Those who can currently only aﬀord the least amount of car insurance coverage will see the biggest hikes.By now, most people in relevant industries have heard about the proposed legislation to end Florida PIP, but most everyday citizens have not. After all, they are too busying worrying about their day-to-day lives to notice every little change going on with insurance companies and lobbyist. But that is exactly what these groups are counting on as they try to pass a bill that will dramatically increase car insurance rates for those who can only aﬀord the bare minimum coverage. For some Floridians, this proposed new law could reduce their rates. But in comparison to how much it will increase rates for those with low-incomes, it's hardly a win for anybody.
What does the new PIP law propose?The new laws being proposed in both the House and Senate (HB1063 and SB1768) will remove the current car insurance system of PIP from state law and replace it with a mandatory Bodily Injury system. There is a multitude of reasons that this law has been proposed. The most commonly stated reason is that PIP doesn't work and there needs to be some sort of reform to curb fraud. And that's true if you're an insurance company looking to increase proﬁts and decrease accountability. However, if you're examining the situation from a logical perspective, the new law is about increasing proﬁts for carriers by decreasing payouts. Currently, Florida requires all drivers to carry what is known as Personal Injury Protection insurance, or PIP. This coverage provides up to $10,000 in coverage for medical bills and lost wages when a driver is injured in a crash, regardless of fault. The current law's main goal is to reduce messy litigation and ensure that hardworking citizens are not left with thousands of dollars in medical bills just because a multi-billion dollar corporation can aﬀord to ﬁght them in court. The newly proposed bills, however, want to switch over to a Bodily Injury insurance system that stipulates coverage based on many factors, including fault. This means that injured drivers would again have to take their insurance companies to court in order to decide who was at-fault, to what degree, and which of their bills the insurance company will have to pay if any. Currently, Bodily Injury (BI) coverage does exist in Florida, but as an optional add-on for drivers who want to ensure that they have extra coverage in case their medical bills exceed the $10,000 PIP limit. However, BI can be expensive and not very economical for low-income drivers who are trying to save money anywhere they can.
How will ending PIP raise rates?According to an article by the Tampa Bay Times, drivers who currently carry the bare minimum in Insurance coverage (just PIP) will see a yearly increase ranging from $250 on average statewide to $385 on average in Pinellas County. And that's just the House plan; the Senate proposal would raise rates even more. The reason for this increase is simple: these drivers will no longer have to carry PIP, reducing their rate by tens-of-dollars. However, they will now be mandated to carry BI insurance, which costs hundreds per year. This is also the reason that those drivers who already currently have BI will see a decrease. Because now they can remove PIP from their bill, reducing their yearly cost by $14 to $80 depending on the county.
Making the Poor PoorerThe reason any person would choose to only carry PIP insurance is a ﬁnancial one. Quite simply, it is the cheapest route to getting your car on the road. Those drivers who can already aﬀord BI and other types of coverage will have no problem paying the extra $1 or $2 a month. Those drivers who can now only aﬀord the bare minimum will have a much hard time paying the extra $32 a month. But this is not the concern of huge insurance carriers and the representatives who support them. They are already extremely wealthy and will continue to see that wealth rise. Insurance carriers wouldn't be supporting this bill if they weren't going to seriously proﬁt from it. Thirty-two dollars may not sound like much, but for someone who has to decide between diapers and putting gas in the car, that is a huge deal. Insurance companies argue that the consumers are already paying more under the PIP system since its expedited nature allows some fraudulent claims to slip through the cracks. They say this increases their operating costs which they have to pass onto the consumer. But if this were the case, the ending of PIP would mean lower rates, not higher. But don't get out your checkbooks just yet. The PIP killing law has yet to pass, and there is no way to know if it will. It has moved pretty quickly through both legislators for a number of varying reasons, but whether or not it will become law is yet to be seen. Some representatives who voted initially for the measures are now concerned about certain language that doesn't safeguard doctors from non-payment and drivers from bad-faith denials. We'll have to wait to see what happens. Perhaps the bill will be killed before becoming law. Perhaps they will modify the law to not raise the rates of those with lower income. For now, we can only hope.