On April 30, 2021, the Florida Legislature passed legislation repealing Florida’s Personal Injury Protection (“PIP”) Law and amending other portions of Florida Law relating to liability insurance coverage and statutory Bad Faith. The legislation has not yet been signed by Governor DeSantis. However, CSK is providing this initial overview of the automobile insurance portion of legislation due to its relevance to the insurance industry. Another Eblast will follow addressing the amendments to statutory Bad Faith law encompassed in Senate Bill 54.
Mandatory Bodily Injury Liability Coverage Limits
Until now, bodily injury liability coverage was not mandatory for automobiles in Florida. The only mandatory liability coverage was $10,000 for property damage. Effective January 1, 2022, Fla. Stat. §324.022(1)(a)1 requires the owners and operators of motor vehicles in Florida to maintain bodily injury liability limits of $25,000/$50,000 for a single accident. This is over and above the $10,000 property damage limits which is still required by Fla. Stat. §324.0221(1)(a)2. A new section of the Florida statutes was added to provide for a mandatory death benefit of $5,000 covering the owner, driver, resident relatives, and an individual struck by a motor vehicle. Fla. Stat. §627.7261. The required death benefit is now part of the mandatory security required for the owners and operators of motor vehicles in Florida.
Revised Fla. Stat. §324.022(b) then outlines how this financial responsibility requirement can be met. Under this provision, the vehicle owner may self-insure or maintain a motor vehicle liability insurance policy that “provides combined property damage liability and bodily injury coverage…in an amount of at least $60,000 for every owner and operator subject to the financial responsibility required.” Note that a $60,000 combined property damage liability and bodily injury liability is different than a $25,000 per person, $50,000 per accident policy with $10,000 in property damage coverage required under Fla. Stat. 324.022. Must such a policy provide $60,000 in property damage coverage or $50,000 in person coverage per accident? It is unclear why the Legislature used different terms to describe the required financial security and the required motor vehicle insurance policy.
Another significant change is that under Fla. Stat. §324.151 the liability policy must cover the owner and permissive drivers, plus all household resident relatives of the insured. The definition of resident relatives is fairly broad, and includes individuals who may be living temporarily elsewhere. While coverage for resident relatives is a term often seen in uninsured motorist and PIP coverage, it is new to Florida mandatory liability coverage. Fla. Stat. §324.151 and §627.747 now both expressly grant the insurer the right to exclude specific drivers from the liability coverage. This was necessary as there will often be situations where the insurer understandably will not desire to insure all resident relatives in a household. Likewise, a vehicle owner may want to exclude certain members of the household in order to obtain an affordable premium. Insurers must investigate the identity of all household members when underwriting policies and be diligent about excluding from coverage any undesirable household members. Since resident relatives are automatically included in liability coverage, a minor could arguably be covered for liability if they used a household car without permission. The policyholder must consent in writing to the exclusion of drivers from the policy.
Insurers may limit liability coverage to the designated insured vehicles, temporary substitute vehicles, and newly acquired vehicles. Liability coverage extends throughout the entire United States and Canada. Carriers may also issue policies for operators who do not own their own vehicle.
Abolition of PIP
New Fla. Stat. §627.7265 abolished no-fault PIP coverage and mandates medical payments coverage be offered instead. Although carriers must offer medical payments coverage, it is not a mandatory coverage. Insurers are required to offer policyholders both $5,000 and $10,000 of medical payments coverage at a minimum. The policy cannot be issued with less than $5,000 in medical payments coverage and the policy automatically provides $10,000 in medical payments coverage if the insurer does not obtain a written rejection of the higher coverage from the named insured. If the insurer obtains a signed rejection of medical payments coverage, it may issue the policy with no medical payments benefits. Coverage must be offered without deductibles, but option deductibles may be offered up to $500. Insurers may not issue policies with a deductible unless there is a written and signed election. Medical payments coverage extends to medical bills arising out the operation, maintenance and use of an automobile. Coverage is extended to the named insured, resident relatives, operator, passengers and persons struck by an automobile. Much like PIP, the carrier must reserve for 30 days $5,000 in medical payments benefits for physicians providing emergency care.
The new statute is silent about any fee schedules, the reasonableness of charges, pre-suit notices, coding of bills, and time for payment, the medical necessity of the care, the types of medical care covered (massage, acupuncture, faith healing, etc.) and time requirements for a provider to submit charges under the medical payments coverage. Likewise, the new provisions do not reference IMEs, peer reviews, EUOs or “6b” requests for information. However, the restrictions on clinic licensing for providers who accept PIP payments were extended to medical payments coverage. Since medical payments coverage has been freed of the “quick pay” legislative mandates and the constitutional access to courts overtones applicable to the now abolished PIP, it is uncertain how the courts will treat medical payments litigation.
The new legislation provides significant limitations on the ability of carriers to recover medical payments in the event the insured recovers in a bodily injury case. No liens are allowed, and the carrier is only reimbursed in a subrogation action if the insured is “made whole” from their bodily injury recovery.
With the abolition of PIP, the “permanent injury thresholds” that previously applied to bodily injury and uninsured motorist cases was likewise eliminated.
Under Fla. Stat. §768.852, the defendant in a bodily injury lawsuit will receive a $10,000 set off against non-economic damages if the plaintiff was non-compliant with maintaining the mandatory coverages. Also, uninsured motorist benefits are now expressly payable over and above the new, mandatory, medical payments coverage. Fla. Stat. §627.727.
Requests for Coverage Information
Under existing law, claimants could make requests for insurance disclosures and the insurer was required to respond in 30 days. However, there was no immediate penalty for not timely responding. Under revised Fla. Stat. §627.4127, either the claimant or the attorney may request an insurance disclosure. Once the insurer is advised of the request, it has 30 days to respond and the plaintiff may file a lawsuit to compel disclosure if no response is received in 30 days. The plaintiff is entitled to fees and costs if the court determines the carrier did not timely disclose coverage.
The effective date of the amendments is January 1, 2022. Any policy valid under the prior statute on December 31, 2021 is still legal after January 1, 2022 until it is renewed, at which time it must be modified to be consistent with the new financial security requirements. However, insureds have the right to convert their coverage to the new format as of January 1, 2022, provided they pay any change in the premium. Insurers must start notifying insureds of the right to convert their policy to the new coverage requirements on September 1, 2021 as policies come up for renewal. Carriers must notify insureds annually in their premium notices of the right to elect to purchase medical payments coverage.
Our team is available to discuss the topics written here and ready to provide additional information contained in this article. Contact us for more information.