The Great PIP Debate: Will Reform Change Florida Auto Insurance?

Florida has operated under a no-fault insurance system since the 1970s. But, could recent activity in the Florida House and Senate replace Personal Injury Protection (PIP) insurance with Bodily Injury (BI) coverage?

For more information on what this could mean for Florida drivers, and how this could impact the cost of your insurance policy, keep on reading.

Changes to the Current Car Insurance System

Drivers in Florida are currently required to carry at least $10,000 worth of PIP insurance, and while not required, more than 90% also carry some level of BI coverage.

According to the Florida House Bill (HB) 19, the new legislature would repeal the state's current no-fault insurance law and would require drivers to carry BI coverage of $25,000 per person and $50,000 per accident to cover the injuries of others.

On the other hand, Senate Bill (SB) 150 is also calling for a repeal of PIP and mandatory BI coverage, however, they're additionally requiring drivers to purchase $5,000 of "medical payment coverage" for a driver's own injuries. This "medical payment coverage" would be enacted regardless of how much health insurance drivers already receive from Medicare, employer plans, or other sources.

Would this addition simply be an alternative version of PIP insurance? To further examine what these changes would mean for the average driver, and how changes could impact their monthly policy, let's break down the current system.

What is Personal Injury Protection (PIP) Insurance?

Personal injury protection, also known as "no-fault insurance" or PIP insurance, is responsible for paying medical bills and rehabilitative costs for you and your passengers after you've been injured in an auto accident. No-fault insurance requires your policy to pay for your injuries no matter who was at-fault in the crash, hence why it is called "no-fault." PIP insurance is also applicable during instances in which you're a passenger in someone else's car, or if you're hit by a car while a pedestrian or cyclist.

While there are 12 states operating under a true no-fault system, 16 states require drivers to carry a minimum amount of PIP coverage. For example, in the state of Florida, every vehicle owner is required to have at least $10,000 worth of PIP insurance.

The variety of expenses covered by PIP insurance does vary by state, but typically includes:

• Medical imaging testing, such as X-Rays or MRIs
• Necessary medical procedures, including surgeries
• Ongoing professional treatment
• Lost wages
• Pain and suffering
• Home care expenses, such as childcare if you are left unable
• Funeral expenses

What is Bodily Injury (BI) Coverage?

Bodily Injury (BI) coverage is responsible for paying for injuries you cause to another driver if you are at-fault in the accident. BI coverage is considered a third-party insurance, as it only covers other drivers and passengers. It will not cover the medical costs of injuries you sustain during the accident. After an accident, a third-party can file against your BI coverage to compensate:

• The medical or healthcare expenses of the third-party, including their initial hospitalization and follow-up care
• The lost wages of the third-party
• Funeral costs or death benefits
• Your legal fees; if the third-party decides to sue, your BI coverage will pay for your legal defense

BI coverage differs from PIP insurance in that, while BI pays for the medical expenses of drivers and passengers in other cars when you are at-fault for an accident, PIP coverage pays for your own expenses regardless of your fault.

An easy way to remember this is:

• Personal Injury = For Your Own Person
• Bodily Injury = For Everybody Else

How are Current Policies Arranged?

Your current car insurance policy is arranged in three numbers, such as 25/50/25. These three numbers are your policy's coverage limits, and each number represents the maximum amount of coverage you have for three separate liabilities. To easily understand what is covered in your car insurance policy, follow this guide:

1. The first number in your auto liability insurance is the bodily injury liability maximum coverage per person injured in an auto accident.
2. The second number in your auto liability insurance is the maximum amount of bodily injury liability coverage per accident.
3. The third and final number in your auto liability insurance is the the maximum amount of property damage liability, per vehicle.

The three numbers of your liability coverage limits do not include your PIP insurance, as your liability coverage is meant for third-party individuals and not your own injuries.

What Would the Proposed Change Mean?

In reality, it is crucial you have both PIP insurance and BI coverage. This is because in the event of an accident, your BI coverage can cover third-party's injuries, but will not cover your own. Therefore, PIP insurance is critical in covering your own medical expenses.

Under HB 19, your car insurance would no longer need to include PIP, and instead your policy would be geared more toward covering the injuries of others. According to a 2016 actuarial study commissioned by the state, HB 19 could save drivers up to $81 a car and collectively close to $1 billion, even with the expected premium for BI coverage steadily increasing.

Conversely, under SB 150 drivers could expect to say goodbye to savings - in addition to the rise in BI coverage premiums, the additional $5,000 worth of medical payments coverage would result in a more costly insurance plan.

Will BI Take the Place of PIP?

Can Bodily Injury coverage take the place of Personal Injury Protection? Absolutely not. Bodily Injury coverage can not pay for your injuries, nor could it compensate for any of your damages.

However, if the Senate moves forward with SB 150, we could be looking at a PIP 2.0 with medical payments coverage. Ultimately, time will only tell what the future of car insurance holds for Florida drivers.

Sources:

1. https://www.law.com/dailybusin...
2. https://en.wikipedia.org/wiki/...
3. https://www.iii.org/article/ba...
4. https://www.palmbeachpost.com/...
5. https://www.floir.com/siteDocu...