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Should Florida Continue to Push Bill for PIP Appeal?

Should Florida Continue to Push Bill for PIP Appeal?
Robert Byron | Dreamstime.com

By Wednesday, 07 March 2018 01:46 PM Current | Bio | Archive

Florida is one of just a handful of states that require personal injury protection auto insurance coverage, and for years state legislators have sought to repeal or change the laws.

The current PIP legislation was put into place in 1972, though the most recent changes took place in 2012. Under the existing law, drivers must obtain at least $10,000 of personal injury protection coverage. PIP coverage is designed to cover medical bills after an auto accident regardless of who is at fault.

On Jan. 12, the Florida House voted to approve a repeal which was voted down by the State Senate Appropriations Committee on Health and Human Services on Feb. 28.

The repeal would have gotten rid of the requirement for Florida drivers to purchase PIP. Instead Florida drivers would be required to purchase bodily injury (BI) liability coverage in order to take responsibility for harm to others in the event of an accident. Most Florida drivers already purchase BI voluntarily. In addition, the Senate’s version of the new law would have required that drivers purchase higher amounts of bodily injury coverage over time. Initial limits were set at $25,000 for injury or death of one person and $50,000 per accident, and by 2023 drivers would be required to maintain at least $30,000 of coverage per person and $60,000 per accident. It also would have required that drivers purchase $5,000 of medical payments coverage, also called MedPay, which is similar to PIP in that it provides first-party coverage.

While the repeal was voted down, it is still technically alive as subcommittee Chairwoman Anitere Flores (R-Miami) moved to reconsider and temporarily postpone the bill. It could also potentially be moved to another committee.

But what exactly would changing the PIP requirements mean for Florida drivers? Would it ultimately save money or drive up costs?

According to a 2016 actuarial study commissioned by the state, the House repeal could have saved drivers an average of $81 per car, or about 6.7 percent on total bills, without MedPay coverage. This would have come close to $1 billion collectively. Savings would come—90 percent of drivers in the state already have bodily injury coverage—as Floridians simply drop payments on PIP.

In the Senate version of the bill, savings on premiums by swapping PIP for MedPay coverage would be mostly offset by added costs of liability coverage and uninsured motorist coverage, however these amounts would vary by county, with some paying less while others would end up paying more.

Currently, Florida drivers pay among the nation’s top-10 highest average car insurance premiums—more than $1,800 per year—for some of the lowest required coverage amounts. The repeal is intended to increase coverage amounts while lowering premiums.

Another possibility with PIP repeal is that it could lead to an increased number of lawsuits, though there has currently been no definitive analysis on it. State Rep. Erin Grall (R-Vero Beach) said in media reports that she believes a repeal would end the flood of PIP lawsuits already ongoing in the state. A state-working group in 2011 estimated that 95 percent of the 36,509 lawsuits filed against insurers in county courts in 2010 involved PIP—mostly health care providers suing insurers to get paid. And in 2017, there were a record amount of PIP lawsuits—60,000—which is a 50 percent jump in one year.

Kristofer R. Kirchen, president of Advanced Insurance Managers in Florida, believes that those who will see the most benefit from repeal would be personal injury lawyers. “I tend to think the removal of the barrier to bring suit will result in more litigation—and we all know that costs everyone dearly,” he said. He continued that the driving poor would likely be hurt, as would health insurers, which he said would likely bear the brunt of the repeals, as even minor crash injuries would fall to them to cover.

“I would then expect health premiums to increase to account for that,” he said. For drivers without health insurance, this could likely increase the burden on doctors and hospitals.

Ultimately, Kircher questions whether all these side effects and potential repercussions are worth the projected savings, which are not guaranteed.

Maxime Rieman is Product Manager at ValuePenguin. Educating and assisting shoppers about financial products has been Rieman's focus, which led her to joining ValuePenguin, a consumer research and advice company based in New York. Previously, she was product marketing director at CoverWallet and launched the personal insurance team at NerdWallet.

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Florida is one of just a handful of states that require personal injury protection auto insurance coverage, and for years state legislators have sought to repeal or change the laws.
florida, pip, insurance, personal, injury
Wednesday, 07 March 2018 01:46 PM
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