AUTO INSURANCE: Fault or No-Fault, It’s Your Fault if You Don’t Pay Attention to the Legislature

Consumers — that means you — often hear about things going on in state legislatures, but pay little heed until the legislation is passed and its effects are felt (usually in your wallet). Right now the Florida Legislature is considering the elimination of Florida No-Fault, or Personal Injury Protection (PIP), Benefits as a requirement for your auto insurance.

For those of you who don’t really understand your automobile insurance coverage, here is a refresher course. If you want to learn about your coverage, go get your policy declaration page and follow along:

AUTO INSURANCE 101

When you purchase your auto policy, you have many options. These options can be broken down into two option types:

1. Type of Coverage
2. Amount of Coverage

Type of Coverage.

There are essentially two types of coverage: coverage for damage to and loss of property, and coverage for personal bodily injury and death.

1. Property Coverages

• Property Damage Liability – this is REQUIRED under Florida Law (minimum of $10,000) – covers damages to other vehicles when you are at fault.
• Collision – covers accident damage to YOUR vehicle, regardless of fault
• Comprehensive – covers damage to YOUR vehicle from things other than accidents (theft, storms, etc.)
• Loss of Use (car rental) – covers a rental while your vehicle is being repaired, regardless of fault.

2. Injury Coverages

• Personal Injury Protection (PIP) – this is currently REQUIRED under Florida Law – regardless of fault, it covers 80% of YOUR Medical Expenses and/or 60% of YOUR Wage Loss up to a limit of either $2,500 or $10,000, depending on whether or not your injury resulted in an “Emergency Medical Condition” (EMC).
• Medical Payments Coverage – regardless of fault, it covers the 20% balance of your medical expenses not covered by PIP, up to the limit of coverage purchased.
• Bodily Injury Coverage (BI) – covers injuries to others when YOU are at fault.
• Uninsured/Underinsured Motorist Coverage (UM) – covers YOUR injuries when the at fault party either has no bodily injury coverage or not enough bodily injury coverage. (IMHO, this is the most important kind of coverage for most people, yet most people don’t have it).

Now that you know the available coverages, understand two things: first, Florida Law currently only requires $10,000 in PD Liability and $10,000 in PIP coverage (neither of these are sufficient if you have a serious injury or a lot of property damage). You are not required to carry Bodily Injury or Uninsured Motorist Coverage. Second, you get to decide the amount of coverage you purchase, and depending on the insurance carrier, that coverage is usually between $10,000 and $500,000 per accident for personal auto policies (you can purchase more, but those coverages usually involve umbrellas, which is an entirely new subject).

What is good about that? You don’t have to pay for BI coverage, so it saves you money; however, you do have to pay for PIP, which costs you money.
What is bad about that? As far as injury coverage goes, if you are injured in a motor vehicle crash, and the at-fault person has no BI coverage (because it is currently not required under Florida Law), then unless you paid for UM coverage, you are probably never going to get reimbursed for your loss. That means the at-fault driver will probably never pay for your medical bills, your lost wages or your pain & suffering.  If you are the at-fault party and you have no BI coverage, then you may have to pay for the other person’s injuries out of your own pocket.  There are problems with the low $10,000 PD Liability limit as well, but that is a topic for another day.

PROPOSED CHANGES IN MANDATORY COVERAGE

So, PAY ATTENTION here. The Florida Legislature is contemplating elimination of PIP benefits and replacing that with mandatory Bodily Injury (BI) coverage of $25,000 per person, $50,000 per accident. Why is this important? As I mentioned above, when you are injured in an motor vehicle crash, the BI coverage of the at fault driver is what pays for the harms and losses of anyone injured in the crash. Right now, many people do not have BI coverage, so if you do not carry UM coverage and get injured by a person with no BI, you are probably stuck paying your own bills and eating the lost wages.

As a lawyer who deals with automobile accidents, when a person comes into my office, one of the first things we must determine is this: is there BI and/or UM coverage for this accident? If not, with some very limited exceptions, we are probably done. While you have the right to sue someone for your injuries even if they don’t have any insurance coverage, the vast majority of people with no coverage have no assets, so suing them results in a noncollectable judgment, which means we can’t get you any money to cover your loss.

So, is the elimination of PIP coverage in favor of mandatory BI coverage a good thing for consumers? Most likely consumers who already carrier BI coverage with limits of $25,000 or greater will notice a savings, because you will no longer be paying for PIP coverage as well. If you don’t currently have BI coverage, then it will likely depend on how you are rated. As an example, for young men who are considered a higher risk, it will probably be significantly more expensive. For others it may be a wash.

Click here to read my blog about what PIP insurance really does and the issues behind whether or not you need it.