WILL THE NEW PIP BILL SAVE CONSUMERS MONEY?

According to an editorial in the Tampa Bay Times today (see below) it is uncertain whether the new PIP bill will save consumers any money. I checked out my insurance bill and my PIP insurance portion costs me about $363 per year per vehicle, and I have two vehicles. My total then for both vehicles is $726.00 per year for PIP.  If I experience a premium savings of 10% as promised in the new law, I will save $72 per year.  In exchange for this savings I give up $7500 in PIP benefits after an automobile accident.

This math in my opinion simply does not add up to a savings for me, but would be a huge benefit to the insurance companies.

The logic behind the bill (according to the article below) was that accident victims can turn to their health insurance (if they have it) or to the at fault drivers liability insurance (if he or she has it). Unfortunately what the legislature failed to acknowledge is that Florida, unlike other states does not require drivers to carry mandatory liability coverage also known as BI (Bodily Injury Liability Coverage).  Cutting out 75% of PIP benefits with the expectation that injured drivers can collect from other sources makes no sense unless the legislature had added a requirement that drivers carry mandatory BI coverage. At the present time, drivers are only required to carry PIP (personal injury protection) and PD (Property Damage) which covers damage to the other car only, not injury to persons. Mandatory BI was proposed during the discussion of the new PIP law, but the legislature voted against mandatory BI.  Too bad for the citizens of this state.  Read more below in an editorial from the Tampa Bay Times.

A Tampa Bay Times Editorial

PIP reforms may not deliver for consumers

Monday, April 9, 2012

Florida lawmakers and Gov. Rick Scott were quick to congratulate themselves for legislation aimed at curbing fraud and abuse under the state's auto accident insurance law, which passed on the last day of the legislative session.

But it may not be that great for consumers. Starting Jan. 1 — Scott is expected to sign HB 119 — victims of accidents with injuries short of an emergency will be entitled to just $2,500 in personal injury protection coverage (known as PIP) for medical bills and lost wages — just one-fourth of the current $10,000 limit. If car owners don't see commensurate decreases in their premiums starting in 2013 and beyond, lawmakers and Scott should be held to account.

From the beginning, reforming the state's PIP law has been an exercise in balancing special interests such as health care providers who rely on it to ensure prompt payment, trial attorneys who fight insurance companies on behalf of consumers and health care providers, and insurance companies that don't want to pay more than they have to. But reform was desperately needed as the current system — which provides up to $10,000 of coverage for accident victims — has become a gold mine for criminal entrepreneurs and unscrupulous professionals.

By one estimate, the fraud or trumped-up medical expenses being financed under the so-called no-fault system amounted to a $1 billion increase in premiums for Floridians.

Several provisions of the bill make sense: tougher licensing requirements for medical clinics, broader use of long-form accident reports, a new antifraud statewide task force and stiffer penalties for providers caught defrauding the system. But it was the House's insistence that the state reduce coverage limits for nonemergency injuries to $2,500 and require victims to receive medical care within 14 days of an accident to qualify for PIP coverage that could impact consumers the most. It's not hard to imagine someone who suffers a soft-tissue back or neck injury in an accident quickly exceeding that $2,500 limit for both medical care and lost wages. That means costs will simply shift to victims' traditional health insurance plans, assuming they even have them, or could require litigation to force the at-fault driver's liability insurance to pay, assuming he even has such coverage.

What will Florida auto insurance customers get in return? Supposedly a 10 percent decrease in their personal injury protection premium by Oct. 1 and 25 percent by 2014 — unless the insurance company can convince regulators that that's too much. Scott will undoubtedly declare victory when he signs this bill in coming weeks. For consumers, it's far less certain.

Copyright 2012 Tampa Bay Times

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