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No-fault auto insurance repeal advances in Senate

January 10, 2018

A bill that would repeal Florida’s longstanding no-fault auto insurance system and require vehicle owners to buy bodily injury coverage cleared a key Senatecommittee on Wednesday over objections from insurance representatives who predicted premiums and lawsuits would increase.

If enacted, Florida vehicle owners would no longer be able to buy personal injury protection (PIP), a low-cost policy that provides up to $10,000 in emergency medical care for themselves and occupants of their vehicles regardless of who is at fault in crashes.

Under the Senate bill introduced by Tom Lee, R-Brandon, vehicle owners would instead be required to buy liability coverage that would fund care for occupants of other vehicles when the policyholder causes a crash.

Florida is one of just two states that do not require vehicle owners to carry some amount of bodily injury liability coverage.

“We logically should insure people against the negligent damage we all may cause,” said Dale Swope, president of the Florida Justice Association, a trade group representing trial attorneys, urging passage of the bill at the Wednesday meeting in Tallahassee.

The PIP law, last updated in 1979, was initially created to ensure funding of medical care for anyone injured in a crash. But it does not require policyholders to buy liability coverage unless they cause a crash or are convicted of certain traffic offenses.

Lee said, “It’s intuitive to think a no-fault law would somehow be devoid of litigation. You don’t have to prove fault, you just have access to coverage for your injuries. But that’s proven to be quite a misnomer. In fact, there is a substantial amount of litigation going on in Florida.”

Lawsuits over no-fault insurance have increased because of consumer protection provisions in state law that encourage attorneys to file bad faith claims against insurers — “over virtually nothing,” Lee said — for amounts beyond PIP coverage caps. Also driving “a tremendous amount of litigation” is a requirement that victims prove their injuries are permanent so they can meet the standard required to receive money for pain and suffering, Lee said.

Christine Rodriguez, a Clermont resident, urged support of the repeal, explaining she was struck from behind three times between December 2014 and July 2016 and forced to open three PIP claims because the drivers had no liability insurance. Afterward, her insurance company labeled her an “at-risk” driver and dropped her. When she found another insurer, her premium increased from $2,700 to $5,800.

A House version of the repeal bill has already been approved at the committee level and is expected to get a vote in the full chamber this week. But that bill lacks an additional requirement in the Senate bill that policyholders must buy $5,000 to fund emergency medical care for themselves. Lee added the so-called MedPay requirement in response to concerns by emergency medical providers over who would pay to treat victims injured by uninsured drivers.

The MedPay provision would give victims 14 days to seek medical treatment and cover chiropractic and dental costs as well.

While the House bill is estimated to reduce average per-policy costs by $81 by removing the PIP requirement, the MedPay provision in the Senate bill would initially create a range of financial impacts, depending on where policyholders live. In urban areas such as South Florida, premium costs would drop because PIP coverage is more expensive. However, premiums would increase in smaller metro areas where PIP coverage costs less, such as Tallahassee.

Mark Delegal, a lobbyist for State Farm, opposed the Senate bill and predicted premiums would increase for vehicle owners who only buy the minimum coverage needed to get “street legal.”

Doug Bell, a lobbyist for Progressive Insurance, also opposed the bill, saying the MedPay coverage requirement and bodily injury coverage requirement would create “a pretty significant [cost] increase to insureds of Florida.”

Rick Parker, representing the Florida Justice Reform Institute, urged the committee not to support the repeal without also finding a way to quell bad faith lawsuits, which he said “arise out of $10,000 policies and not $100,000 or $1 million policies.”

The committee supported the bill with a 10-1 vote, with the sole no vote coming from Sen. Doug Broxson, a Republican representing Escambia County, Santa Rosa County and part of Okaloosa County in the Panhandle.

In other insurance-related news from the Legislature, the House Banking and Insurance Subcommittee unanimously approved a bill that would require property insurance purchasers to sign their initials next to a statement alerting them that their policies do not include flood insurance.