Clearing Up the Misconceptions of "No Fault" Coverage

Good morning, and welcome to this week’s installment of our video blog. I’m Marcus Michles here at Michles & Booth, and this morning, I want to talk about something I’ll bet you think you understand, but I’ll bet you don’t completely understand. That’s Florida’s no-fault system.

A lot of people hear that Florida is a no-fault state. I’ve been dealing with this for many, many years. There are so many misconceptions and so much bad information out there. It’s not as simple as people might think and yet not quite as complicated as others might think.

What does being a no-fault state mean?

Here’s the deal. Florida is a no-fault state, but what that means is simply each and every licensed driver is required to carry no-fault coverage in Florida. We call that PIP, personal injury protection and, it pays 80% of a medical bill or 60% of a lost wage up to a combined total of $10,000.

So if you’re properly covered, if you’re compliant with the law, you have this coverage. Your PIP, your no-fault coverage, and some people call it full coverage – I’m going to come back to that in a minute – but you’ve got this coverage with you wherever you go, and if you get into an accident, regardless of whether you caused the accident or someone else caused the accident, you have this PIP that will pay your medical bills and lost wages up to $10,000.

What does full coverage mean?

Now let’s go back to that full coverage phrase. I hate that phrase. People come to me all the time saying they have full coverage. Well, what does that mean? It really only means that they are fully compliant with Florida’s law, that you have the threshold and really its minimum insurance. If you’re driving around out there and buy your insurance from an insurance agent, and you go online to get your insurance, all you really care about at that moment is spending as little money as possible on your insurance bill, but that means you get as little insurance as possible for your money. So you have this thing you call full coverage, and you feel like you’re fully covered, but you’re really not. There are a lot of different kinds of coverage; collision for example which is optional which covers your car, which covers you in the event the person that hurts you did not have sufficient insurance to help you.

How does no-fault coverage or PIP work?

There’s a lot of insurance we could get into but today I just want to talk about this no fault idea. So if you not get into an accident and you caused the accident, I’m going to think “well, gosh, your insurance company should pay for my medical bills. It should pay for everything, right? I mean why should my insurance rates go up because you were negligent and you rear-ended me?” Well, in a no-fault state, it doesn’t matter that that you were at fault in hitting me. I have my no-fault coverage. I have my PIP and that’s what I use when I go to the emergency room. I go to my doctor. I go to healthcare providers of any kind. They get billed first up to $10,000. Now the at-fault party pays 20% of the medical bill and pays 40% of the lost wage, but there’s still secondary. They’re not the primary payoff.

Why is this good?

Now you’re thinking that makes no sense. Marcus, that doesn’t make any sense. I’m sitting so polite and somebody rear-ends me, and my insurance has to pay? Let me tell you why that is and maybe it’ll help you accept it a little more. The reason behind it is this…if you and I get into an accident, and it’s a fault-based state, one of us has to prove to the healthcare provider who was at fault before the right people get billed, right? And it might keep us from getting health care. If you claim you had the green light, and I claim I had the green light, and our insurance companies can’t agree as to whose fault it was and the law enforcement officers not really sure, we have to find out the fault issue before we can get our health care, before our health care bills can be paid.

The no-fault system says we’re not going to squabble in court. We’re not going to fight that liability fight. It doesn’t matter. It’s a no fault state…meaning fault does not matter in getting the bills paid initially. Alright. Here’s the funny part of this whole story. The no-fault system all goes away once one thing is proven, and that’s a permanent injury.

Once you have a permanent injury and you can demonstrate a permanent injury, it’s a more fault-based system, and that’s what I’m going to talk about next time. Stay with us on our video blog. We’re going to make you smarter on the issues of no-fault insurance and car accidents and the world of personal injury, but if you’ve got questions about the no-fault system, give me a call. I don’t sell insurance so I don’t have a dog in that fight, but I’ll help you through that if you want to.

Give me a call. Let me know what you want to hear about on the show. Thanks for tuning in. I’m Marcus Michles at Michles & Booth. Have a great week!