Bill abolishes PIP, returns at-fault auto insurance
Measure also sets up new bad faith procedure for auto claims
Sen. Danny Burgess
A bill to switch Florida from a no-fault to at-fault auto insurance state — which backers said would end all personal injury protection or PIP claims and lawsuits — passed in the Florida Legislature April 30, the last day of the 2021 regular session.
SB 54 would also make it harder to sue insurance companies for bad faith. Backers, citing a 2016 state study, said it would lower rates for most Florida drivers by 5 to 6% — perhaps by 15% in some areas of the state — and might save even more.
Opponents said it would raise rates.
Sen. Jeff Brandes, R-St. Petersburg, said the bill’s provisions had not been sufficiently looked at. He added he checked with an insurance expert who predicted the bill would raise rates by 40%.
“There is no reason we could not take this language, let it simmer over the summer,” Brandes said. “Let’s figure what’s going to go on with rate increases based on this language, because based on this language right now, what people are telling me is that for the poorer Floridians, those who are struggling to make it, the rates are going to increase 40% in a state that’s already one of the most expensive in the country.”
But Sen. Danny Burgess, R-Zephyrhills and sponsor of the bill, said the improvements will end fraud and benefit car owners.
“We know PIP is ripe with fraud. We’re going to see so much reduction in rates because of that elimination of fraud,” he said. “We’re taking out the entire process of litigation, the cottage industry with PIP lawyers. That’s one. We’re literally removing an entire pathway of frivolous litigation by getting this out of there….
“We have bad faith reform. Sen. [Kathleen] Passidomo [R-Naples] has been working on bad faith reform for 10 years. This is the holy grail of litigation reform and we’re doing it in our bill. That’s going to have an incredible impact here.”
In lieu of PIP coverage, the bill requires motorists to have a policy that provides $25,000 coverage for a single person injured in an accident or $50,000 when two or more people are injured, and $10,000 for property insurance damage caused by a crash.
The Senate concurred in an amendment made by the House that would remove required medical payment coverage in the policies, which supplements health insurance coverage in auto accidents, and leave it as an option. It then made a technical change to maintain a $5,000 death benefit, which Burgess said the House struck by accident, and approved the bill 37-3.
That required the House to reconsider the bill, which it did, approving it 100-16.
“This bill is so important for our consumers and it’s really going to help a lot of people in their time of need and they get a serious injury in a car accident,” said Rep. Amber Mariano, R-Hudson.
Rep. Matt Willhite, D-Wellington, praised Rep. Erin Grall, R-Vero Beach and House sponsor of the bill, who he said has worked on the auto insurance issue for five years.
“Florida has got to do something about their car insurance,” he said. “Twenty-five percent of the population of Florida doesn’t even have car insurance and Rep. Grall is trying to change that and keep more money in our pockets and keep us safe in the meantime.”
“It really took all of the stakeholders’ opinions into account, and it is a negotiated product, it’s not what we started with five years ago,” Grall said.
When the House passed its initial bill on April 27, Grall, an attorney who does personal injury work, said the $10,000 PIP required coverage was set in 1979, and allowing for inflation would have to be $72,000 today to provide the same coverage. She also said the coverage was duplicative because the hospitalization expenses would be covered by health insurance.
“PIP does not hold negligent drivers accountable for the accidents they cause,” she said.
While the bill, if signed by the governor, would end PIP claims, it also creates F.S. §624.156, which sets out an extensive system for pursuing first and third-party bad faith actions against insurers.
The bill sets a list of actions that insurers can follow to demonstrate good faith. It also requires third party claimants to submit a demand for settlement within the insurer’s policy limit in exchange for a release of further liability against the insured and then obtain a judgment in excess of policy limits against the insured.
A claimant may not condition the acceptance settlement demand other than exercising the right to examine the insured for up to two hours under oath.
The law becomes effective January 1.
