Senate bill aims to replace PIP insurance
'We’re trying to get to the best balance, the best right answer'
A measure repealing Florida’s no-fault, person injury protection (PIP) auto insurance system and replacing it with an at-fault, bodily injury system has passed its second Senate Committee.
The Senate Judiciary Committee on February 15 passed SB 54, which would do away with PIP, raise required coverage limits on policies, offer lower limits for students and low-income drivers, and make it harder to sue insurance companies for bad faith. Those seeking bad faith actions would have to show the insurer violated its duty of good faith to the insured and in failing to settle a claim.
The bill also eliminates limits on recovering pain and suffering damages from PIP insured and would allow liability for uninsured motorists to include pain and suffering and other injuries.
Instead of the current limits of $10,000 personal injury protection for one person, $20,000 for multiple persons injured in an accident, and $10,000 for property damage protections, the bill would set a limit of $25,000 protection for an injured person, $50,000 for multiple persons injured, and $10,000 for property damage.
“This is a massive sea change and there are a number of ways we could approach this,” said Sen. Danny Burgess, R-Zephyrhills, one of the bill’s sponsors. “We’re trying to get to the best balance, the best right answer.”
An amendment adopted at the meeting would allow college and high school students and those making less than 200% of the federal poverty income to purchase policies with lower limits of $15,000/$30,000/$10,000 for the three coverage categories.
The amendment would also allow insurance companies to offer policies with up to a $200 deductible for windshield replacement. State law currently requires insurance companies to cover the entire cost of replacing cracked or damaged windshields.
Sen. Perry Thurston, D-Ft. Lauderdale, introduced an amendment to strike the bad faith changes from the bill.
He said the proposed bill had deficiencies in demand letter requirements, blocked conditions of acceptance from settlements that could produce additional litigation on whether the demand letter complied with the law, would allow an insurance company to offer policy limits but take no further action to protect the policyholder from additional damages, and changes when a bad faith claim could be tried.
“It requires an excess judgment as a condition precedent to filing a bad faith claim. Sometimes the parties will agree to try the bad faith claim…before the issuance of a final judgment just as a means of accelerating a settlement,” Thurston said.
Kathy Mauss, with the Florida Justice Reform Institute, opposed Thurston’s amendment.
“Bad faith is essential to be included in any decision made to eliminate PIP coverage and go to a mandatory BI [bodily injury] system,” she said, adding in some cases bad faith can be asserted even before a claim or notice is made.
Not changing bad faith and failing to make other changes made in the bill “will further ruin a system that is already very challenged,” Mauss said. “All we’re asking for is there be given notice to the insurance company that a claim exists, be given notice of an opportunity to settle that claim, and only then if they are not accepted [to file a bad faith action].”
However, Matthew Posgay, an attorney who represents policyholders, said the provision would hurt small businesses that could be left liable for excess judgments.
“This is not a small change, this is a significant change that will eliminate protections for small businesses that we need to protect,” Posgay said. “Doing this means insurance companies can do wrong, get paid for doing work that they didn’t do right, then their insured or small businesses are left holding all the cards through no fault of their own.”
He also argued under the bill anyone injured in a car accident would have to seek an attorney’s help in order to file a claim.
Sen. Doug Broxson, R-Pensacola, opposed Thurston’s amendment, saying it would defeat the purpose of replacing PIP system, would create market uncertainty, and lead to higher premiums.
Thurston’s amendment failed on a voice vote.
Sen. Darryl Rouson, D-St. Petersburg, said he would support the bill in committee, but continue to seek changes to the bad faith provisions.
Eric Romano, president of the Florida Justice Association, said he was concerned there was no requirement that people seeking the lower limit policies prove they met the income requirements.
“With no penalty to the customer, no penalty to the insurer, it creates an unenforceable honor system with no consequences,” he said.
Romano also endorsed Posgay’s criticisms of the bad faith sections, although he said the FJA generally supports the change to an at-fault, bodily injury system.
He said a study by the FJA Foundation shows the change could save two thirds of Florida drivers $349 a year on auto insurance while 6.2% would see a slight increase.
Burgess called the current system broken.
“What we’re trying to do here is actually go in a direction where we do reduce litigation, because personal injury protection in Florida’s no-fault system has failed to do just that,” he said. “Meanwhile, the cost of PIP remains very, very high compared to benefits that it does provide….
“This has been a bill that has been before us for a number of years and this is the year we need to look to finally put this issue to bed and ensure that Florida has joined 48 other states in the union in doing so.”
SB 54, which would become effective January 1, passed 7-2, and earlier passed the Banking and Insurance Committee 10-2. It next goes to the Rules Committee and then the Senate floor. Two similar or related bills, HB 719 and HB 273, have been filed in the House and referred to committees, although neither has been heard.