Florida Premiums May Rise If No-Fault Auto Insurance Sunsets

Floridians may have to pay higher auto premiums -- and health premiums -- if a state law mandating no-fault auto insurance is allowed to expire next month.

Insurers say switching to a tort system, in which the driver at fault in an accident pays, can only benefit consumers because there will be fewer fraudulent claims, lowering costs. But consumers and health care providers are concerned that the savings won't necessarily be passed along to policyholders. And even if auto premiums do fall, this may not offset the reductions in coverage or the cost of any additional auto or health coverage they may need.

Under the current system, policyholders involved in accidents are reimbursed for any damage to their vehicles and any medical expenses -- regardless of who is at fault. They are required to purchase at least $10,000 of a type of coverage called personal injury protection (PIP), which pays for medical treatment, rehabilitation, lost wages and even a funeral service.

By comparison, in a tort system, the driver at fault is responsible for paying the other party's medical expenses as well as for compensating them for loss of wages and "pain and suffering." Currently there are 38 states -- including Colorado, which had its no-fault system repealed in July of 2003 -- that operate under a tort system.

Besides Florida, Michigan, New York, New Jersey, Pennsylvania, Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota, Utah and Puerto Rico mandate no-fault auto insurance.