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No Fault Auto Insurance Repeal Stalls Over ‘Bad Faith’

Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.
The Florida Channel
Tom Lee, R-Thonotosassa

Florida’s no-fault auto insurance system might avoid repeal for another year as lawmakers fight over whether to slap “bad faith” litigation issues in the proposal. 

The House Government Operations & Technology Appropriations Subcommittee voted 13-4 on Tuesday to end the no-fault system, which requires motorists to carry personal-injury protection, or PIP, coverage. The bill (HB 779) would require motorists to carry bodily-injury coverage.

But a short time later Tuesday, the Senate version (SB 378) did not come up as scheduled in the Senate Banking and Insurance Committee.

The proposal, at least for now, appears stalled over a proposed amendment designed to restrict “bad faith” lawsuits, which involve allegations that insurers have not properly looked out for the interests of their customers.

A bad-faith provision isn’t included in the House bill, and Senate sponsor Tom Lee said he had no intention of bringing up his bill because of the amendment. He objected to the same bad-faith amendment being added to a separate insurance measure sponsored by Sen. Jeff Brandes, R-St. Petersburg.

“I spent 10 hours on this other bill,” Lee said of Brandes’ bill. “Provision after provision after provision, and then all of a sudden, when it's all agreed to, now this amendment pops up. Nobody talked to me about it.”

Brandes’ bill had to be postponed after Lee objected. Lee, R-Thonotosassa, said after the meeting he couldn’t support the amendment, which was the product of “people above my pay grade.”

“If that's the best we can do here in the Senate, then PIP is going to have to wait, you know, survive another year,” Lee said.

Brandes said the no-fault bill won’t get back on the committee agenda without addressing bad-faith cases, which he added are part of a wider need for lawmakers to address issues in the insurance industry, including problems in the property-insurance industry.

“This is why I'm saying we're headed towards a special session on insurance,” Brandes said. “It's going to be all-hands-on-deck for Florida because we're seeing rates rise. We're seeing coverage is being limited. We're seeing insurance companies not rewriting business of the people. Less people are putting new roofs on.”

Insurers and business groups have sought for years to put more restrictions on bad-faith lawsuits and have sought to tie it to the no-fault auto insurance issue.

Lawmakers for years have debated whether to get rid of the system, which requires motorists to carry $10,000 in PIP coverage to help pay medical bills after accidents. The $10,000 PIP coverage amount has been unchanged since 1979.

The House this year has moved to include a Senate proposal that medical-payments coverage, known as “MedPay,” be offered to consumers. Such coverage could help pay medical bills if motorists are involved in accidents.

House sponsor Erin Grall, R-Vero Beach, has said bad-faith changes would make the proposal “more complicated than it needs to be.” On Tuesday, Grall said she remains open to adding bad-faith language but questioned if there is a “landing spot” for such a provision.

The House and Senate proposals would move away from the PIP requirement and, starting Jan. 1, mandate that motorists carry bodily injury coverage. The bills would require a minimum of $25,000 in bodily injury coverage for the injury or death of one person and $50,000 for injuries or deaths of two or more people. The proposals also would retain an existing $10,000 financial responsibility requirement for property damage.

Policyholders would also be given a chance to reject medical payments coverage starting at $5,000, with deductibles from zero to $500.

A 2016 report by the Florida Office of Insurance Regulation projected that drivers would see a 5.6 percent savings by shifting to a bodily-injury coverage requirement. A study two years later by the actuarial consulting firm Milliman showed an average increase in premiums of $67, or a 5.3 percent increase.

Grall said motorists should see an 8.1 percent savings and that including bad faith language would only provide about a 1 percent savings.

Progressive Insurance estimates motorists could see premiums increase $312 to $348 a year under the change from PIP to mandatory bodily injury coverage.