Florida No Fault Insurance – No Fault Auto Insurance Laws in FL and Other States

What is Florida no fault insurance? What exactly is no fault insurance in the first place? Where is it available and what are its advantages and disadvantages? If you life in FL and have questions about how the Florida no fault car insurance laws work or really if you live in any one of the twelve states that use a no fault system, knowing the answers to these questions will help you understand how your car insurance policy works. Read on to learn some of the basics of no fault car insurance in Florida and in other states.WHAT IS NO FAULT INSURANCE?Under ‘pure’ no fault insurance each driver would be completely covered by his own auto insurance (up to his policy limit), and drivers would be barred from suing another driver regardless of the severity of the accident, the injuries incurred and even if a death were involved.However, no state uses ‘pure’ no fault insurance. In general, no fault is an auto insurance system in which both drivers must carry insurance for their own protection, and their ability to sue other drivers for damages is regulated by certain limitations. States impose these limitations by determining which cases are permitted to go to litigation.Under this system, motorists may sue for severe injuries and pain and suffering. Some states MI, NJ, NY, and PA use a verbal threshold system, where the severity of the injury is defined in verbal terms (verbal threshold). Other states use a monetary threshold, a set dollar amount in medical bills and lost wages that must be met before a motorist may sue for damages. Insurers generally favor laws that provide for a verbal threshold on suits instead of a dollar threshold. Setting dollar targets for medical expenses may encourage the submission of fraudulent claims in an effort to reach the total dollar amount whether the expense it justified or not.WHY THE NEED FOR NO FAULT INSURANCE?The desire for a new way of handling auto insurance claims rose out of a dissatisfaction with the way in which insurance claims were processed. This dissatisfaction was not only on the part of those purchasing auto insurance, but also on those companies and agencies marketing auto insurance and the state officials regulating it. The issue focused on the often expensive and time consuming process of determining who was at fault in the accident and who was legally and financially responsible.The delays in determining liability caused legislation to be introduced in many states in the 1970′s that allowed victims to recover financial losses such as medical and hospital expenses and lost income from their own insurance companies. This became a forerunner of today’s no fault insurance.The concept of no fault insurance was first widely introduced to the public in the early 1900′s. Its two main tenants, stemming waste, inequities, and lengthy delays in the liability system, and providing affordable coverage for medical care and rehabilitation costs had its appeal among the populace. However, the process that was to be put into place to pay for no fault insurance was anything but appealing to the voters. A pay-at-the pump initiative was introduced as a way to pay for no fault insurance by collecting a fee on gasoline sales. In every state in which the initiative was considered, the plan to tax gas in order to fund no fault was defeated. Legislature in many forms was even introduced at the Congressional level but it never made it to a vote.HOW DOES NO FAULT WORK?The ‘no fault’ part of an insurance plan is usually called PIP, Personal Injury Protection, or it is sometimes referred to as OBEL, Optional Basic Economic Loss. Different state’s PIP’s cover different aspects associated with personal injury. Generally, the coverage is related to medical expenses, loss of wages, and compensation for loss of services incurred because of an auto accident. Funeral costs and death benefits are also usually covered.STATES THAT HAVE NO FAULT INSURANCE LAWSMI, NJ, NY, PA, HI, KS, KY, MASS, MI, ND, UT, and DC and Puerto Rico have a no fault insurance system. Florida’s no fault insurance expired Oct. 1, 2007 but was re-enacted in Jan of 2008. However, when the system was re-instated, significant reforms to curb fraud were added. This may have been due in large to a letter sent by Chief Financial Officer Alex Sink in July of 2007 to the Governor and state officials. This letter stated that more than 3,000 complaints about PIP fraud had been received in the last twelve months and 329 cases were opened with 225 convictions being obtained. Under the former system, unscrupulous medical clinics and attorneys could run up medical costs for minor accidents.The following states had no fault Insurance in place at one time and chose to repeal it, with the exception of Pennsylvania who repealed theirs and then reenacted it.Nevada: – effective 1974 – repealed 1980
Pennsylvania: – effective 1976 – repealed 1984 – reenacted 1990
Georgia: – effective 1975 – repealed 1991
Connecticut: – effective 1973 – repealed 1993
Colorado: – effective 1974 – repealed 2002WHAT ARE THE BENEFITS OF NO FAULT INSURANCE?No fault is intended to reduce legal and administrative fees that are associated with insurance claims and reduce premium costs. Also, the long delays associated with determining which party is at fault and the haggling between insurance companies over who is financially responsible is done away with. This plan also insures that no matter who is responsible for an accident each party will be covered to his policy limit.CRITICS OF NO FAULT INSURANCECritics point out that this insurance system carries some of the highest insurance premiums in the nation. The liability issues that still remain intact actually drive premium costs up. States with no fault insurance also carry the highest incidences of fraud and abuse.Another criticism of no fault insurance is that reckless or negligent drivers are not punished because many cases do not go to trial and these drivers may continue to drive irresponsibly.NO FAULT AUTO INSURANCE QUOTESWhether you are in a no fault state or not – it is always a good plan to shop around and compare car insurance quotes at least once every 6 months to insure that you are getting the best deal.

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