Florida’s no-fault insurance structure is slowly failing. The unique setup of these laws, once thought to benefit both victims and insurance companies, has been the subject of repeated reform efforts throughout the years, and once again, faces the prospect of more changes in the upcoming legislative session. Some are suggesting that maybe the entire setup should be thrown out.
The History of PIP
Florida law requires that all drivers carry personal injury protection (“PIP”). This insurance is available to everybody, regardless of who causes an accident, hence the name “no-fault insurance.” The insurance will pay for medical bills or lost wages up to $10,000, minus any applicable deductibles.
The system was set up to provide accident victims a fast, efficient source of insurance funds to help them when they are in need, without having to prove that anybody is at fault, and without having to hire lawyers or resort to a court system.
But through the years, PIP has faced problems. Some have come from those who take advantage of the system, seeing it as free money. Fake medical bills or fake accidents have led to insurance fraud. As a result, reforms in 2012 required victims to obtain medical treatment related to an accident within 14 days, cut the available benefits to $2,500 for non-emergency services, and eliminated payments for massage and acupuncture services. That included restrictions on chiropractic treatment.
Other problems come from the insurance companies themselves, which have often cut off benefits before the policy limits are reached, even while victims still need treatment, leaving insured victims without the funds that they were promised. As a result, more litigation is needed, to fight the cutoff of those benefits.
Others point out that the benefits are almost useless, as the $10,000 limit that was set in the 80s, was set in a time when medical services, salaries, and vehicles, all cost less than they do today.
Only 12 other states have a system like Florida’s no-fault system, and of those, three provide consumers other options.
Premiums are Rising
Now, it is reported that Florida’s insurance premiums are amongst the highest in the nation, meaning that the PIP structure has actually cost Florida residents more money.
Although the mandatory limits are only $10,000, according to testimony at a state legislative committee, Florida’s insurance rates are fifth highest in the nation. PIP rates did decline after the 2012 reforms, but then spiraled back up; rates have increased more than 25% since 2015, but some insurers, such as Allstate, have raised rates up to 40% since that time. Most agree that the 2012 reforms did little to lower premiums for consumers.
Many drivers, who may also have their own private health insurance, also resent having to pay for PIP, essentially a second insurance policy. In fact, a study recently estimated that drivers would save $81 per car if the entire PIP system were scrapped.
Suggestions for Reform
Suggestions for reform include completely eliminating the PIP insurance system, to requiring bodily injury insurance instead of PIP. Unlike PIP, which insures the driver, liability protects others that a driver injures. That is, it will insure the driver against claims brought against him or her by others. Bodily injury coverage is not currently mandatory, and thus, although we tend to think that all drivers must legally be insured, that does not mean that they need be insured to pay for damages that they cause to others.
Other plans suggest requiring insurers to offer certain types of insurance, such as for medical payments, but not making it mandatory for those plans to actually be purchased by drivers.
Parties are split on their opinions. Insurers are largely neutral, but suggest that requiring bodily injury or medical payment coverage would lead to an increase in premiums. Hospitals and doctors suggest that the current system, while broken, is better than nothing, as accident victims at least still have insurance funds to rely on, and providers do not have to base treatment on ability to pay issues. They also point out that with the uncertainty surrounding the ACA in congress, the possibility that there may be more people without private health insurance makes mandatory PIP all the more important.
Others simply suggest that no matter what happens, there are more drivers, more accidents, and thus, any insurance plan is destined to result in increasing premiums until the underlying problem of too many accidents is quelled.
Changes Will Affect Court Cases
If PIP is repealed, it may make it easier for car accident victims to recover for injuries in court. The current system requires that victims demonstrate that they have a severe, permanent injury, in order to recover for injuries suffered in a car accident. Short of that, a victim can only recover out-of-pocket expenses.
That limitation can be difficult for victims who suffer lingering, painful, and disruptive injuries, but where there may not be objective evidence of permanency. They often find juries that agree the victim is not at fault, and agree the victim was injured, but do not agree that the victim was injured seriously enough to recover. A repeal of PIP could end that restriction, allowing for fairer recovery of full damages for car accident victims.
If you are in a car accident, you need to understand how insurance laws affect your ability to recover for your injuries. Contact Brill & Rinaldi today about a free consultation to discuss your case.