SHOULD FLORIDA ELIMINATE PIP (NO FAULT) INSURANCE?

The Florida Legislature has taken a step towards scrapping a decades old law that supports the no-fault insurance system in the state and legislation to reform it is pending. The state Senate is also considering its own version of the measure to discard the no-fault auto insurance system.

Also known as Personal Injury Protection (PIP) in Florida, no-fault insurance covers at least $10,000 in medical expenses without the need to determine which party is at fault during a vehicular accident. PIP is intended to pay 80% of medical expenses and 60% of lost wages after an accident.

No-fault or PIP was established in Florida in 1971, and at that time, $10,000 seemed appropriate to cover the average medical bills incurred in an auto accident. Fast forward 46 years and we find that medical bills on a typical auto accident are closer to $25,000.00. In addition, the Florida legislature reduced the amount that PIP would pay to $2500 unless there is an emergency medical condition or EMC. Currently there are 11 states that have this type of antiquated system of car insurance.

If that was not bad enough, insurance carriers have resorted to what are known in the industry as IME’s or independent medical exams, conducted by an insurance company paid doctor (hardly independent), and usually resulting with the insurance company doctor declaring that the patient is fine and needs no further treatment. This is also known in the industry as an IME Cutoff, which terminates any further payments by your PIP coverage.

Here is the best part, in Florida the only insurance coverage that you are required to carry is PIP (see discussion above) and property damage. We already know that PIP is supposed to pay your medical bills, but often does not. The only other coverage that is required is property damage, which covers the damage that the insured driver may do to your car. So under the existing Florida law, you get some of your medical costs paid and you get the damage to your car paid.

What about the injury to people? At this time, Florida does not require anyone to carry what is know as bodily injury liability insurance, or BI coveage. BI coverage would pay for injuries you incur as the victim of an auto accident, your medical bills, pain and suffering and a host of other losses you may incur. Most people don’t know the importance of this until they get hit by a Florida driver that carries only the required PIP and property damage coverage.

Right now, the Florida legislature is considering eliminating PIP and requiring that all Florida drivers carry BI liability coverage in the amount of $25,000/$50,000. This is a good idea for all of Florida. Some legislators are trying to tack on a provision that limits bad faith claims against insurance carriers that deny legitimate claims, lets hope that does not happen.

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