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Florida Legislators Are Considering Killing No-Fault Auto Insurance

Personal Injury Protection has been a mandatory part of Florida auto insurance since the 1970s. The idea behind this $10,000 policy has been to speed up claims for the most important aspect of a car accident – physical injuries to passengers and pedestrians – by skipping the part where lawyers and claims adjusters have to determine fault and getting straight to paying out claims for medical expenses.

Unfortunately, the nearly half-century-old PIP system has invited constant attempts at fraud, endless lawsuits, and legislative “fixes” that often make things worse instead of better. It’s also the reason why Florida auto insurance is the fourth most expensive in the nation, and because of these reasons Florida legislators are trying once again to kill PIP altogether.

The Fraud

The reason the no-fault insurance model exists is to skip the expensive and time-consuming investigation period that often holds up insurance claims and raises premiums since the money to pay for investigators has to come from somewhere. But while the no-fault system works fine for workers’ compensation, probably because of the existing relationship between the employee and employer, no-fault PIP hasn’t been quite as successful.

Perhaps part of the problem is the fact that car accidents often cause head injuries like whiplash and concussions along with other injuries which sometimes take days to fully develop or else persist at a low level without ever ending. Because of this, PIP policies need to have some flexibility in how they’re applied – flexibility which also happens to give patients and doctors the opportunity to lie about how serious an accident is and split a $10,000 payday.

More sophisticated fraud rings include every step along the insurance process: insurance agents who issue bogus policies to bogus individuals, doctors who write up bogus clinic visits for bogus injuries, and even lawyers who defend bogus clients against a very real insurance company.

The “Fixes”

As recently as 2012, Florida’s legislature passed a law that severely restricted access to PIP benefits in the name of reducing fraud and therefore premiums. In the first place, it restricts general benefits to $2500, and to access the rest you need a certified physician to sign a document that says you need immediate care to avoid death or a permanent disability. It also reduces the time you get to seek medical attention to 14 days and restricts the kinds of caregivers PIP will compensate you for visiting.

Unfortunately, the return on these restrictions has been a marginal drop in overall insurance premiums (including several premiums which have only gone up), and now that the Affordable Care Act mandates that everyone have health insurance, the PIP policy is less important than ever before.

With all these factors, from the fraud to the ineffective fixes, it’s no wonder that Florida legislators are trying to end the policy entirely and start over. There’s still a place for supplementary medical insurance considering that 3 million Floridians are without insurance despite the ACA mandate, but as the situation stands it may be for the best to simply end the current system and start over.