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End of No-Fault Could Lead to More Uninsured Vehicles

Aug 29, 2007

By Linda Kleindienst, South Florida Sun-Sentinel

Aug. 30--TALLAHASSEE -- Millions of uninsured cars could soon be traveling Florida's roads, a result of the looming demise of mandatory no-fault insurance and the state's inability to fully enforce what insurance requirements remain.

If no-fault vanishes as scheduled, on Oct. 1, the state will still require that all motor vehicles be covered for $10,000 of property damage. Drivers will have to prove they have insurance when they register their cars or are involved in an accident -- and failure to be insured could mean a $500 fine and 60 days in jail.

But two major enforcement tools will disappear along with no-fault: a requirement that insurance companies tell the state when a driver drops insurance; and the ability of law enforcement to check insurance papersany time they stop a motorist.

State officials concede that some drivers may be tempted to purchase insurance to get a car registered, then drop it the next day.

"I think it would be a concern and I hope that people not do that because the law still requires insurance, and there is a potential criminal penalty," said Electra Theodorides-Bustle, executive director of the Florida Department of Highway Safety and Motor Vehicles.

Arnold Ruskin, a retired accountant from Margate, is among the Florida residents worried about what might follow the end of no-fault. There may be more hit-and-run accidents involving drivers who flee to avoid being charged for their lack of insurance coverage, he said.

"I'm outraged. If they get into an accident, they'll take off," Ruskin said.

Before state legislators improved enforcement of Florida's auto insurance laws in the late 1980s, the Florida Department of Insurance estimated that one of every three cars on the road was uninsured. In Miami-Dade County, the rate was estimated to be as high as two of every three. Despite the surge in car and truck registrations since then, the percentage of uninsured vehicles has dwindled. Of the 19.5 million vehicles now registered in Florida, state officials estimate 700,000 lack insurance coverage -- fewer than one in 20.

No-fault, which mandates each car be covered with $10,000 of personal injury protection insurance, is scheduled to "sunset" -- Tallahassee jargon for expire -- unless the Legislature renews it. Legislators are scheduled to meet in special session on Sept. 18, but insurance has not yet been put on the agenda and legislative leaders voice doubts it will be.The end of no-fault, state officials say, will doom two key enforcement mechanisms written into the same law.

In 2006 alone, police agencies across the state issued 322,520 citations to drivers because they weren't carrying proof of insurance. At least 94,000 paid a fine.

During the same period, the Highway Safety Department issued warnings to nearly 850,000 car owners after getting notices that their insurance policies had been dropped. While many notices were the result of drivers changing insurance companies or buying new cars, 350,000 did have their licenses suspended for not having coverage.

Neither of those enforcement tools will exist once no-fault is gone.

"Enforcement is the key issue. Without that, it's going to go back to the way it was. ... Of every three cars that pass you by, one will not have insurance." said Dan Tarantin, head of Direct General, an auto insurance company catering to motorists who purchase the minimal insurance, with 158,000 Florida policyholders.

Four million Florida drivers at present carry only the minimum required insurance -- and they are the most likely to drop coverage if the state doesn't enforce insurance requirements, said Gunars Mansons, of Fort Lauderdale, vice president of the Specialty Agents Association, a group of small independent agencies.

"It should be considered criminal for a lawmaker to allow his community to go back to the wild, wild West," Mansons said. "We'll have people without insurance running into us. And if they can't pay, you or your insurance company is going to have to get a [court] judgment against them."

The large insurance companies, led by State Farm, want to end no-fault. They claim the system is rife with fraud, which leads to higher rates. Under no-fault, insurance companies must pay medical benefits for their policyholders, no matter who caused an accident -- and that has opened the door to staged car crashes, false crash reports, faked injuries and fraudulent billing.

"It's speculation that the number of uninsureds will go up, but that's not the trend we've seen in other states," said Allison North-Jones, spokeswoman for Floridians for Lower Insurance Costs, a group that includes State Farm and other major insurers, including Allstate, Nationwide, AIG and Progressive.

"The trend in other states is that the rate actually declined because auto insurance becomes more affordable across the board. And medical liability becomes more affordable as opportunities for fraud and abuse are more limited," she said.

Linda Kleindienst can be reached at [email protected] or 850-224-6214.


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