The Personal Injury Protection Law and Florida Auto Insurance Rates

The Florida auto insurance industry is supporting the efforts in reforming the Personal Injury Protection (PIP) auto insurance law.  According to the Sunshine State News, the industry has seen premiums rise up to $910 million because of an alarming number of staged accidents. This allows victims of a crash, whether at fault or not, to claim benefits from their insurance company.

The PIP law

Also known as the Florida No Fault Insurance, it allows all parties in an accident to claim insurance benefits based on their policy limits.  This law requires all motor vehicle owners (of 4-wheeled vehicles or more) in Florida to have $10,000 minimum PIP coverage and another $10,000 minimum for property damage liability (PDL) coverage. PIP covers a person involved in a crash whether you were driving or not.  PIP also allows coverage for your child, household members, and passengers who do not own a PIP policy.  A pedestrian involved in a vehicle crash is also covered.

PIP Law reform

Governor Rick Scott, together with CFO Jeff Atwater, has recently campaigned for a reform on the PIP law because of insurance fraud instances that have increased since the law took into effect. The rapid rise in claims is putting the insurance industry at risk, as insurance companies are now spending hundreds of millions of dollars to pay for a wide variety of benefits for all injured parties, Florida auto insurance holders or not, such as medical and hospital fees, car repairs, legal fees and many other benefits included in various policies.

Insurance Fraud

Most people who commit insurance fraud related to the PIP law perform one of the following actions to claim bogus benefits from Florida auto insurance companies:

  • Purposely crash cars with an accomplice
     
  • Purposely crash cars with an unknowing driver
     
  • Real crash victims that have special arrangements with medical clinics or pharmaceutical companies for “over-treatment”, resulting in over-billing

Effects

Insurance companies who spend more money to cover claims need to earn more money to stabilize their businesses. To make up for their losses due to the wide coverage of PIP insurance policies, they increase insurance rates, and car owners have to pay this price.  This move for PIP reform by the Florida state government and insurance industry is a step in the right direction.  If reviewed properly and the proper action is taken, it will not only serve as protection for insurance companies, but for honest Florida auto insurance holders as well.