No-Fault Insurance Law Expires in Florida Oct. 1st

Florida’s no-fault insurance law, which makes every Florida driver carry at least $10,000 in personal injury protection (PIP) will expire on October 1st.  The change is putting the insurance industry and Florida drivers into a tailspin as both try to figure out what this means to everyone.

For starters, Florida drivers who are considered “safe drivers” will no longer be required to have proof of insurance to get their drivers licenses, though they will still be responsible for any damage they cause for an accident that’s their fault.  Unfortunately if an uninsured driver doesn’t have insurance, the only way for the victim to recover damages will be through a lawsuit. 

Folks with insurance love the idea, because their insurance rates will drop.  State Farm has already received approval for a 16% reduction effective Oct 1; Allstate and AIG have also filed for approval for a similar reduction.  Florida auto insurance companies have lobbied hard against the no-fault provision, claiming that it’s caused a tremendous amount of fraud through staged accidents, false crash reports, and fraudulent billing since no matter who is to blame for an accident, the company has to pay the expenses.

Florida already has over 750,000 uninsured drivers on the road, and losing the PIP requirement will just add to that number.  If you do drive in Florida, make sure you have uninsured/underinsured motorist coverage, because things are just going to get worse.  Though the legislature could vote to keep no-fault and PIP coverage requirements in force when they reconvene on Sept 18, the odds are unlikely they will do so. 

I can definitely see both sides of this argument.  Sadly there are so many unscrupulous people that look for a way to get away with something for free that I’m sure the insurance companies are paying a fortune in fraud.  Adding more prosecutors to combat the fraud will only further clog up the courts.  But good people injured in an accident deserve to have some recourse to pay for their injuries.  Personally I think stronger prosecution of uninsured motorists is necessary, to the point that the penalties are just not worth the risk. 

Only three states do not require PIP.  It will be interesting to watch what happens in Florida once this change occurs.  In fact, it could set a precedent for other states to follow.  We’ll see.