Friday, July 20, 2007

Florida's Car Insurance Crisis

On October 1st, Florida's requirement that all car drivers carry PIP (Personal Injury Protection) will expire. If that is allowed to happen, due to the way that Florida law is structured, NO driver will be required to own car insurance.

This will place us with only 2 other states who also don't require car insurance. However, we're not a little ma-and-pa state any more: We have the 3rd largest population of millionaires in the entire USA (most of them are on the east coast of Florida, which is opposite to the Tampa Bay Area).

We also have plenty of people who will quickly become uninsured motorists within a short amount of time. Currently, it is estimated that a full 1/3 of our population will abandon car insurance within 12-18 months after the requirements are dropped. (Many won't drop their insurance immediately because they won't realize that it's an option).

What does this mean?

Let's think this through logically: If 1/3 of the population won't have car insurance, how will this affect the remaining 2/3 that do?

1. Whenever an unisured motorist is involved in an accident, both parties will end up in court. The court system will be overwhelmed with accident claims, because there will no longer be insurance companies to work it out for us.

2. In order to protect themselves, the remaining 2/3 who own car insurance will now have to add an additional policy rider for uninsured motorists, thus raising their rates considerably.

3. Car insurance companies will be casting about for ways to save their profits. It will only make sense for them to raise the rates on the remaining 2/3 in order to make up for their loss of the 1/3. This will put an increasingly large financial burden on the majority of the drivers.

4. Uninsured motorists will not be required to have a certain amount of money tucked away if they drive without insurance. That means that when (not if) a poor, uninsured motorist causes a terrible accident, he will not be able to pay for the medical bills and damage to the other car. Who will pay? Well, you can't get blood out of a stone, as my mother always says. So, the victim will have to either attempt to get money from her own car or health insurance company. The problem is that her insurance companies may refuse to pay under such circumstances or they'll pay and her rates will skyrocket as a result of it!

Currently, Florida's Chief Financial Officer (CFO) Alex Sink is begging the Governor and legislature to put a temporary halt on everything for two years, until they have time to educate themselves on the ramifications of this. Many insurance groups are doing the same, which may be self-serving but is still, in actuality, correct because it will affect us all. Terribly.


The Lazy Iguana said...

1/3 of people in Miami already drive without insurance. If you are financing a car - new or used - you already have to get uninsured motorist coverage.

green said...

I think New Hampshire is one of the states that doesn't require car insurance. Which is the 3rd one?

Saur♥Kraut said...

Green, I'm currently too lazy to look it up, but I THINK it's Wisconsin. I can't remember at the moment. ;o)

Lazy, yes, but ONLY if you're financing it. If you own it free and clear (like lots of poor people actually do because they buy beaters) then they don't have to.

daveawayfromhome said...

Seeing as at least half of the money involved in an accident claim is for medical coverage, maybe auto insurance can be used an another arguement for universal health care. After all, if everyone must buy auto insurance, how is that different from a tax (aside from the money going into shareholders' pockets, rather than into infrastructure).

Cranky Yankee said...

New Hampshire doesn't require everyone to have insurance. You are only required to carry insurance if you are deemed a risk. A DWI or an certain accumulation of demerit points will cause you to be deemed at risk and therefore required to have insurance.

We are also not required to wear seat belts or motorcycle helmets. Children under 16 must have seat belts on in cars. You have to wear a motorcycle helmet if you under 18 years of age and all passengers on a motorcycle must wear a helmet.

Personally I think it is stupid not to carry insurance. Not that I give a shit about the other guy. It's just that "I" have too much to lose. I also wear a helmet when I ride and a seat belt, most of the time, when I drive. At the same time time it is not the government's business to tell me how to conduct my private life.

For someone who decries what you wrongly call "Socialism" you sure don't mind big brother making you give money to a bloated insurance industry.

mal said...

It makes me wonder who is lobbying for dropping the requirement? The Trial Lawyers Association?

Some times the lobbyists for or against a bill tell you more about it than anything

Three Score and Ten or more said...

Remind me not to drive in Florida (Actually I have kids in Florida and have to drive there, sigh)