Florida No-Fault Law Changes Begin January 1; Intent Is To Curb Fraud, Lower Auto Insurance Costs

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TAMPA, Florida, December 18, 2012 — Beginning on January 1, 2013, legislative reforms to Florida’s No-Fault Auto Insurance Law become effective. For the vast majority of Florida drivers, the changes will be minor. But for those who made a living off staging auto accidents or filing fraudulent insurance claims, the changes are designed to put a big dent in their lucrative, but criminal, line of work.
The intent of the No-Fault bill (HB 119) is to cut the fraud that contributed to increasing auto insurance rates, with an expectation of a positive impact on rates once the new law is fully implemented, said the Insurance Information Institute (I.I.I.).
Beginning in January, there are two primary changes that affect injured drivers and their passengers. First, initial treatment must be sought within 14 days of a car crash. Second, the type of treatment people with injuries choose will depend on the extent of injuries they have sustained.  
  • For medical emergencies, the full medical benefit of $10,000 in Personal Injury Protection (PIP) coverage is available, just as it has been since 1978. Treatment for injuries can be provided by ambulance or at a hospital, or from a physician, dentist, supervised physician’s assistant or advance registered nurse practitioner.
  • For non-emergency treatment, the medical benefit is $2,500. Non-emergencies can be treated by any provider; however, neither massage therapy nor acupuncture will be reimbursed under PIP coverage. If follow-up care for treatment covered by PIP is required, a referral is necessary from a physician, osteopath, chiropractor or dentist.
Changes in the law are intended to curb the dramatic rise in the cost of auto insurance claims and, consequently, the rising insurance premiums that Florida drivers have experienced to pay these escalating costs. An I.I.I. analysis showed the average cost of a No-Fault claim was $5,812 in 2008 and rose to a peak of $8,796 by the end of 2010. Much of this increase was attributed to fraud associated with staged accidents, including illegal or improper medical billing, and increased frequency of lawsuits. These abuses are detailed in a report developed by Florida’s Office of the Insurance Consumer Advocate.
“Because there has been considerable fraud in the No-Fault system, insurers were paying more than they should for claims and drivers were paying more than they should for insurance,” said Lynne McChristian, Florida representative for the I.I.I. “These changes are intended to reverse that trend to the benefit of Florida drivers.”
Any cost savings that occurs as a result of the reforms will impact the PIP portion of auto insurance premiums, said the I.I.I. PIP premium comprises about 20 percent of the overall auto insurance premium. An impact analysis of HB 119, by Pinnacle Actuarial Resources, concluded that PIP premium rates could be reduced by 14 percent to 24.6 percent as a result of the reforms, which is equivalent to an overall auto insurance reduction of 2.8 percent to 5.4 percent overall. These projected savings are contingent upon full implementation of the new PIP laws and the reforms contained in the law working as intended.
Paper on Florida No-Fault Reform: PIP Reform- HB 119
The I.I.I. has a full library of educational videos on its You Tube Channel. Information about I.I.I. mobile apps can be found here.
Insurance Information Institute, 4775 E. Fowler Avenue, Tampa, FL 33617, (813) 480-6446

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