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Auto Insurance Requirements Are Up in the Air: What Kind of Car Insurance Will Be Mandated When the No-Fault Law Expires in October Depends on Whom You Ask

May 26, 2007

By Beatrice E. Garcia, The Miami Herald

May 27--If lawmakers don't take action before the state's no-fault law expires in October, the courts could well decide how much and what kind of auto insurance coverage Florida drivers will have to buy.

Uncertainty reigns, as insurers, regulators and legislative staffers trying to figure out what life on the road without no-fault means are offering very different interpretations.

Some, including the state agency that enforces the no-fault law, believe no auto insurance coverage would be required at all.

Others, including some insurers, say drivers will still have to buy property damage liability coverage.

It's also not clear whether insurers will allow drivers who already have no-fault benefits to keep them as long as their policy remains in force.

And, losing the law would eliminate the requirement that insurers immediately report auto policy cancellations to the state. That, in turn, means the Department of Highway Safety and Motor Vehicles will not be able to move quickly to suspend the licenses of drivers who are going bare.

As of now, the no-fault law, which requires drivers to purchase $10,000 in personal injury protection -- or, PIP -- and another $10,000 in property damage liability, will be history after Oct. 1.

It's the Department of Highway Safety and Motor Vehicles -- which enforces those insurance requirements -- that believes no no-fault means no mandatory insurance coverage.


Insurers such as State Farm Insurance argue differently. In a six-page opinion, State Farm lobbyist Mark Delegal says a "financial responsibility requirement" contained in a separate state statute applies to all auto owners in Florida. This requirement says that a driver must be able to cover property damage up to $10,000 and up $30,000 per accident in combined property damage and liability.

And, Delegal says, a different statute requires owners to show proof of insurance when they register their cars.

But the motor vehicles department has said it believes the financial responsibility requirement applies only to those with DUI convictions, judgments stemming from accidents and numerous traffic violations. The agency says there is no requirement the average driver show proof he or she can meet that responsibility.

Paul Jess, a lobbyist for the Florida Justice Association, which represents the trial attorneys, said he can see it both ways. He said drivers can meet the financial liability requirement by purchasing liability insurance, by posting a bond or by self-insuring.


Attorneys say the difference of opinion depends on whether you believe the financial responsibility statute, which refers to the no-fault law, is actually linked with the law so that if no-fault disappears so does the responsibility requirements.

"Clearly, there is a difference of opinion that will probably result in more litigation," said Cris E. Boyar, an attorney in Margate who handles auto accident cases.

The Office of Insurance Regulation said it's continuing to study this issue.

In an e-mail to The Miami Herald, the OIR said it would likely require legislative action to mandate insurance coverage.

One key provision in the no-fault law that will disappear is the requirement for insurers to report to DHSMV when an auto policy is canceled or payments lapse. Based on this information, the agency will suspend a driver's license until the insurance is reinstated.

"The state will be losing a key enforcement mechanism," said Brian Deffenbaugh, staff director for the Senate Banking and Insurance Committee.

For the time being, there's no word on whether lawmakers will take up auto insurance in the special session.

The party line came from Gov. Charlie Crist at a bill signing in Hollywood Thursday: "They've got to come to consensus. If they can do that, we can maybe get it in there."

So far, there's no consensus.


Copyright (c) 2007, The Miami Herald

Distributed by McClatchy-Tribune Information Services.

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