February 12, 2018

Did you know that Florida drivers pay some of the highest insurance rates in the nation for the least amount of coverage? Florida drivers paid the fifth-highest average auto insurance bill in the United States in 2015. Moreover personal injury protection (PIP) premiums increased 25 percent in 2015 and 2016. Today, Florida is one of the most expensive places in the country to own a car. 

Under Florida law, it is required that every vehicle owner and driver on the road have $10,000 worth of PIP insurance coverage. PIP coverage is mandated by the state of Florida for all drivers to carry. PIP pays for injuries you sustain in an accident regardless of who was at fault in the accident.

The intention of PIP coverage is to provide injured drivers in Florida up to $10,000 in immediate medical coverage in lieu of establishing fault through the tort remedy. The goal of PIP is to reduce litigation to determine fault in auto accidents and lessen the injured party’s delay in receiving payment for injuries.

But the Florida Legislature has been grappling with the state’s no-fault system. Bills in the House and Senate would abolish the requirement to purchase $10,000 worth of PIP.

The Florida House voted overwhelmingly in an 88-15 vote to repeal the state’s no-fault auto insurance law. House Bill (HB) 19 provides that drivers would carry bodily-injury liability insurance (BI) at limits of $25,000 per person and $50,000 per accident to cover injuries to others. This would be instead of requiring drivers to carry PIP in the amount of $10,000 to cover their own injuries regardless of who is at fault.

Florida adopted a no-fault automobile insurance plan in 1971. The goal was quick compensation for people injured in minor accidents, and to limit the number of lawsuits. By cutting litigation costs, the theory went, premiums would fall, and policyholders without lawyers would get fair recovery.

Advocates of HB 19 assert that the current no-fault law is flawed because it imposes the cost of an auto accident on the victim through increased insurance rates, instead of the person who caused the accident. HB 19 would reduce rates for the average driver while providing increased coverage. More than 90 percent of Florida drivers already carry BI coverage. Therefore, a savings will result for Florida drivers because they will no longer have to pay for the cost of PIP protection, which has increased in recent years even for drivers who never get in an accident.

The study done for the Florida Office of Insurance Regulation shows a repeal of Florida’s no-fault PIP system would provide drivers “an estimated overall reduction in premiums of 9.6 percent on the liability coverage package or $81 per car annually for the average driver. For all coverages combined, the estimated premium decrease is 6.7 percent.”

Other states have found that repealing no-fault PIP has led to lower rates. Colorado repealed its no-fault system and replaced it with mandatory bodily injury in 2003. Rates there fell every year from 2004 through 2014, with rates dropping by double digits in 10 of those 11 years. In Connecticut, drivers saw an initial 9.7 percent drop when they switched.

To understand what the latest legislative moves might mean for you and the drivers in your household, visit www.corlessbarfield.com and call 877-517-5595.