Florida drivers face changes as PIP could expire
Apr 2, 2007
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Florida drivers face changes as PIP could expire
April 1, 2007
The Miami Herald
By Beatrice E. Garcia
Come October, the way Floridians buy auto insurance could change dramatically.
That’s when the state’s current no-fault insurance law is set to expire. Along with it would go the required $ 10,000 personal injury protection drivers now buy to cover medical expenses and lost wages when there’s an accident, regardless of who is at fault.
Several major insurers including State Farm Insurance of Florida and Allstate Florida are lobbying hard to let the no-fault law sunset because it breeds massive fraud and runs up charges for often unnecessary and expensive medical procedures to exhaust the $ 10,000 that’s provided in every accident. The companies say they would prefer to slug it out in court and recover damages from drivers who are responsible for accidents.
Although the Legislature is still wrestling with this issue — several groups including the Florida Hospital Association are fighting to continue the no-fault system and a Senate committee has advanced a bill that extends it until 2009 — insurers already are beginning to prepare for life after PIP. State Farm, for instance, has begun sending its customers letters with their renewals detailing how their policies will change come October.
For consumers, what would the end of PIP mean for premiums?
PIP premiums can vary widely range — from slightly over $ 100 per car for a 40-year-old driver with a pristine driving record insured by Geico to more than $ 550 for a driver with spotty driving record insured by United Automobile Insurance of North Miami Beach, which specializes in the nonstandard market. State Farm estimates the cost of PIP coverage averages $ 250 per car.
Eliminating the required personal injury coverage could save drivers with health insurance as much as 250 dollars�and possibly more in places like South Florida, where the coverage is expensive.
POSSIBLE INCREASE
However, Paul Sanford, a lobbyist for Blue Cross/Blue Shield, said the insurer’s actuaries estimate transferring the cost of auto-accident related medical care to a health insurer could mean increases in healthcare premiums of $ 5 to $ 7 per family member.
For a family of four, that’s $ 20 to $ 28 per month, or $ 240 to $ 336 a year. That would wipe out a good portion of savings that could come from eliminating PIP premiums.
Consumers with no other healthcare coverage would be wise to purchase some form of medical coverage as part of their auto insurance. Again, this expense will wipe out some of the savings achieved by eliminating PIP coverage — as much as $ 100 or more depending on how much coverage a driver buys.
Right now, Florida statutes don’t require drivers to buy medical payments coverage. If the PIP law expires and no other changes are made, the coverage would remain optional.
Drivers also would need to buy bodily injury coverage to cover medical expenses for other drivers and passengers if they cause an accident.
Justin Glover, a spokesman for State Farm, says the company figures consumers still will see some savings even if they need to purchase the medical coverage.
Charles Grimsley, general counsel for United Automobile Insurance, a carrier that sells auto insurance mostly to consumers with less than stellar driving records, says it doesn’t offer medical payments coverage. But the company would begin offering it if PIP and the no-fault law weren’t extended.
Grimsley acknowledged that some of the savings provided by eliminating the required PIP coverage would be offset by possibly higher premiums for bodily injury coverage, which drivers should purchase to cover damages in case they cause an accident with injuries. Another cost would be adding medical payments coverage if they didn’t have health insurance.
While insurers are busy estimating the PIP savings — State Farm has already filed rates showing an average statewide 16 percent reduction — the fight is far from over in Tallahassee.
Hospitals would like to see the current law extended — with reforms to thwart fraud — because they fear drivers without healthcare coverage will end up in emergency rooms. The Florida Hospital Association, which would like the no-fault law extended to 2010, fears eliminating PIP could create a 350 million dollar shortfall for hospitals.
A bill passed the Senate Banking and Insurance Committee last week that extended the no-fault law until 2009 but implemented some of the limits on fees and utilization that insurers have been demanding for several years now.
For instance, the bill would pay 200 percent of charges allowed by Medicare for various treatment and services. Also, service and treatment could be limited to emergency-room and in-hospital facilities.
BILL PROPOSAL
Sen. J.D. Alexander, R-Lake Wales, has introduced a bill that would require insurers to offer medical payments coverage of $ 25,000 per person and $ 50,000 per accident.
But unlike PIP, which is broad coverage with no fee or utilization limits, the benefits envisioned in Alexander’s bill would cover only emergency-room or in-hospital treatment during the first 72 hours after an accident. But it wouldn’t cover other treatment such as rehabilitative services and chiropractic doctors.
”This is a bit of a different approach,” says George Grawe, general counsel for Allstate Floridian. “It would absolutely knock out a lot of treatment that’s not necessary.
”Some lawmakers are concerned about those folks who don’t have any kind of medical coverage. This bill tries to address that need,” Grawe adds.
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Auto insurance: What gets covered
Only these two coverages are now required by state law for every car on the road:
� Personal injury protection, or PIP, pays 80 percent of medical expenses and 60 percent of lost wages up to the limit of coverage regardless of fault in an accident. A minimum of $ 10,000 is required.
� Property damage liability covers damage causes to another person’s property, including, building, fence or animal. A minimum of $ 10,000 is required.
But there are several optional coverages, including:
� Bodily injury liability — covers medical expenses beyond the $ 10,000 PIP benefits for people injured in an accident the driver causes.
� Collision — pays for repairs to vehicles caused by accidents; can elect deductibles of $ 250, $ 500 or $ 1,000.
� Comprehensive — pays for other damage, such as fire, theft windstorm vandalism or flood; can elect deductibles of $ 250, $ 500 or $ 1,000.
� Uninsured motorist — provides medical benefits and lost wages to driver or passengers in an accident caused by another driver with insufficient or inadequate insurance coverage. It’s usually sold in increments of $ 15,000 per person and $ 30,000 per accident.
� Medical payments — provides additional medical benefits beyond PIP coverage; sold in increments from $ 5,000 to $ 20,000 depending on insurer. Currently pays a driver’s medical expenses up to limit purchased.
NOTE: If a car is financed, lenders may require drivers to buy several optional coverages, including collision and comprehensive benefits.
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