Florida Motor Vehicle No-Fault insurance (“Personal Injury Protection” or “PIP”) is a form of medical insurance used for motor vehicle crashes. It is mandatory on vehicles registered in Florida. It covers owners, certain family members and passengers, and pedestrians. The typical policy limit is $10,000 reduced by deductibles ranging from $500 to $2,000.
PIP does not compensate the insured or anyone else for pain and suffering damages. This type of compensation comes from bodily injury (BI) and uninsured/underinsured motorist (UM/UIM) insurance. Florida is one of only a handful of states that does not require drivers to maintain BI insurance. (Besides PIP, the only other type of mandatory vehicle insurance is Property Damage — Liability. It pays for damage to the personal property of others.) Because BI and UM/UIM cost extra, a large percentage of Florida operators do not maintain them.
Neither BI nor UM/UIM cover medical expenses that are “paid or payable” by PIP. This is known as the PIP offset (or setoff). Example of a “paid” scenario and its consequences: $20,000 BI policy limit. $15,000 medical bill, reduced by the Medicare “Allowable” formula to $10,000. Assuming no deductible, PIP pays $8,000, or 80%, leaving a $2,000 balance. Hence, the limit of liability to the at fault driver’s insurance company, the BI carrier, for past medical expenses, is $2,000 instead of $15,000. Accordingly, instead of offering $20,000 to settle the BI case, which approximates its exposure without the offset, the carrier may only offer $5,000 or $6,000. (These numbers are hypotheticals based on a typical case. In some instances, a case with $15,000 in medical charges, even with the PIP offset, can be worth hundreds of thousands of dollars, if not millions, depending on the injuries.)