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Scott R. Marshall
Scott R. Marshall
Attorney • (727) 299-0449

AUTO INSURANCE: No Fault (PIP) vs. Bodily Injury (BI) – The Politics of Mandatory Auto Insurance Coverage

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We live in a world where insurance has become a necessary evil.  Why?  In the United States, we do not have true social welfare benefits that take care of you when you can’t take care of yourself.  You have to buy insurance for that.  If you don’t buy it, you run the risk of losing everything you own.  There are certain situations where you may be required to carry some sort of insurance coverage, either by law or by contract. If you own an automobile in the State of Florida, you are currently required to carry a minimum of $10,000 in Property Damage Liability coverage and $10,000 in Florida No-Fault (Personal Injury Protection) coverage. If you lease your car, or you owe money on it, you will be required to carry additional coverages.  This blog is about two types of coverage:  PIP and BI.  Do we need both?  As I have discussed in previous blogs (here), the Florida Legislature is taking up this issue right now.

WHAT’S ON THE TABLE?
There are currently bills pending in both the House and the Senate that would replace Florida No Fault PIP with mandatory Bodily Injury (BI) coverage of minimum $25,000 per person, $50,000 per accident.  To read more about PIP coverage and what it is, click here. Remember that BI coverage is the coverage from the at-fault party’s auto insurance policy that pays the harms and losses (bills, wages, pain & suffering, etc.) of everyone who is hurt in the accident (except for the medical bills of the at-fault party). Requiring Bodily Injury coverage is more inline with our tort system, which is designed to hold individuals and companies personally responsible for their negligence.  If you are hurt in an auto accident by the negligence of someone else, it is the at-fault driver’s Bodily Injury (BI) coverage that will pay you.  They pay for their BI coverage; their BI coverage pays you.  Their premiums may be affected; yours are not. Currently, BI is not required coverage in Florida, so if they don’t have BI coverage, you are usually on your own, and get stuck paying for a loss that was not your fault.
INSUREDS’ PERSPECTIVE(this is you):  KEEP IT OR SCRAP IT? 
Whether or not you, as an insured, want to keep mandatory No Fault PIP benefits or scrap it comes down to your own personal insurance and financial situation.  Here are some bullet points:
  • If you have decent health insurance AND disability insurance, PIP is not that much help to you (It may come down to how big of a deductible you carry on your health insurance).
  • If you do not have decent health insurance AND disability insurance, PIP can cover up to $10,000 of medical and wages, which is plenty of coverage in the majority of car accidents (if you get carted off to the hospital by ambulance, you are most likely going to use a good chunk of your $10,000 in PIP).
If you have good health insurance and a short term disability policy, you are probably paying for coverage you don’t need. If you are the at-fault driver, having PIP is not going to keep you from getting sued. If you don’t have health and disability insurance, PIP can save you financially by covering most of your medical and your lost wages up to the $10,000 limit of your coverage (if you have a catastrophic injury, you’re most likely going to need much more than PIP).  If PIP is swapped out for mandatory Bodily Injury (BI) coverage, here are the bullet points to consider:
  • If you already carry BI limits of at least $25,000, then you will probably save whatever your PIP coverage premium is.
  • If you don’t currently carry at least those BI limits, then there is little evidence you will save money, and in some cases (i.e. you are in a higher risk class), you may end up paying more.
Which is better for you and how might abolishing PIP affect us?  We can look to other states for some guidance on this issue.  Colorado abolished PIP coverage in 2003 and insureds noticed an immediate 27% reduction in premiums. Unfortunately, the people most affected by this will be the ones with no BI coverage today, and who are probably the least able to afford it if their premiums do rise. The upside is that you would avoid paying for PIP coverage that you may not need, and if you are a safe driver, your premiums should remain under control.  Another upside is that by having mandatory BI coverage, most accidents will be able to be resolved within the coverage limits, which reduces the likelihood of you getting stuck with the 20% of your medical bills that PIP does not cover.
WHO IS WEIGHING IN ON THE ISSUE?
Well, as you can expect, other than the citizens of Florida who pay for the auto insurance, there are a number of industries affected by this issue. So, let’s first identify the parties and why they care.
Insurance Industry.
The insurance industry has been lobbying for years to limit or scrap PIP. Why? They claim that the PIP system is rampant with fraud. In pushing to limit PIP benefits, they have successfully lobbied the legislature to apply a “fee schedule” which limits the amount of money healthcare providers are paid for services. They have, most recently, placed limits on the amount of coverage available to insureds (you) if you do not have an “emergency medical condition” or if you fail to seek medical care within 14 days of an auto accident.  They have eliminated coverage for massage and acupuncture.  It’s gotten to the point that you are paying an awful lot of money for not a lot of coverage.
They argue that the rise of “Injury Clinics” and referral networks, like 1-800-Ask Gary and 411-PAIN, have been driven by PIP coverage and that the system that has been created as a result is rampant with fraud and “staged” accidents. Every insurance company has a Special Investigations Unit (SIU) who works with the Florida Bureau of Insurance Fraud. They have quite a big hammer and have put many fraudulent providers out of business.
They also argue that PIP has not reduced lawsuits. This is true. In fact, Colorado noticed a decline in auto accident-related lawsuits after they abolished PIP a few years ago.  Click here to read more about Colorado.
Trial Lawyers (this is me).
The Florida Justice Association (Florida’s trial lawyer association, of which I am a member) supports abolishing PIP coverage in favor of mandatory bodily injury (BI) coverage. Why? Simple reason for us: we see too many clients who have been injured, lost wages, and incurred medical bills in an accident where no one has anything except PIP coverage, which usually means they (you) lose money.
Two things about this: first, not all trial lawyers support the abolition of mandatory PIP coverage; second, in full disclosure, trial lawyers will benefit from mandatory BI coverage in the following ways:
  1. The so-called PIP “threshold” will vanish.  Under the current PIP statute, you are only entitled to your out of pocket expenses unless you can prove that you sustained a permanent injury.  This will make it easier for us to make claims for our clients.
  2. The PIP “offset” will vanish, allowing us to recover the entire amount of our clients’ losses. Currently, there is an offset for the amount of money the PIP carrier pays.
  3. Everyone will have BI coverage, so we will not have to worry about turning people away because there is no coverage for their loss.
Healthcare Providers.
Most healthcare providers who deal with auto accident injuries currently enjoy immediate payment for the services they render. If PIP is abolished, then they will be forced to deal with health insurance, if there is any, which can carry high deductibles and limited coverage, or in the event there is no health insurance, they will have to wait until the end to get paid. Most of them don’t want to do this. Would you?
THE BOTTOM LINE
Strange Bedfellows
With more BI coverage out there, there will be more people we, as trial lawyers, can help. The primary difference between trial lawyers and healthcare providers on this issue is that trial lawyers always have to wait to get paid until the case is over. The abolition of PIP coverage will mean that if there is no health insurance coverage, healthcare providers will too. The insurance industry is, as usual, just looking to save money.
Regardless of your position on the PIP issue, it would appear that the Florida Legislature is poised to scrap PIP and replace it with mandatory BI coverage.  Now you know what the issues are, who wants what, and hopefully how it may affect you.  For my part, it’s quite a strange feeling to be on the same side of a legislative issue as the insurance industry. Trial lawyers and insurance companies. Talk about strange bedfellows.
Click here for a discussion on exactly how your BI coverage works and why Uninsured/Underinsured (UM) coverage is must have.

2 Comments

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  1. Steve smoth says:
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    You wont be bedfellows when the ins companies eliminate bad faith claims in new statute

  2. up arrow

    You are right about that Steve Smoth.