No-Fault Law to Expire Soon
Updated August 2007: The Florida no-fault law, which requires drivers to have $10,000 worth of personal injury protection (PIP), is set to expire October 1, 2007.
Unless lawmakers for PIP, who are trying to come up with a passable bill, are able to save the no-fault law, Florida will return to a traditional fault system where drivers have to seek compensation from the party at fault. Thirty-eight states already have this kind of fault system.
There will be many problems that will come up if the no-fault law expires. Those in favor of letting the law expire say that insurance rates will decrease significantly, but even if that is the case, there will more than likely be mass chaos and confusion once the fault system takes precedence.
The PIP program paid for medical bills no matter who was at fault in a car accident, but the program was prone to fraud and hospital overcharges. But the loss of the program could cost Florida’s hospitals millions of dollars. Hospitals will have to pay for patients that don’t have health insurance, which could cost up to $350 million a year.
The new system assumes that it can get money lost from auto insurance companies from health insurance companies instead, but the health care system may not be able to make up for the difference. As a result of this, health insurance rates will probably increase to absorb the extra costs.
Without Florida no-fault, auto insurance rates will decrease approximately 16.7%, but now consumers will have to purchase more insurance, such as more bodily injury insurance and medical insurance, to account for drivers who decide not to purchase PIP insurance. As of now an estimated 4 million Floridians currently buy the minimum insurance and once they no longer have to buy PIP insurance, they probably won’t.
Letting the Florida no-fault law expire may lower auto insurance rates, but the damage caused by not having the bill will outweigh any benefits.