Insurance Academy

Florida Rejects PIP Reform Again

By | July 2, 2021

It might be shocking, but not only do I work for the fine people who publish Insurance Journal, but I read Insurance Journal. I’m particularly interested in reading it when I get an email from a friend, asking for my response to a story.

The Insurance Journal reported that Florida Governor Ron DeSantis vetoed an auto insurance bill that would update the minimum financial responsibility requirements in Florida and replace personal injury protection (PIP) with medical payments coverage. You can read that story here.

What was my response?

This is disappointing to me. The PIP system is broken, and the state’s minimum financial responsibility requirements are a joke.

Let’s start from the beginning.

Personal Injury Protection, or PIP, is an auto coverage that is required in no-fault states. In these states, insureds buy coverage for their injuries without regard to fault up to a certain limit. That’s where PIP comes in. PIP coverage pays for damages as a result of bodily injury in an auto accident. Those damages can include medical bills, lost wages, and death benefits. Of course, there’s more to it than that, but to get that level of detail, you’ll need to read your policy, issued in your state. This isn’t an issue everywhere. Right now, there are only 12 states that have a no-fault law.

Why is this a big deal?

In Florida, we are required to carry a minimum of $10,000 PIP. The theory goes that with that $10,000 if I am in an accident in Florida, there is money to cover my medical expenses and lost wages that result from that accident. And if I were in an accident, that’s exactly what would happen. I would contact my insurance company, let them know that I was in an accident, give them all of the details, and tell them that I’m going to the urgent care or emergency room to get looked at. The urgent care would see me, find out it was an auto accident, get my insurance information, and be off to the races to give me the best care possible.

That’s great, but what if it’s a bad accident and the medical bills are more than the $10,000 minimum that’s required? The first answer is that $10,000 is the most that you can get for PIP so there’s that. Never fear, there are two other options available. The first option is to buy Medical Payments coverage, which provides similar coverage to PIP. The second option is to do what the no-fault laws initially attempted to avoid, sue the other driver.

What would the bill do?

If you’ve never read a bill that amends current law, you should. Think back to high school when you submitted that essay that you thought was a total winner. You remember it as I do. When it came back, it was a sea of red marks, making me question both my teacher’s sanity (because that stuff was brilliant) and my future career prospects.

A new bill will likely have a section that is new legislation. That bit is a little easier to read because it’s as simple and straightforward as any legal document can be. It has it’s issues, but if you can read an insurance policy, you should be able to read legislation. The rest of the bill will include the parts of the existing laws that it is amending and that’s a little more fun (wrong, it’s harder).

Once you get into the amended portion of the law, it’s a rainbow of legalese, statutory references, and bad high school memories. Because they are amending current law, the new language is underlined, and if you’re reading the online version, rather than the PDF, green. The words that are removed are stricken through and in red. You would think that it makes things easier, but keep in mind that you’re not reading a genius essay, you’re reading a proposed law, which is not written as well as your essay was.

To get to the point, the part of the bill that I’m concerned about included three provisions of import.

  1. Every reference to the requirement to carry PIP is stricken out. YAY!
  2. The requirement to carry a minimum of $10,000 property damage liability is maintained (too low….)
  3. The requirement to carry a minimum of $25,000 per person and $50,000 per accident bodily injury liability is added (also too low…)
  4. The requirement to offer medical payments coverage with a minimum limit of $5,000 with an additional offer of $10,000.

To be fair, I haven’t read the whole thing, but this is the section that I’m most concerned about. Everyone who is involved in the Florida auto insurance market understands that the system is broken. I’m not certain that there is a repair to it mostly because it is a Florida insurance market, but that’s what makes this state great. We can experiment here because just about anything will improve how things work here.

I can’t fault someone that is operating in the dictates of their conscience. I can only offer my opinion that now was as good a time as any to affect a positive change in the Florida auto market. I can only hope that the legislature picks up this torch one more time and does so in a way that can improve things here.

Topics Florida

About Patrick Wraight

Patrick Wraight, CIC, CRM, AU, is director of Insurance Journal's Academy of Insurance. He can be reached at pwraight@ijacademy.com.

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