Florida Senate mulling repeal of auto no-fault law

Florida last reformed personal-injury protection requirements for auto insurance in 2012, and initially saw significant auto insurance premium declines, with a 14.4% drop in 2014. However, two years later rates shot back up to slightly more than 25%
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A bill filed in the Florida State Senate on Jan. 15, 2021, would repeal the state’s current no-fault law requiring drivers to carry personal-injury protection (PIP) insurance coverage, according to a release from the legislative body. The new law would instead require drivers to carry bodily injury liability coverage.

If passed, Senate Bill 54, Motor Vehicle Insurance, would also establish a new framework to resolve “bad faith failure to settle” disputes stemming from auto insurance claims.

The requirements in the new bill include:

  • For bodily injury (BI) or death of one person in any one crash, $25,000, and
  • Subject to that limit for one person, $50,000 for BI or death of two or more people in any one crash.
  • Retains the existing $10,000 financial responsibility requirement for property damage.
  • Revises required coverage amounts for garage liability and commercial motor vehicle insurance, and increases the cash deposit amount required for a certificate of self-insurance establishing financial responsibility for owners and operators of motor vehicles that are not for-hire vehicles.
  • Repealing the no-fault law eliminates the limitations on recovering pain and suffering damages from PIP insureds, which currently require bodily injury that causes death or significant and permanent injury.

The bill would also require insurers to offer medical payments (MedPay) coverage with limits of $5,000 or $10,000 to cover medical expenses of the insured. Insurers would also be able to offer policy limits that go beyond $5,000, and may offer deductibles of up to $500. Under the new provisions, insurers would also be required to reserve $5,000 of MedPay benefits for 30 days to cover physicians or dentists providing emergency services or hospital inpatient care.

“Replacing our no-fault system with a bodily injury liability system more appropriately places liability where it should be — with the party that caused the accident,” State Senator Danny Burgess said in a release. “Additionally, the bill creates a new framework for handling bad faith litigation that provides a clear set of standards to govern the conduct of both parties in the claims handling process, which we believe will lead to better outcomes for both insured Floridians and their insurance companies.”

Repealing PIP shows mixed results

While the goal of the bill is to reduce insurance costs for U.S. motorists, research indicates that reworking PIP requirements don’t always result in the desired outcome.

“Florida has the third-highest average auto premium in the U.S. at $2,239 (based on 2020 data),” Mark Friedlander, I.I.I director of corporate communications, told “Repealing and replacing PIP has been addressed during the last several Florida legislative sessions with numerous bills introduced in both the senate and house but none have been passed the full legislature.”

Florida last reformed PIP in 2012, and those moves initially led to significant auto premium declines, according to the Insurance Information Institute (I.I.I.), which noted rates dropped 14.4% by 2014. However, those drops were short-lived as premiums rose 25.6% in 2016 and have been steadily increasing since.

Further, a 2016 report by the Florida Office of Insurance Regulation estimated drivers would see a 5.6% decline in auto premiums by switching to a bodily injury coverage requirement. However, studies conducted two years later revealed that repealing the no-fault would lead to an average increase in premiums of slightly more than 5%. The need for Florida drivers to purchase uninsured/underinsured coverage to make up for the loss of PIP coverage would mitigate any savings from the regulation change, according to Milliman, an actuarial consulting firm.

Friedlander told PC360 that it is difficult to determine the results that repealing the no-fault law would have on premiums at this time, given the number of factors that determine auto rates. He added that compared to other parts of the state, premiums are typically higher in South Florida (Broward, Miami/Dade and Palm Beach counties) and in major metro areas such as Orlando and Tampa Bay.

“So that is another key variable in determining how this would impact rates across the state,” he explained.


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