Lawmakers consider big changes to auto insurance. Here’s who wins, loses.

Under proposals being considered by the Florida Legislature, drivers who already pay for extra insurance protection would see their rates go down.
Under proposals being considered by the Florida Legislature, drivers who already pay for extra insurance protection would see their rates go down. Miami Herald file photo

Getting auto insurance would get a lot more expensive for those who can least afford it in Florida — those living paycheck to paycheck — under a pair of proposals gaining traction in the Legislature.

Drivers who can only afford the bare minimum of insurance to keep their cars on the road would have to pay, on average, $250 more a year for coverage under a House plan. Under a Senate plan they’d have to come up with nearly $323 more a year.

For other drivers who already pay for extra protection for insurance, their rates will go down, at least under the plan the House is championing. Drivers who pay for bodily injury coverage now would see their bills drop by an average of $81 a year.

No one will be happier than Miami-Dade residents, where personal injury protection insurance rates are highest. Those already with bodily injury insurance would see their rates drop by an average of $259 a year.

The rate shock for those at the lower economic end would be worse in some counties where the kind of coverage the Legislature wants to require is more expensive because of traffic density, percentage of uninsured and accident rates.

In Broward County, getting car insurance would cost $265 more on average for those who have the bare minimum coverage, according to a statewide report commissioned by the state Office of Insurance Regulation. In Miami-Dade, those without bodily injury coverage will pay $70.64 more per year, the lowest jump of any county in Florida.

“If you take the folks who are paying the least, because that is all they can afford, these are the people who are going to see increased rates,” State Rep. Jay Fant, R-Jacksonville, told the Herald/Times.

Still, concerns about costs to consumers have done little to slow momentum on one of the top issues for the insurance industry — scrapping the state’s current no-fault insurance system. Currently, drivers and passengers get medical injuries and car damages paid for up to $10,000 no matter who is at fault in an accident. Drivers have to pay an additional cost — which varies greatly from county to county — to insurance companies to pay for that coverage for personal injury protection, or PIP.

Coverage for bodily injury, however, is not currently required. That costs extra.

If the current system is eliminated, insurance companies would save millions of dollars in what they say are often questionable medical injury claims they get stuck paying. They say that then forces them to pass on rate increases to consumers. A House bill (HB 1063) has already cleared its first hearing and the Senate proposal (SB 1768) could be heard in a committee as soon as next week.

But the bill has major hurdles to overcome. Doctors and hospitals are girding for a fight if the state eliminates mandatory coverage for PIP. Eliminating PIP would mean that the $10,000 drivers now get paid toward medical costs though their insurers might not be there for them to pay for injured drivers. That could leave hospitals and doctors with more unpaid bills to collect.

Under both the initial House and Senate proposals, Florida would no longer require drivers to get PIP. Instead drivers would have to carry enough bodily injury coverage to pay $25,000 of injuries to another person, and $50,000 of injuries to two or more people. Most drivers in Florida already have that type of coverage or better. But they aren’t required to have it. Both House and Senate plans require it.

While they concede that the poor and those who just want to have less insurance coverage will have to pay more, those backing the bill say it’s unavoidable when ensuring that everyone has adequate coverage on the roads, especially if they cause an accident.

“What we are saying, when people operate a vehicle on the road in Florida, you are operating a dangerous instrument that can cause significant bodily harm and damage,” said Rep. Erin Grall, a Vero Beach Republican who is leading the debate in the House. “And there is a minimum threshold of coverage that our residents should have to have.”

Grall emphasized that nearly 95 percent of drivers who have adequate auto insurance will save money on premiums. She said it was no more than 7 percent of the population that cuts corners by not paying for bodily injury coverage. They are the ones who would face the rate increases, she said.

Florida Legislature wants to override local rules.

However, Mark Delegal, a lobbyist for State Farm Insurance, warned that the percentage of those who would pay more could actually be closer to 15 percent. He said to avoid that, Grall’s bill has to go further to protect the insurance industry from bad faith lawsuits so the industry can cut rates further for drivers.

No one wants to stick it to those with less means, said Sen. Tom Lee, R-Thonotosassa. But he said many drivers currently don’t have enough insurance to cover the damage they cause if they are at fault in an accident.

“Rates for them would have to go up under any system,” Lee said.

State Rep. Blaise Ingoglia, a Hernando Republican who is also chair of the Republican Party of Florida, worries that if the state makes it too expensive, more will try to just go without coverage. He said that would put more uninsured drivers on the road in a state that already has one of the highest percentages of uninsured drivers in America. Ingoglia and Fant both voted against Grall’s bill in a committee earlier this week.

But while parts of the House and the Senate proposals are similar in ending PIP, Lee’s bill differs in one big way. Lee proposes that if Florida does away with PIP coverage, it has to have some system in place to help hospitals and doctors get some costs paid. He wants insurance policies to have a mandatory $5,000 that would go to paying health care providers after an accident. Otherwise, he said hospitals will see a major cost shift to them, which could result in higher health insurance rates.

But Grall and House leaders are adamant that their bill won’t include this added provision. Grall said it is up to private insurers to offer that coverage and people to buy it on their own.

Completely ending PIP is a dramatic change after decades of trying to revise PIP, which was intended to keep car accidents from clogging up the legal system. The $10,000 of medical coverage has been the same since 1979.

The system has invited fraud, where people stage accidents to claim injuries to get access to the $10,000 that each person injured in an accident can receive. In 2012, the Legislature did a major rewrite of the law to cut down on fraud. After that reform package, PIP rates in Florida dropped 14 percent. But since 2015 the rates have climbed once again.

Grall said with each reform, those who want to abuse the system find new ways to do it. She said it is time to just end the policy altogether and try a new program like what she is proposing. Philosophically she said the state has to get out of a no-fault system, to one that makes “personal responsibility” for causing an accident paramount.

“I would say the original premise of PIP has in fact failed,” Grall said.

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Who wins, who loses

For people who already have adequate bodily injury coverage this is how much their rate would drop if the state eliminates mandatory PIP and requires people to carry bodily injury protection.

Statewide: $80.13

Broward: $115.40

Miami-Dade: $258.74

Monroe: $4.47

For people who don’t already have bodily injury coverage, which pays for medical expenses, this is how much their rates would go up on average if the state eliminates mandatory PIP.

Statewide: $250.27

Broward: $265.26

Miami-Dade: $70.64

Monroe: $283.37

Pinnacle Actuarial Resources for the Florida Office of Insurance Regulation