South Florida Sun-Sentinel Personal Finance Column: End of No-Fault Likely to Require More Coverage

By Harriet Johnson Brackey, South Florida Sun-Sentinel

Sep. 16--Oh, fun. Now is the time to review your auto insurance coverage.

Starting next month, unless something happens in Tallahassee, the requirement that all Florida licensed drivers carry $10,000 in personal injury protection -- called PIP -- will expire. The no-fault system will end.

That may reduce your insurance premium, but you will be taking on more risk than you have now. As a result, you may want to buy more coverage. And you need to be prepared for what the rest of Florida's drivers will do.

"For the type of clients that I insure, they are going to continue buying coverage, but there's going to be a segment of the population that stops carrying automobile insurance altogether," predicts Alex Soto, who heads InSource Inc., a Miami insurance agency. Soto is also president of the Independent Insurance Agents & Brokers of America, a trade group.

That's a frightening thought. And so is this one: "Without no-fault, you may find you are underinsured," says Paul Mack, president of The Mack Insurance Group in Deerfield Beach.

Here's what you need to know:

PIP stays on your auto policy until your policy expires. So if your renewal date is November or January or any date after Oct. 1, 2007, PIP will remain until then. If you get into an accident Oct. 2 or any other date before the policy renews, your insurer may use the PIP coverage to provide medical benefits. If the insurer has notified you that it will cancel that coverage, on the other hand, then you don't have it.

You can, of course, call your agent and delete PIP after Oct. 1. That might save you something in the range of 15 percent of your premium, insurers say.

After Oct. 1, your auto insurance will not provide the same protection as it does today. Right now, PIP kicks in to handle the first $10,000 of medical bills, a portion of lost wages and a death benefit. You don't have to sweat it. After Oct. 1, you may have to sue someone to get your bills covered. If you have health insurance, your health insurer will cover your bills initially, but then you'll have to seek reimbursement from the at-fault driver.

Or, if you are the driver found to be at fault in an accident, you could be the one sued. Your personal health insurance does not pay anyone else's bills.

Even your own auto insurance company could come after you. Florida Chief Financial Officer Alex Sink's "Life Without No Fault Insurance" guide says that even if your policy initially pays for the other driver's medical bills, and you are later found not to be at fault, your insurance company may expect you to get reimbursement from the other driver who caused the accident. You can read more on her Web site, www.myfloridacfo.com.

Consider adding medical and bodily injury coverage to your auto policy. The first one is to cover your own medical bills and bodily injury coverage is for the injuries you cause to others. A medical expense or med-pay provision "is very important especially for those who don't have any other health insurance coverage," said Ron Bartlett, a spokesman for Direct General, a Nashville, Tenn.-based insurance company that does business here under the name Florida No-Fault. Insurance companies say that even for those who do have health insurance, med-pay can be used to cover deductibles and co-payments.

The point of bodily injury coverage is, if you are at fault in an auto accident, you may be forced to pay the other person's medical bills out of your own pocket.

If you don't have uninsured motorist coverage, think about getting it. The driver who didn't buy insurance isn't likely to pony up to cover your damages. Collision coverage may make sense, too.We certainly have our share of uninsured drivers in South Florida, no matter what the law says. When PIP expires, it is widely assumed that the number of uninsured motorists will increase.

That is because, under current law, if your policy lapses, the insurance company has to tell the state. That requirement goes away when PIP ends. And, although you'll still have to show proof of insurance when registering a car or after an accident, the head of the Florida Department of Highway Safety and Motor Vehicles has said the department will no longer suspend licenses of those whose policies lapsed. Insurers fear plenty of people will get a policy to get a license, then drop it.

The best strategy: Talk all of this over with your insurance agent and consider what you can afford. If you bulk up your auto coverage, any savings on PIP could disappear.

"Possibly, while you save money because you're no longer buying PIP, somewhere down the road, uninsured motorist coverage may go up, bodily injury and liability may go up," said Sam Miller, spokesman for the Florida Insurance Council. "None of this is really quite clear."

Oh, yes it is. This is Florida and we're talking about insurance. Since when has the price ever gone down?

Harriet Johnson Brackey can be reached at or 954-356-4614.

Watch Harriet Johnson Brackey on PBS. Her next appearance on the Nightly Business Report's Money File segment will be Wednesday. The show airs at 7 p.m. on WPBT Channel 2.

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