No-Fault Insurance: What Is It? And, Why Should Floridians Care?
If you’re a Floridian, you live in a no-fault state. What does that mean? What does no-fault insurance protect you from? Keep reading to find out…
Insurance law is confusing at the best of times. And when companies start throwing around terms like “No-fault” and “PIP”, it gets even harder to understand.
And if you aren’t clear on what your insurance is, what the terms mean, and what is covered, you can find yourself pretty far up a creek in the case of an auto accident.
Florida is not the only no-fault insurance state. Eighteen states are considered “no-fault”. But in February of 2018, Florida’s no-fault status came under fire when the House of Representatives voted overwhelmingly to repeal the law.
The motion failed in Senate committee, but still is enough to make Floridians wonder: What is no-fault insurance? How does it work? Is it even necessary?
Let’s take a look at exactly what the law is in Florida, why it matters, and how it helps you if you’re in an accident.
What is No-Fault Insurance?
The term “no-fault” is a little misleading. It makes it sound almost as though it is a method of absolving parties of liability in case of an accident.
This is not the case.
“No-fault” simply means that your auto insurance will pay your medical bills regardless of who was at fault in an accident.
“No-Fault” insurance and Personal Injury Protection, or PIP, are two terms for the exact same type of coverage. In Florida, you must carry at least $10k of personal injury protection with your auto insurance.
No-Fault Law in Florida
In 1971, Florida officially became a No-Fault state, with the passage of the Florida No-Fault Motor Vehicle Law.
As with all laws, the verbiage is dense and filled with legalese, but boils down to the following.
In Florida, every driver is required to carry Personal Injury Protection as a part of their auto insurance plan.
What this means is that, in the case of an accident, an injured party can receive medical treatment through their own auto insurance policy, rather than waiting for a payout from the at-fault party.
This is the “no-fault” in no-fault insurance law.
It doesn’t eliminate fault, but the fault is irrelevant when it comes to paying medical claims for injuries sustained in an accident.
Now, this DOESN’T mean that you are safe from litigation if you are the at-fault party.
The minimum and most common PIP policy are only about $10,000 of coverage. Should the injured party’s medical bills exceed that, they may come knocking on your door for the rest. Or, if you are the injured party, know that you can still seek legal action in addition to your own PIP.
So know that the point of PIP is not to allow the at-fault party a way out of responsibility. Rather, it is a way to keep courts from being bogged down with small claims and to ensure that the injured receive quick treatment without the hassle of waiting for a secondary insurance payout.
Why Does It Matter to Floridians?
The no-fault law was passed for two reasons.
First, to free up courts.
Before becoming a no-fault state, municipal and local courts were having difficulty keeping up with insurance suits from car accidents. Under No-fault law, the injured can still pursue damages if needed and if certain conditions are met. However, the first line of response is from the injured party’s own carrier.
The second reason for the legislation was to improve recovery times.
Prior to the law, the injured had to decide if they wished to pursue a claim with their own insurance company or that of the at-fault party.
The problem, of course, is that their own insurance company might deny the claim, putting the responsibility on the at-fault party. Then the insurance of the at-fault driver might drag their feet paying out a claim or in verifying the claim. All of this delays medical treatment for the injured.
Now, the claim of the injured party automatically goes to their own PIP, ensuring speedy medical treatment and a jump-start on recovery.
Essentially, the bill was passed to increase efficiency and avoid backlog, both in local courts and in terms of payout times.
Do I Need No-Fault Insurance?
If you live in Florida and you are a driver, whether or not you need it isn’t the question. By default, all auto policies in Florida must carry PIP. So if you have auto insurance in the state of Florida, you have no-fault insurance.
The decisions you have to make in terms of your PIP have more to do with how much you want to pay. Factors like limits and deductibles can all be played with to make sure you have the coverage you want at a price point that works well for you.
The minimum PIP policy in Florida has a $10k limit. You can go higher than this, and many do, but $10k is the absolute minimum allowed by Florida law.
Then you can decide on a deductible, or the amount you must pay before insurance takes over. Some plans have $100 deductibles, others $1000, and that number is up to you.
After that deductible, no-fault insurance will pay 80% of your medical bills and 60% of lost wages.
Cons of No-Fault Insurance
No system is perfect, and PIP is no exception.
While it does simplify the claims system, it also puts limits on your ability to collect damages from the at-fault driver.
Under No-Fault law, you CAN sue for damages, but only if your injuries are permanent or severe. And while “permanent” isn’t subjective, “severe” certainly is. You’ll be relying on a judge to determine if your injuries are even severe enough to bring a suit in the first place.
PIP also does not cover damage to your vehicle or property, or pain and suffering. You’ll need to make sure you have collision coverage, or PDL, also required in the state of Florida.
Where to Go for No-Fault Insurance
In Florida, anyone who sells auto insurance can sell you no-fault PIP insurance coverage.
But you want to make sure you are getting just what you need from an experienced professional.