Florida’s ‘no-fault’ auto insurance era will end if DeSantis signs bill into law

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Jim Saunders
·4 min read
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Florida motorists are one step closer to no longer having “no-fault” auto insurance, after lawmakers Friday approved ditching the decades-old system and its requirement of carrying personal-injury protection coverage.

The House and Senate signed off on a heavily negotiated bill (SB 54) in the closing hours of the 2021 legislative session. If the bill is signed by Gov. Ron DeSantis, the requirement for carrying so-called PIP coverage would end and motorists would need to have bodily-injury coverage.

“You may not like every bit of this bill, but, you know, Florida’s got to do something about their car insurance,” Rep. Matt Willhite, D-Wellington, said in backing the legislation. “Twenty-five percent of the population in Florida doesn’t even have car insurance.”

But critics warn the bill would drive up costs for the poorest Floridians and could put more motorists on the road without coverage. The Personal Insurance Federation of Florida, an industry group, and the American Property Casualty Insurance Association quickly called on DeSantis to veto the legislation.

“Given the financial burdens individuals, families, and businesses continue to face due to the COVID-19 pandemic, now is not the time to make major policy changes that affect every Florida driver and impose a tremendous financial burden on Floridians, especially those who can least afford it,” Logan McFaddin, assistant vice president of state government relations for the American Property Casualty Insurance Association, said in a prepared statement.

DeSantis said Friday he had not reviewed the bill.

The bill — approved 37-3 by the Senate and 100-16 in the House — came after lawmakers in recent years have repeatedly considered eliminating the no-fault system. They revamped the system in 2012 to address fraud that was driving up insurance rates. Florida is one of just two states that don’t require some level of bodily-injury coverage.

Rep. Erin Grall, a Vero Beach Republican who has pushed for the elimination of no-fault for five years, acknowledged the bill is the result of “huge industry food fights.”

Senate bill sponsor Danny Burgess, R-Zephyrhills, argued the “balanced” proposal will reduce rates for most motorists, pointing to a 2016 report by the Florida Office of Insurance Regulation that projected drivers on average would see 5.6% savings with a shift to a bodily-injury coverage requirement.

Motivation is fighting fraud

Burgess said rates would be reduced because of an elimination of fraud.

“We’re taking out an entire process of litigation out of here through the cottage industry with PIP lawyers,” he said. “That’s gone. We are literally removing an entire pathway to frivolous litigation by getting this out of here.”

Critics contend the plan will become an economic burden for Floridians who buy only PIP coverage.

But proponents said the $10,000 in PIP coverage available in the no-fault system to help pay for healthcare costs after accidents has not kept up with the times. The coverage level has been on the books since 1979.

They also maintain that most drivers already have the required levels of bodily-injury protection — $25,000 for the injury or death of one person in an accident and $50,000 for injuries or deaths of two or more people.

Motorists would also have to purchase $5,000 in death benefit coverage, which is currently required under no-fault, to help cover funeral expenses and other bills of people killed in collisions. Insurers also would have to offer medical payments coverage, known as med-pay, of $5,000 and $10,000 without a deductible.

Costs may go up, not down

Sen. Jeff Brandes, R-St. Petersburg, suggested the bill be delayed until lawmakers could receive updated cost estimates.

“Florida already has some of the highest rates in the country. And, unfortunately, if you’re just struggling to make it, if you’re at the bottom end of the auto-insurance market buying just PIP today, your rates could go up 40 or 50 percent,” said Brandes, who joined Sen. Lauren Book, D-Plantation, and Sen. Jason Pizzo, D-North Miami Beach, in voting against the bill.

A 2018 study by the actuarial consulting firm Milliman showed a potential average increase in premiums of $67, or a 5.3% increase.

The American Property Casualty Insurance Association has argued costs would increase 3% to 6% because of a “lack of meaningful bad faith reforms” in the legislation.

Bad-faith lawsuits, which can be costly, involve allegations that insurers have not properly looked out for the interests of their customers. Bad faith was a sticking point in the past as the House and Senate considered measures to repeal the no-fault system.

Burgess said parts of the bill addressing medical payments and bad-faith litigation will “further reduce rates.”

“This is the Holy Grail of litigation reform,” Burgess said.