Florida is one of the few states in the US that uses a “no-fault” insurance protocol to handle auto accidents. In theory, no-fault insurance is a financial and legal mechanism that, in theory, is designed to make things easier for everyone. In states that use “traditional” insurance methods, if there is a motor vehicle accident, one of the earliest factors that must be determined is who is at fault for the accident. Once fault has been determined, the at-fault driver’s insurance provider will be expected to cover any required insurance or medical costs. This can sometimes be a long process and even delay in receiving funds that could be needed quickly for repairs or even medical treatment.
The no-fault idea was supposed to provide a faster and easier method of resolving cost issues in car accidents. A state that uses no-fault insurance means that, in theory, in the event of an accident, regardless of who is at fault, the insurance companies for all involved will immediately provide a payment to cover the costs. This seems convenient, as it minimizes the wait. From a legal perspective, it also seemed like a good idea, as part of the idea was to reduce the number of lawsuits trying to recover costs for minor repairs or medical treatment in court.
However, the reality did not go as many insurers or drivers in Florida had thought.
Crime finds ways
One of the biggest issues with Florida’s no-fault insurance provisions is that it leads to many “bad faith” insurance claims. In other words, some people commit insurance fraud. Individual drivers sometimes carry this out, and in worst-case scenarios, it’s an organized effort between drivers, doctors, lawyers and even auto repair businesses such as auto glass contractors.
Drivers, for example, will get a false diagnosis from a doctor, usually something like a disc injury. This type of muscle damage can be debilitating, but it’s easy to fake. Perhaps most importantly, it’s a muscle injury that doesn’t show up on X-rays, making it an easy diagnosis.
However, windshield replacement is the most prevalent form of insurance fraud in Florida. Sometimes, drivers don’t even know they’re part of an insurance fraud scheme. A damaged windshield may only require $200-$300 to repair, but with false claims, unethical auto repair businesses can run up the damage to thousands of dollars without informing drivers of what is happening.
The PIP problem
Personal injury protection, or PIP, is at the heart of Florida’s no-fault insurance policy. There are a total of 12 states left in the US that still use a no-fault policy, but for three of them, Kentucky, Pennsylvania and New Jersey, it is optional. Florida is one of nine other states where no fault is binding, and that’s where PIP becomes a foundation.
All drivers must, by law, be insured for $10,000 in PIP. This effectively means that any accident in Florida will be settled quickly for up to $10,000 due to the no-fault policy. However, for accidents that exceed this in damage and/or medical costs, it is time to go to court to secure the rest of the financial damages if the drivers or their insurance company does not admit fault.
Because of this $10,000 limit and the frequency with which fraud occurs to take advantage of that “easy” $10,000, Florida is consistently in the top 10 most expensive states to insure and spends a lot of time hovering within the five seen in any given year. .
Need for Reform
In the past, there have been efforts to repeal or reform the way no-fault insurance works in Florida. In 2007, no-fault insurance was completely repealed and reinstated soon after. The state recently tried to overhaul some of the mechanisms behind no-fault insurance, but Governor DeSantis vetoed that bill in 2021, leaving Florida in its current, messy state of insurance. New efforts have begun this year to try again, with a proposal to eliminate the current $10,000 in PIP with $25,000 in bodily injury coverage. Whether this new repeal effort will succeed remains to be seen.
One of the biggest issues with Florida’s current no-fault policy is that it’s stuck in the past. The cost of PIP achieved was originally conceived in 1979 and this amount has not changed in the decades since its inception. However, $10,000 adjusted to current dollars is actually closer to $77,000. The cost of medical treatment has risen tremendously in the decades since PIP was conceived, but the $10,000 cost is often insufficient to cover the medical expenses a driver may face in 2022.
Receipt of compensation
Florida’s insurance environment is rife with bad faith claims, despite the convenience that PIP was supposed to bring. In cases where people have a legitimate need for insurance, they may have to go to court anyway to fight for compensation for medical costs that quickly exceed $10,000.
If you are in a situation where you have been in an accident and are not at fault, talk to a car accident attorney and get the help you need.