TALLAHASSEE -- Florida residents pay the fourth highest auto rates in the nation — an average of $2,059 a year, a 2019 report has found. Watchdog group the Florida Justice Reform Institute (FJRI) says PIP, Florida’s personal injury protection mandate, bears much of the blame for the state's high rates.
The State of Auto Insurance, an annual report from the auto insurance comparison website The Zebra, says Michigan residents pay the highest average auto insurance rates in the nation, a whopping $2,693 a year, followed by Louisiana, Rhode Island and Florida. Maine residents pay the lowest rates, an average of $896 a year.
William Large, president of FJRI, says there are two reasons driving up Florida auto insurance rates: third party bad faith claims; and litigation abuse in the personal injury protection (PIP) arena.
William Large, president of the Florida Justice Reform Institute
“Perhaps PIP is no longer a viable system,” Large said.
All Florida drivers are required to purchase personal injury protection (PIP) as part of their auto insurance policies. PIP allows state drivers to claim up to $10,000 in immediate medical coverage after an accident, eliminating the need to go to court in order to determine who is to blame.
“PIP coverage makes the individual responsible for their own injuries in an accident, regardless of fault,” according to the Florida Office of Insurance Regulation (FOIR) website.
Because Florida has streamlined the claims process with PIP, Large believes that too many claims are being filed, and that too many of the total claims filed are for severe injuries.
“Frequency and severity drive litigation claims which, in turn, drive insurance premiums,” Large said.
The amount of PIP claims and the number of PIP payments has skyrocketed in recent years, even though the number of drivers and auto accidents in Florida has remained relatively constant, according to the FOIR website. PIP accounts for roughly 2 percent of Florida’s collected insurance premium, yet PIP claims account for nearly half of fraud referrals.
Dishonest doctors, clinics that bill for expensive and unnecessary medical treatments and unscrupulous lawyers who file unwarranted lawsuits are parts of the problem, and Large says Florida policymakers should consider much-needed reforms.