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Changing PIP Causes Confusion

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By RUSSELL RAY, The Tampa Tribune

Published: November 7, 2007

Comment: Did You Drop Your Coverage?

TAMPA - A month after state lawmakers ended their battle over Florida's no-fault auto insurance law, motorists are still struggling to understand all of the changes.

Some have come to the wrong conclusion because they've decided to carry no coverage at all, insurance agents say.

"They're under the impression there is no pressure for them to have insurance today," said Jack Sieling, who owns Fifth Avenue Insurance Agency in St. Petersburg. "We usually explain to them that's not the case."

The confusion came after the Legislature and Gov. Charlie Crist decided to bring back the state's no-fault law effective Jan. 1. Thinking there is no requirement to carry auto insurance until January, some drivers have either stopped paying their premiums or chosen not to renew their policies.

Although it's true that $10,000 in personal injury protection coverage won't be required until January, Florida motorists are still required to carry at least $10,000 in property damage liability coverage, which pays for the damage you cause to another person's property.

Although there's no way to know exactly how many people are without coverage right now, there's no doubt about the consequences. Anyone caught driving without the mandatory property damage liability coverage will face driver's license suspension and a reinstatement fee ranging from $150 to $500.

"One of my insured said a friend of his with three cars was saying, 'Hey, did you hear we don't have to buy insurance until January?'" said Arnie Vasquez, president of the Specialty Agents of Florida.

"That's the impression a lot of them are under," said Vasquez, whose trade group represents agents who cover drivers with low incomes, bad credit or spotty driving records. "If I didn't know better, I would get the same impression from reading all the newspaper articles."

Florida's no-fault law, which required drivers to buy at least $10,000 of personal injury protection, or PIP, expired Oct. 1, after legislators deadlocked over changes designed to reduce fraudulent claims. Lawmakers later resolved their differences and voted last month in special session to restore the PIP requirement effective Jan. 1.

PIP pays for medical costs regardless of fault.

Although PIP is no longer mandatory, the requirement to carry property damage liability coverage never went away, a fact some motorists never recognized.

The confusion is "causing some folks to not put the stamp on the envelope and mail in that monthly payment," Sieling said. "I'm getting some indication of that."

2 Largest Insurers Don't See Trend

Still, not everyone is seeing this as a significant trend. State Farm and Allstate, the state's two largest auto insurers, said their agents haven't had a problem with customers halting payments or failing to renew because of confusion over mandatory coverage.

"There might be pockets here and there, but we haven't seen that by and large," said Allstate spokesman Adam Shores. "Part of that is because we've been aggressively communicating information to our agents and encouraging them to share that with their customers."

Insurers have until Nov. 15 to notify their policyholders that $10,000 of PIP coverage will be added to their policies come January. PIP generally accounts for about $150 to $200 a year of a typical policy's annual premium.

AAA is concerned that consumers confused by the changes in auto insurance requirements will not pay for PIP when it reappears on their bills. If that happens, policies will be canceled and more uninsured motorists will be driving Florida's roads and highways, said Toni Germinario, managing director of operations for AAA Insurance Agency.

"If you think of all the changes and all the promises of rate decreases, people are expecting to get money back, not to be asked to pay more money," Germinario said. "People are just so confused."

Some insurance companies are beginning to offer PIP coverage to customers ahead of the Jan. 1 deadline. Other companies won't begin providing the coverage until it again becomes mandatory.

Under legislation Gov. Crist signed into law last month, the no-fault system still applies to accidents between drivers who still carry PIP coverage, which means the cost of treating your injuries will still be covered no matter who is at fault.

If you don't carry PIP and you're in an accident before Jan. 1, it will be handled under a fault-based system, which means the police and the courts will determine who caused the accident before insurance benefits are paid.

Driver's Licenses Reinstated

Ironically, the expiration of the PIP requirement forced the Department of Highway Safety and Motor Vehicles to reinstate driver's licenses for 275,000 people who had their licenses suspended before Oct. 1 for not carrying PIP and property damage insurance.

"When PIP no longer was mandatory, anyone who had an outstanding license suspension for failure to comply with that law were automatically reinstated," said Dave Westberry, the department's deputy executive director.

The department regained its authority to enforce the requirement to carry property damage insurance after Gov. Crist signed the new no-fault law last month and is sending notices to drivers.

Before Oct. 1, when PIP was still required, about 5 percent of the more than 15 million drivers in Florida were uninsured, Westberry said.

"That makes us one of the highest insured states in the country," he said. "Five percent is a very low uninsured motorist rate."

Questions And Answers

Q: Am I still required to carry auto insurance in Florida?

A Yes. Although personal injury protection is not required until Jan. 1, drivers are still required to carry at least $10,000 of property damage liability coverage, which pays for the damage you caused to another person's property.

Q: What are the penalties for driving with no insurance in Florida?

A: The state can suspend your driver's license, tag and registration for up to three years or until proof of insurance is provided. Also, you will pay a fee, or a penalty, ranging from $150 to $500, to reinstate your license.

Reporter Russell Ray can be reached at (813) 259-7870 or rray@tampatrib.com.

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