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Florida’s PIP Insurance Moves One Step Closer to Repeal

by | Jun 29, 2021

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Update June 30, 2021

Gov. DeSantis quickly issued a veto on SB 54 less than 48 hours after receiving the bill. Though noting the many flaws in Florida’s current No-Fault system, DeSantis wrote:

“[the proposed law] does not adequately address the current issues facing Florida drivers and may have unintended consequences that would negatively impact both the market and consumers.”

On Monday, June 28 the Florida Legislature finally placed Senate Bill (SB) 54 on the desk of Governor Ron DeSantis. The Governor has until June 30, 2021 to sign or veto the bill. If signed by Governor DeSantis, the bill would go into effect on January 1, 2022.

Drivers, insurers, and attorneys alike have been waiting anxiously for updates on SB 54’s status ever since it passed the legislature at the end of April. The bill seeks to revise Florida’s motor vehicle insurance statutes. Most importantly, perhaps, it would repeal Florida’s Motor Vehicle No-Fault Law, often referred to as Personal Injury Protection or “PIP” coverage.

What Is PIP Coverage?

Florida’s “No-Fault Insurance” system has been in place for over 50 years. Its passage was intended to lower the number of uninsured drivers, reduce the burden on the courts, and get payments to injury victims more quickly.

Under Florida’s current Personal Injury Protection (PIP) statute, drivers are required to carry a minimum of $10,000 Personal Injury Protection (PIP) coverage and $10,000 Property Damage Liability coverage.

However, Florida currently has one of the highest uninsured motorist rates in the country at around 20%, plus the highest car insurance premiums. Clearly the status quo is not achieving the desired ends.

As such, lawmakers have passed a much-needed revision to Florida’s five-decades’-old No-Fault laws.

New CS/CS/SB 54: Repeal of Florida’s No-Fault Law

SB 54 would put in place an entirely new system for motor vehicle insurance. Florida drivers would have new insurance coverage requirements of:

  • $25,000 of bodily injury (BI) coveragefor injury or death of one person,
  • $50,000 of bodily injury (BI) coveragefor injury or death or two or more persons, and
  • $10,000 property damage liability coveragefor damage to, or destruction of, another’s property.

The bill also increases the required coverage amounts for so-called “garage liability,” for commercial motor vehicle insurance.

Mandatory Offer of Medical Payments Coverage

Insurance companies must offer medical payments coverage (MedPay), which protects the insured, vehicle operators and passengers, pedestrians, and others struck by a motor vehicle for medical expenses. Insurers must offer MedPay coverage at $5,000 and $10,000 tiers, but they can offer additional limits above minimum $5,000 coverage (e.g. $7,500).

The MedPay provisions also state:

  • Insurers must offer a zero-deductible option,
  • Insurers may also offer deductibles up to $500,
  • MedPay must provide an additional death benefit of at least $5,000, and
  • Insurers must hold $5,000 of MedPay benefits for 30 days to pay physicians or dentists who provide emergency or hospital inpatient care.

Importantly, unless a policy holder declines or selects a different MedPay limit and deductible in writing, the policy is presumed to include $10,000-limit MedPay coverage with no deductible.

Pro Tip: Should the No-Fault Law be repealed, it would eliminate with it the restrictions on recovering pain and suffering damages, which currently require bodily injury that causes death or significant and permanent injury. Because this limitation would disappear, SB 54 specifies that legal liability of uninsured motorist coverage includes damages for pain, suffering, disability or physical impairment, disfigurement, mental anguish, inconvenience, and the loss of past and future capacity for the enjoyment of life.

Mandatory Death Benefit

On top of MedPay’s $5,000 death benefit, the new law would require that each motor vehicle insurance policy must also provide a first-party death benefit of $5,000 per deceased individual. This death benefit covers the policy holder, resident relatives, vehicle operators, vehicle passengers, and pedestrians.

Bad Faith Claims against Insurance Companies

Another meaningful change is the adoption of a new framework for all “Bad Faith claims” against motor vehicle insurers for failure to settle. The bill adopts the definition of “bad faith failure to settle” as:

an insurer’s violation of a best practice, which is a proximate cause of the insurer not settling a third-party claim when, under all the circumstances, the insurer could and should have done so, had it acted fairly and honestly toward its insured and with due regard for the insured’s interests. The party bringing the bad faith action has the burden to prove both elements.

Also, under the new standards:

  • Motor vehicle insurers must follow established best practices in claim handling, claim investigation, defense of the insured, and settlement negotiations.
  • Policy holders must cooperate in the settlement process, and
  • A failure to settle cannot be attributed to the claimant’s lack of communication, provided that the claimant makes certain communications to the insurer.

Safe Harbor Provisions

The bill creates certain “safe harbor” provisions that give insurers a reasonable opportunity to investigate and evaluate a claim. These provisions specify that an insurer does not act in bad faith if it:

  • Follows best practices,
  • Does not initiate settlement negotiations by tendering applicable policy limits in exchange for a general release of the insured within 45 days after receiving actual notice of the loss,
  • Does not accept a settlement offer within 45 days after receiving actual notice of the loss if the settlement offer provides:
    • The insurer fewer than 15 days for acceptance, or
    • The insurer fewer than 30 days for acceptance where the offer contains conditions for acceptance other than the insurer’s disclosure of its policy limits.

The best practices require that an insurer must initiate settlement negotiations after the expiration of the foregoing safe harbor periods by tendering its policy limits to the claimant in exchange for a general release of the insured, if the facts available to the insurer indicate the insured’s liability is likely to exceed the policy limits.

The bill specifies that the damages in a bad faith action are the amount of the excess judgment and court costs. If the party bringing the bad faith action is the insured or an assignee of the insured, the damages also include reasonable attorney fees incurred by the party bringing the action. Punitive damages may not be awarded.

Setoff on Noneconomic Damages

One of the most impactful consequences of the new bill would be the disappearance of the so-called “PIP setoff.” Under current law, the total compensation awarded to a plaintiff does not include the $10,000 of PIP benefits.

Instead, SB 54 provides the defendant a $10,000 setoff on noneconomic damages in certain situations. This new setoff comes into play if:

  • The injured vehicle operator lacked the minimum required motor vehicle insurance (see above), and
  • The vehicle operator lacked the minimum required motor vehicle insurance for more than 30 days immediately preceding the crash.

There are also specific situations in which the $10,000 setoff on noneconomic damages would not apply:

  • If the at-fault driver was driving under the influence,
  • If the at-fault driver acted intentionally, recklessly, or with gross negligence,
  • If the at-fault driver fled from the scene, or
  • If the at-fault driver was in the process of committing a felony.

Finally, the $10,000 setoff on noneconomic damages also does not apply to wrongful death claims.

Miscellaneous Provisions

There is a smattering of additional provisions in the bill that could be important. The bill variously:

  • Requires insurers to notify policyholders by September 1, 2021, of the new insurance requirements and to allow them to conform their existing coverage to meet the new requirements.
  • Specifies that No-Fault insurance policies issued before January 1, 2022 will be deemed to comply with the new bill’s bodily injury requirements until the end of the policy term.
  • Provides that if a motor vehicle insurer fails to timely provide information related to liability insurance coverage as required by s. 627.4137, F.S., the claimant may file an action to enforce the section, and is entitled to an award of reasonable attorney fees and costs to be paid by the insurer.
  • Allows policyholders to exclude coverage of claims and suits for certain individuals whom they name specifically in the policy.

Competent Legal Representation Is Critical

The Governor has 30 days from the writing of this post to determine the fate of SB 54. If it goes into effect, Florida’s No-Fault insurance law will officially cease to be effective as of January 1, 2022.

Be sure to check back for updates on the status of SB 54 and other significant pieces of legislation.

Given how fundamentally this new bill could impact car accident claims, obtaining competent and experienced legal representation is more important than ever. Call us at 561.372.3800 or submit a contact form to schedule a free case evaluation.

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