The state of Florida’s car insurance laws are notably different from many other states. The state requires all drivers of vehicles with at least four wheels to purchase and carry an auto insurance policy with two types of coverage:
- Property Damage Liability (PDL)
- Personal Injury Protection (PIP)
Each type of coverage must have a minimum coverage amount of $10,000, and both have important distinctions.
Property damage liability (PDL) insurance covers any damage that you, a family member or other covered individual driving your vehicle may cause to another person’s property while driving.
If you rear end someone else’s vehicle or if you back over your neighbor’s mailbox, PDL insurance will cover the damages to the vehicle you rear ended or replace your neighbor’s mailbox. However, PDL will not pay out anything for damages your car may have incurred in either of these two scenarios. Hence the term “liability” in the name, as the insurance protects you from being liable to damage you may accidentally cause to another person’s property with your car.
The state of Florida does not require you to carry coverage that insures your own vehicle, although it’s certainly recommended.
Personal injury protection (PIP) insurance covers you, your family members, and individuals riding in your car without a registered vehicle and without PIP, in the event of crash with injuries. PIP coverage applies to all qualified individuals regardless of fault (who caused the crash or injuries) and is dubbed Florida’s no fault insurance.
Everyone who owns a vehicle must carry a PIP policy with minimum coverage of $10,000. PIP does not just apply to vehicular crashes but in several other incidents including:
- Pedestrians injured by vehicles
- Bicyclists injured by vehicles
- Children injured on school buses
Another type of insurance, bodily injury liability (BIL) insurance, covers medical and funeral costs you, a family member or other covered individual may cause while driving.
This insurance is not required by the state, has higher coverage amounts and subsequently higher premiums. However, BIL decreases your liability if you or another covered person driving your car is the cause of a major accident.
Not requiring Bodily Liability Insurance (BIL) is another way in which Florida differs from most other states. Only one other state in the country, New Hampshire, does not require drivers to carry a policy with BIL. If you own any sort of major asset, including your primary residence, consider adding BIL coverage to protect yourself.
Why No Fault Insurance?
Florida is one of only a handful of states with no fault auto insurance laws. The no fault insurance laws were instituted to keep monthly premiums low by delivering quick payouts on behalf of at fault drivers and avoiding costly law suits through limited liability.
Largely due to no fault laws, companies selling auto insurance in Florida can offer premiums that are lower than national averages. However, critics of no fault laws say that the legislation protects at fault drivers from law suits that could result in loss of major assets too much so, resulting in more reckless driving. A reputable study published by the University of Pennsylvania confirms that no fault insurance laws lead to more drinking while driving, greater incidents of speeding and higher fatality rates overall.
Aside from safety considerations, many criticize Florida’s no fault system since it is often abused. Quick PIP payouts have lead to instances where medical clinics fabricate or exaggerate injuries to reach the $10,000 maximum. The Florida Department of Financial Services receives thousands of PIP fraud tips and makes hundreds of arrests each year.