TALLAHASSEE, Fla. - The Florida Legislature passed striking changes to car insurance laws, voting to end the requirement for drivers to purchase no-fault insurance and replacing it with a requirement to purchase minimum levels of injury liability coverage.
Governor DeSantis is deciding whether to sign it or veto it, as he faces strong pressure from both sides.
"Every bill I ever file that makes it through both chambers I expect the governor to sign – this one in particular because 90% of the legislature on both chambers supported the bill," said Pinellas State Senator Darryl Rouson. "It creates responsible roadways. It hopefully will reduce rates."
However, the legislature’s own analysis could not determine how the reforms will impact policyholders, health insurers, or injured drivers.
The analysis cites one study projecting average premiums would drop around 5%, and another study showing average premiums would increase 5% to 50% depending on the coverage drivers currently have.
Florida passed the current no-fault system in the 1970s to streamline court proceedings. Instead of suing over minor crashes, all Florida drivers had to buy no-fault insurance, also called personal injury protection (PIP).
With PIP, if you’re injured in a crash, it doesn’t matter who is at fault. The no-fault insurance covers medical treatment and some lost wages up to $10,000.
But state lawmakers grew increasingly concerned about fraud in the system. Crooks staged accidents and disreputable clinics overcharged to bilk PIP insurance. That ultimately compelled the legislature to pass this bill to get rid of no-fault insurance.
"When you get rid of fraud, then you can reduce rates," said Rouson.
The legislature also added the requirement for drivers to buy injury liability coverage, which protects someone who is injured by an insured driver due to that driver's negligence, to protect people who sustain more serious injuries in accidents.
"I’ve seen many clients who required surgery after being injured in a car accident and they have to pay for that surgery bill because of the fact that the other driver did not carry any insurance coverage," said attorney Matt Noyes. "It’s crazy in Florida that we have been allowed for so long to not be required to carry mandatory bodily injury liability coverage."
Insurance experts say if drivers already buy more coverage than what the legislation requires, their premiums, in theory, should also nudge down.
"This law is going to reduce their premiums from $30 to $60 because they will no longer have to purchase PIP," said Tom Cotton, owner of Hugh Cotton Insurance.
However, around 40% of insured drivers do not buy bodily injury coverage at levels required in the legislation. Cotton said their bills would increase.
"If they comply with the law, they’re going to see an increase in premiums from $200 to $600," he explained.
Noyes added, "I know a lot of people that would rather pay another $350 a year than tens of thousands of medical bills after being injured in a crash because somebody didn’t have any liability coverage," said Noyes.
Florida Chief Financial Officer Jimmy Patronis said many drivers may not think in those terms. He fears many who are low-income may go uninsured and eventually cost all of us. Around 25% of all Florida drivers already drive with no insurance. If that number goes up, he says rates for people who do buy insurance will likely go up in the long run.
"When you increase insurance rates on folks, it’s my experience most people won’t stop paying their cable bill, won’t stop paying utility bills, they won’t stop paying their property tax bill… but they will stop paying their car insurance bills," Patronis said. "And it could be a few years before you see what the fallout of the full effects are."
Some who want to keep Florida’s no-fault system as-is point to Colorado, which scrapped its no-fault system in 2003. Rates went down at first, then years later shot up to among the highest in the nation. But was that because it scrapped no-fault, or because the state legalized recreational marijuana in 2012?
The lawmakers and industry experts are torn, or say it's too hard to tell.
Robert Hunter, the insurance director for the Consumer Federation of America, says, "My best guess is they would stay the same or maybe slightly reduced in average. Unfortunately, they’ll go up for lower-income people, I think."
Hunter was previously one of the nation’s leading advocates of no-fault. Now he believes it has become too susceptible to fraud. In his view, the legislature made the right call to abandon the same system he spent much of his life promoting.
"I still think no-fault is more efficient and pays claim quicker. The problem is the fraud, and so I think you are better off moving away from no-fault," he added.