Q&A: Who pays when no-fault insurance law changes?

Rates may drop, but someone still has to pay. Drivers need to check their policies now.

By JENNIFER LIBERTO and TOM ZUCCO, Times Staff Writers
Published August 15, 2007

TALLAHASSEE - After being on the books for 36 years, Florida's no-fault auto insurance laws that require all drivers to buy personal injury protection, or PIP, are set to end.

The official expiration date is Oct. 1, but this week is pivotal.

Auto insurers must send out notices to their policyholders at least 45 days before rates change, so unless the Legislature acts at the last minute, no-fault will expire.

State Farm, Florida's largest auto insurer, already has sent out one round of notices and other carriers are doing the same. Whether insurance companies have guessed wrong remains to be seen. But the process is in motion.

How could the end of no-fault affect Florida's nearly 13-million motorists? Here are some questions and answers.

What is PIP?
PIP stands for personal injury protection and is currently part of an auto policy that covers medical coverage for all Florida drivers, no matter who is at fault. Unless lawmakers act, that mandated protection disappears on Oct. 1. PIP covers the driver of the car and the passengers.

Will this take effect all at once?
No. Most policies won't change until they come up for renewal. But experts strongly recommend you talk to your insurance agent so you understand what's covered and what's not before you renew.

What happens if I'm in an accident after Oct. 1?
A law enforcement officer will have to determine fault, and then the at-fault driver will be responsible for damages. If the other driver has his or her own insurance, that company pays. If not, your insurance company may have to file a lawsuit to recover damages.

You can also buy additional coverage, like uninsured motorist coverage, so that your insurance company will pay to repair your car if somebody without auto insurance hits you.

What if I'm injured?
Again, that depends on who police say is at fault and whether the person who hit you has insurance. It also depends on what kind of coverage you have through your auto insurance. Your health insurance may also cover some expenses.

How many uninsured motorists are there in Florida?
About 750,000, according to the state. Nearly 12-million Florida motorists are insured.

What kind of auto insurance coverage do I have to buy by law?
That's still unclear. When no-fault disappears, the question remains as to whether drivers will be required to buy insurance covering property damage to cars. While auto insurers say they believe the sunset doesn't affect laws requiring drivers to buy property damage coverage, the Department of Highway Safety and Motor Vehicles says they believe property damage laws will also disappear, according to DMV spokeswoman Julie Baker. Potentially, Florida could join a few states that don't mandate auto insurance coverage. However, the department is still looking into it.

Will my auto insurance rates go down?
Regulators say yes, because eliminating PIP means auto insurers have less liability. State Farm Mutual, AIG and Allstate have requested rate decreases for auto customers, and most other insurers are expected to do the same.

How much could I save?
Since most companies appear to be filing for decreases in the 15 to 17 percent range, the savings for a two-car household will be about $450 a year.

Will my health insurance rates go up?
Hospitals and health insurance companies say yes; auto insurance companies say no. Both appear to have numbers to back them up.

What about bodily injury protection?
Most policies carry some kind of bodily injury coverage, but it's not mandatory now and won't be after Oct. 1. This coverage protects you if you injure someone in an accident.

What are the chances the Legislature is going to revive the mandatory no-fault laws during the special session?
The Legislature has had four years to come up with a solution to prevent the state's no-fault laws from going away. Given those odds, it doesn't look good, say those who are watching the issue closely. Even Gov. Charlie Crist and state CFO Alex Sink have said the chances are slim.

What advice do regulators have for people with more questions?
"There's definitely going to be a lot more responsibility on the part of the driver if PIP sunsets," said Tom Zutell, a spokesman for the Florida Office of Insurance Regulation. "And it's going to be confusing at first. That's why people have to talk to their agents."

Times staff writer Helen Huntley contributed to this report.

FAST FACTS: Check your insurance
Now is a good time to take a quick spin through your auto and health insurance policies. On your auto policy, check to see what the limits are for property damage, bodily injury, and uninsured motorists. On your health insurance policy, check to make sure you're covered for injuries in an auto accident, and how much coverage you have. Call your insurance agent if you have any questions.

Florida not alone
States that have repealed their no-fault laws:

• Nevada: effective 1974, repealed 1980.
• Pennsylvania: effective 1976, repealed 1984, re-enacted 1990.
• Georgia: effective 1975, repealed 1991.
• Connecticut: effective 1973, repealed 1993.
• Colorado: effective 1974, repealed 2003.

Source: Insurance Information Institute

[Last modified August 15, 2007, 01:14:34]