Tuesday October 2, 2007

What's up with mandatory PIP car insurance?

The state’s law requiring personal injury protection (PIP) insurance expired Sunday, though the fight is not quite over yet. What does this mean?

First, a primer on the exact changes (and please correct me if I’m wrong leaving out something important). The PIP law required every driver to carry $10,000 worth of protection for anyone injured by or in their car. It made Florida a “no-fault” state: if you’re in a crash with another driver, each drivers’ insurance covers his medical expenses, regardless of who caused the accident. Hence “no fault.” The logic behind this is that it allows everyone to get medical treatment without bureaucratic worries, and theoretically keeps costs low by minimizing lawsuits.

The downside of this is that if you already have medical insurance, you’re paying for double coverage. Many people who are in accidents that are not their fault also unsurprisingly report their insurance rates going up afterwards. So, the new law allows drivers to carry insurance for property damage only, should they so desire. Under the new system, if you’re in an accident, your regular health insurance will pay your medical bills, presumably recovering their costs from the person who caused the accident, in court if necessary.

This would be great if 1) everyone had health insurance and 2) everyone was smart enough to get insurance to cover injury they cause to others. To the extent that those two things are not true (only 80% of Florida residents currently have medical coverage; and don’t even get me started on #2), the new law is going to wreak havoc. The upside is savings for those that are properly insured, yet drive carefully enough not to actually cause accidents. More importantly, it will tend to hasten a state of affairs where we are forced to confront the larger medical/insurance disaster facing the country, as a much larger proportion of car accident victims arriving in hospitals will have no insurance covering them.

This highlights the real clusterfuck aspect of this change, which is that medical/insurance lobbies are essentially behind both sides of the issue. On the anti-PIP side are companies who are concerned about insurance fraud under the old system, which could easily pump money out of the system, $10,000 at a time, with simple staged accidents and shady doctors. On the other side are the doctors and hospitals worrying about the uninsured trauma cases they’ll be forced (god forbid) to treat and not be able to collect payment for.

That these are the two sides battling over something this important (rather then what’s best for people who’s just been in a serious car accident) is a sure sign of a broken system. I’m almost tempted to let them do away with it, let the situation come to a head, and then fix it from the bottom up.

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  1. Keeping PIP anyway    Tue Oct 2, 03:58 PM #  

    What my health insurance will cover is so unpredictable and asinine (won’t cover anything to do with pregancy/birth?!?), that I have NO faith that they’ll lend a hand if I’m in a car accident. I’m keeping my PIP.

  2. Magic City Harvard Lawyer    Tue Oct 2, 05:23 PM #  

    Interesting thoughts on the end of PIP — the battle of interest groups on this issue is certainly a spectacle, as I’ve commented on my own blog here

  3. b.a.c.    Tue Oct 2, 06:22 PM #  

    Let the good times roll? lol

  4. cohen    Tue Oct 2, 11:01 PM #  

    great ,,,im no longer breaking the law

  5. tommy    Wed Oct 3, 05:04 PM #  

    My auto insurance company raised the rate to compensate for no PIP. Double penetration. They said “these things happen!”