Florida PiP about to Drive into the Sunset

The Legislature is at it again.

You have to hand it to them, when they decided to mess with a buzz saw, they get right in there. No-Fault insurance and PIP (personal injury protection) were hailed as a breakthrough way to simplify auto insurance and bring down drivers’ premiums. It actually did, for a little while. However, like Assignment of Benefits for homeowners, PIP has been plagued by fraud, escalating every year, and driving premiums through the roof. It’s ironic that both of these programs, both intended to streamline the insurance claim process and deliver benefits to the insureds quickly have both been so flagrantly and openly abused.

 PIP and Actual Costs

The law as it stands is inadequate as medical expenses can rapidly outstrip $10,000. At the same time, the system is open to abuse by bad actors who are gaming the system for as many people as they can get in the door. The new law will require drivers to carry $25,000 in personal injury insurance for the other party, but in our opinion this is not building a better mousetrap, it’s just changing the cheese. In this case, bad actors may seek out accidents, trying to make minimal or no injuries into a big payday. At the same time, $25,000 doesn’t even begin to cover the expenses of a severe car accident. In Florida, a hospital inpatient stay can run from $1600 per day to as much as $2300 – and that’s without ER, ICU, or surgical expenses. A stay in ICU can run over $4000 per day, with ancillary billing for medical specialists and so on. That $25,000 could be blown out the first day.

 What’s the Answer?

 It’s hard to say. Any time you build a foolproof system, along comes a more innovative fool. Perhaps a reinsurance program along the lines of Alaska’s health insurance market would help bring down costs by providing a way to pay off verified medical claims in excess of the $10,000 PiP limit or the $25,000 proposed limit. Or they could raise the mandated minimum coverage to something more realistic than 1972 dollars. Or, as roads become more crowded, investment in public transportation could make driving and paying those high premiums much less attractive. In time, driverless cars might even make human-caused accidents a thing of the past. Until then, we’re stuck with insurance, and insurance fraud.

 Get Covered

 Until the legislature moves on PIP one way or the other, you best bet is to ditch the cheap basic insurance and looking at something that will realistically cover you in the event of an accident. Insurance is meant to keep you from financial ruin in the event of an accident, not just to get you out on the road. While you might think you can get by with the minimum coverage because you’re a good driver, you really need to think about the other guy out there who’s a really bad one, and what would happen if you met on a slick road in the middle of the night.