Florida No Fault Insurance Update

No renewal of no-fault before Oct. 1
As Florida’s no-fault insurance law ends its three-decade run Oct. 1, the state’s highly competitive automobile insurance market may be ready to enjoy a new dawn — or enter a new Dark Ages, depending on who you talk to.Hospitals fear being stuck with unpaid emergency room bills. Insurance agents are puzzling over what to advise their clients — no-fault protection won’t go away all at once but rather as policies come for renewal in the coming months. And consumers are often confused that the only plan for the future seems to be allowing no-fault to sunset and letting the chips fall as they may.

The only consensus among lawmakers and various business interests is that the current law invites fraud. There’s no agreement on any kind of solution.The Legislature is now supposed to meet for a budget-cutting session Oct. 3, rather than Sept. 18 as originally projected. Many lawmakers anticipated a last-minute effort to extend or even reform no-fault during the earlier date.Now that the target is Oct. 3, it’s certain that no-fault will expire — and there’s no word on whether the special session order that should be published this week will contain any agenda item other than the budget.

It’s a PIP

The centerpiece of no-fault is its mandatory $10,000 personal injury protection coverage, which pays 80 percent of medical expenses and 60 percent of lost wages plus miscellaneous household expenses that might be caused by an accident — for example, hiring cleaning or yard service while convalescing.

PIP has been effective in providing quick settlements of legitimate medical expenses, especially emergency room bills.But it’s also spawned many outpatient “PIP clinics,” mainly in Miami-Dade, Broward and Palm Beach counties. These medical facilities are noted less for the effectiveness of the treatments they provide than for the speed with which they can file claims totaling $10,000.”Our no-fault system was by no means perfect. You are never going to come up with a perfect system as long as there are people out there looking to play the system and defraud the system,” said Jim Nolan, president of Nolan Family Insurance. “It drives auto insurance costs for every consumer up by hundreds of dollars every year.

“The ripple effects from this are going to be heard for years to come,” he said.

Fault lines

Prior to no-fault, Florida had a fault-based system — if you were hurt in an accident, you sued the at-fault driver.Best case, the other driver had bodily injury liability coverage sufficient to pay the claim. Worst case, the case ended up in court, with the injured person going after the at-fault driver’s insurance, followed by his other assets.

“Losing no-fault kind of scares me a little, because people will wind up in lawsuits more often,” said Sheila Graham, agent with West Coast Insurance Agency.After Oct. 1, assuming there’s no last-minute extension, Florida goes back to a fault-based system.Nolan said that one of the complexities of the no-fault law was that it protected drivers from pain-and-suffering claims, except when the accident resulted in a permanent disability. This will no longer be the case.

“In a post-no-fault world, drivers need to ensure that they have adequate insurance to protect their financial security, because if they don’t, their entire financial portfolio will be in the crosshairs of the plaintiff’s attorneys,” said Rich Rasmussen, vice president of the Florida Hospital Association, a Tallahassee-based industry group.

Nolan said that under no-fault, all claims were settled first against the accident victim’s own PIP. Only after the $10,000 was exhausted would claims be filed against other coverage — including the victim’s own health insurance or the other driver’s bodily injury liability coverage, if carried.

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