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We’ve discussed the importance of No-Fault coverage and how it can help individuals who are injured in a car accident, whether they are at fault or not, pay their medical bills and lost wages. But of late, there has been an outcry for repeal of the No-Fault law in states where the law makes car insurance premiums most costly (ie. New York, Michigan, New Jersey, and Florida).
The Bureau of Labor Statistics has shown an increase of 12% in costs for No-Fault, or Personal Injury Protection (PIP), which is generally correlated with rises in the costs of medical services. But No-Fault costs can also climb due to fraudulent claims. Individuals will stage car accidents and corroborate with physicians or healthcare workers in order to obtain No-Fault funds illegally. These fraudulent claims are especially abounding in Florida, where fraudulent auto claims increased by 275% between 2007 to 2012. One report cited that in 2012, these fraudulent claims costed the state over $1 billion. In order to make up for this lost money, insurance companies raise rates, which makes No-Fault coverage seem like an unnecessary additional cost.
Many drivers also consider No-Fault to be redundant, as they already have health insurance through their own private plan or Medicare/Medicaid. They feel it doesn’t make sense to pay out extra when they’re already covered.
Many individuals do not have some form of short-term disability insurance. The Bureau of Labor Statistics recorded that only 39% of private industry workers had short-term disability insurance in 2014. Repealing the No-Fault law could leave many individuals without coverage for disability if injured in an accident.
No-Fault was originally designed to provide individuals who have been injured an accident, whether they were at fault or not, the financial means to have their medical expenses and lost wages reimbursed. Say you are injured by someone else in an accident – the accident is their fault – but they have no insurance to cover your medical expenses. This is when your No-Fault coverage (and any additional No-Fault coverage you’ve purchased, such as “APIP” or “OBEL”) would become your safety net. Without No-Fault coverage, you would be in trouble.
Atop that, the court system would be flooded if the No-Fault law were repealed. Many individuals who are injured in car accidents get the full reimbursement they require through No-Fault coverage. Without it, they may very will be forced to file a personal injury claim (if they were not at fault for their accident). Even if their injuries aren’t severe, they’ll likely require medical treatment. Their private health insurance may not be enough to cover the costs of their medical treatment and they may have no disability coverage. Having the No-Fault laws in place allows court systems to focus on car accident cases of serious injury such as dismemberment or disfigurement, trying them faster and more efficiently.
Last April, the state House of Representatives of Florida were 89 to 29 for repealing the No-Fault law. But, the decision was stalled in the state senate. Efforts to repeal the law were also stalled in Michigan’s state legislature. New York could be the next to consider this due to high car insurance rates.
But if high costs are the root incentive for wanting to repeal the No-Fault law, shouldn’t we strategize ways to lower those costs before repealing the No-Fault law? Perhaps we should strategize a more efficient way to crack down harder on investigation into fraudulent PIP claims. We hope, for the sake of individuals who need No-Fault coverage, that this law is not threatened in the future. We do, however, believe the law deserves some reform. For instance, we believe the injury threshold set forth by legislation should be more transparent.