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PIP Requirements Challenged In Florida

State officials are ramping up their investigation into whether requiring no-fault insurance, otherwise known as personal injury protection (PIP), has benefitted the state of Florida. The $125,000 study is due on September 2, 2016 and could have far reaching consequences to Florida residents, insurance providers, and local legislators.

Why Is PIP Required?

In 2012, the State of Florida passed HR 119, requiring all auto owners to carry PIP insurance in hopes of reducing an estimated one billion dollars in insurance fraud. The intent was to reduce the cost of fraud to insurance companies in the hopes they would pass the savings onto customers. The law requires all Florida drivers to carry up a minimum of $10,000 in PIP coverage. PIP coverages makes individuals responsible for the cost of their injuries regardless of fault, rather than establishing fault in the courts. The law was also supposed to reduce the payment delay for injured drivers and reduce long term medical costs by ensuring immediate care.

Opposition To PIP Requirements

Many drivers and legislators are unhappy with the PIP requirements. The biggest issue with PIP requirements is that drivers have not seen a reduction in premium. In fact, drivers have seen rate hikes of an average 40% just in the last year. There also has not been a reduction in either legitimate PIP lawsuits or fraudulent PIP claims. Many drivers also feel the coverage is an unnecessary cost when they are already paying for healthcare through Medicaid, privately, or through employer-sponsored coverage. Drivers feel that doubling this coverage is a waste of their money. Both State Representative Bill Hager and Senator Jeff Brandes have sponsored legislation to repeal PIP requirements

Proponents Of PIP Requirements

Proponents of required PIP including Governor Rick Scott, believe that issues aside, PIP helps protect drivers because it ensures that everyone has medical coverage. It is especially helpful because Florida has high rates of underinsured and uninsured motorists and PIP helps protect drivers when they’ve been in an accident with people with inadequate coverage. Finally proponents believe that it protects at-fault drivers from unfairly punitive litigation and court rulings, specifically in the cases where the at fault driver does not have the means to afford legal protection.

Alternatives To PIP Requirements

If the study finds that requiring PIP in fact burdens consumers and does not protect against fraud, the state legislature will have to explore alternatives. The first would be a full repeal of HR 119, which means insured drivers would no longer be forced to carry this coverage. The second option would be to expand the mandatory minimums of bodily injury liability. This would reestablish a fault system but would ensure that drivers carry more coverage for medical bills. Finally, there is a possibility of reducing the required premium to $2,500 instead of $10,000 to help mitigate the rising cost. Regardless of the outcome of the study, legislators will be expected to do something about the rising cost of insurance and continue to find ways to deal with fraudulence that costs insurance companies and consumers money.

The investigation, conducted by an independent group of actuaries, is intended to discover whether PIP requirements have been helpful or a burden to consumers, whether reducing the cost will be more beneficial, and the relationship between PIP requirements and rising insurance costs. The findings of the report will be published publicly and help taxpayers and state legislators decide what steps are needed to improve Florida’s insurance system. So expect to see further discussion in the Fall and even some changes to your insurance bill.