In Florida, every car owner must have Personal Injury Coverage. The rule went into place 40 years ago and many say since then it’s gotten too expensive. Now lawmakers are looking into a new plan to revamp the system.
A bill in the House would change the minimum insurance required to drive in Florida. Currently motor vehicle owners must maintain Personal Injury Protection coverage. It provides $10,000 for injury to the insured person in an accident. But the sponsor, Rep. Erin Grall (R-Vero Beach), says it’s not needed for everyone.
“Many of our citizens are being forced to buy coverage that they just do not need," expressed Grall. "If you have health insurance you’re being asked to purchase this unnecessary insurance. And if you are retired and eligible for Medicare you do not need coverage for lost wages or medical expenses yet you are forced to maintain this coverage in Florida.”
Grall wants to move to a new system.
“So what the bill does is it repeals Florida’s motor vehicle no-fault law, it replaces PIP with mandatory bodily injury requirements at $25,000 per person $50,000 in the aggregate, and in addition to the bodily injury coverage insurers must offer medical payments coverage at $5,000 or $10,000 and it must include a $5,000 death benefit," explained Grall.
But insurance companies believe the change could cause more lawsuits. PIP is insurance that covers the driver no matter who’s at fault in an accident but under the new system, those at fault are not covered. Personal Insurance Federation President Michael Carlson explains how bodily injury coverage works.
"If you are hurt through someone else’s negligence, if they run a red light and they crash into your vehicle and you are hurt, you have to sue them or demand from them whatever their coverage is," explained Carlson. "If it’s just $25,000 than that would be the maximum you could demand either in a lawsuit or if their insurance company acknowledged that they were responsible they might just pay you without a lawsuit."
Carlson and other proponents worry the change could cause the number of bad faith lawsuits to sky rocket. That’s when a person goes after an insurance company for being dishonest or unfair. This could simply mean they took too long to decide to cover an injury or determine if their driver was at fault.
Grall agrees it’s a possibility but wants to focus on fixing the problem at hand. The current insurance system has seen rates increase over time and she believes the change could help reduce costs.
"PIP lawsuits have been a major driver of litigation in the state of Florida. actually probably the highest when it comes to AOB [assignment of benefit] claims," explained Grall. "By eliminating PIP, we would be eliminating that whole framework of lawsuits from our system which I believe would lead to a significant decrease in auto premiums and clogging our court system."
If the law passes Florida would join 38 other states that have similar types of coverage requirements. Grall points to one as an example.
"Colorado which is the state which has most recently eliminated PIP in replace with bodily injury coverage and that was in 2003. And they have gone, I think they are now right in the middle around 25th in terms of their rates nationwide. And they’ve overall experienced a 33% to 35% decrease in their insurance rates," explains Grall.
The bill passed the committee. But several lawmakers discussed wanting to see changes before being fully confident the bill should become law.