Erin Grall, R-Vero Beach, would officially end the no-fault system. Lawmakers would replace it with mandated bodily injury liability coverage, which most Florida drivers already have. Doctors, EMT, and other medical personnel groups oppose the measure, as do insurance companies.

Florida’s No-Fault System: Some Benefits and Drawbacks

The current auto insurance system has been the law of the land since 1971. No-fault auto insurance requires all drivers to carry Personal Injury Protection (PIP), or equivalent first party medical insurance, which gives drivers easy access to health insurance in the event that they sustain injury in a car accident. While drivers can obtain funds to cover medical costs following an accident, it is extremely difficult to sue for bodily or property damage in the twelve states that adhere to the no-fault system.

The concept is widely unpopular from a financial standpoint, as it requires drivers to get health insurance for when they are driving when private health insurance or Medicare/ Medicaid already provide that coverage. Essentially, drivers are paying double for additional insurance many do not need. Overall, PIP through no-fault insurance is as appealing as it is repulsive.

Pros of PIP Coverage:

Personal injury protection insurance covers drivers and passengers in the event of an injury crash, regardless of who was at fault for the accident. Everyone who owns a vehicle in Florida must carry a PIP policy with a minimum coverage of $10,000. PIP kicks in for car accidents, pedestrian accidents, bike accidents, and can even provide for children injured on school buses.

No-fault insurance allows injured parties to receive compensation whether or not they caused the accident that led to their injuries. It is rarely obvious who is at fault for a car accident, which makes it difficult to receive compensation from insurance companies without PIP. With PIP, drivers don’t need to sue for minor injuries. Therefore, PIP keeps the courts free from all but the most serious cases, such as accidents that caused dismemberment or premature death, making the process more efficient for those suffering the most.

In turn, PIP also provides disability insurance, which is not included in most healthcare plans. According to the Bureau of Labor Statistics, only 39% of private industry workers have short-term disability coverage, as of 2014.

Cons of PIP Coverage:

Mandated personal injury protection coverage pushes Florida into the top ten states with the most expensive car insurance rates. Since the cost of PIP rises with every increase in the cost of medical services, the Bureau of Labor Statistics found that it has increased 12% since 2012. Additionally, these prices are driven upward by fraudulent claims. Florida is ripe for auto insurance fraud, as insurance companies don’t investigate claims to discover who was at fault. From 200 to 2012, Florida has seen a 275% increase in fraudulent claims, costing the state over $1 billion.

How do insurance companies respond to economic losses? Naturally, they raise rates on drivers, even those who would never file a fraudulent claim. Many Floridians simply cannot afford no-fault auto insurance, particularly those who are already paying for health insurance through their employer.

Should Florida Scrap No-Fault Insurance?

Drivers stand to save a significant percentage on their car insurance without mandatory PIP; however, those who do not already have health insurance would have no immediate access to funds if they got hurt in a car accident. Florida ranks 45th for its rate of uninsured residents, according to the Florida Policy Institute. This means that 13.3% of Floridians lack any health insurance. Drivers who fall into this population rely solely on the current system for support should they get hurt.

Lawmakers in several no-fault states like Michigan, where the average cost of car insurance is the highest of anywhere in the country, have proposed some solutions to rectify the issues, including setting up a commission to investigate fraud and preventing hospitals from charging the victims of auto accidents more for care. There have been attempts to reform current no-fault laws, such as attempts to thwart rising premiums, but these have failed.

Without no-fault insurance, drivers stand to save significantly on auto insurance premiums, but they may need to turn to personal injury attorneys more frequently to gain the compensation they need after sustaining harm. At The Umansky Law Firm, we have served the greater Orlando area providing aggressive personal injury protection for over 25 years. We provide our clients with competent and compassionate service, regardless of the severity of their injuries. Call 407-228-3838 for a free consultation or chat with us live 24/7.