14 September 2009

Florida No Fault Insurance - What Is No Fault Insurance?


Under Florida No Fault insurance each driver would be completely covered by his own car insurance (up to his policy limit), and drivers can not sue another driver regardless of the severity of the accident, the injuries incurred and even in the case of death.

However, no state uses strict form of no fault insurance. In general, no fault is an auto insurance system in which both drivers must carry insurance for their own protection, and their ability to sue other drivers for damages is regulated by certain limitations. States impose these limitations by determining which cases are permitted to go to litigation.

Under this system, drivers may sue for severe injuries and pain and suffering. Some states MI, NJ, NY, and PA use a verbal threshold system, where the severity of the injury is defined in verbal terms (verbal threshold). Florida No Fault Insurance.

Other states use a monetary threshold, a set dollar amount in medical bills and lost wages that must be met before a motorist may sue for damages. Insurers generally favor laws that provide for a verbal threshold on suits instead of a dollar threshold. Setting dollar targets for medical expenses may encourage the submission of fraudulent claims in an effort to reach the total dollar amount whether the expense it justified or not.


The desire for a new way of handling auto insurance claims rose out of a dissatisfaction with the way in which insurance claims were processed. This dissatisfaction was not only on the part of those purchasing auto insurance, but also on those companies and agencies marketing auto insurance and the state officials regulating it. The issue focused on the often expensive and time consuming process of determining who was at fault in the accident and who was legally and financially responsible.

The delays in determining liability caused legislation to be introduced in many states in the 1970's that allowed victims to recover financial losses such as medical and hospital expenses and lost income from their own insurance companies. This became a forerunner of today's no fault insurance.

The concept of no fault insurance was first widely introduced to the public in the early 1900's. Its two main tenants, stemming waste, inequities, and lengthy delays in the liability system, and providing affordable coverage for medical care and rehabilitation costs had its appeal among the populace. However, the process that was to be put into place to pay for no fault insurance was anything but appealing to the voters.

A pay-at-the pump initiative was introduced as a way to pay for no fault insurance by collecting a fee on gasoline sales. In every state in which the initiative was considered, the plan to tax gas in order to fund no fault was defeated. Legislature in many forms was even introduced at the Congressional level but it never made it to a vote.


The 'no fault' part of an insurance plan is usually called PIP, Personal Injury Protection, or it is sometimes referred to as OBEL, Optional Basic Economic Loss. Different state's PIP's cover different aspects associated with personal injury.

Generally, the coverage is related to medical expenses, loss of wages, and compensation for loss of services incurred because of an auto accident. Funeral costs and death benefits are also usually covered.

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