There are several bills pending in the Florida legislature which may end
up changing our auto insurance laws. One bill, which would repeal the
Florida no-fault auto insurance law, has received a lot of attention in
the press in the last few months. Another one, which involves which people
auto insurance policies must cover within a household, has received less
coverage. But as this blog will explain, this bill is also a good idea,
and passing it would protect Florida accident victims and insurance customers.
First, a little auto insurance background information: auto insurance typically
consists of several coverages bundled into one policy. One type of coverage
which is typically part of that bundle is called “liability coverage.”
Liability coverage kicks in when a policyholder causes an accident. A particular
form of liability coverage, called “bodily injury liability,”
covers injuries suffered by third parties when a policyholder causes an
accident. For example, if you run a red light and injure another driver,
bodily injury liability coverage is available to pay for the other driver’s
medical bills and other damages.
This coverage generally protects the person who buys the insurance, along
with other people in that person’s household. For example, if you
buy bodily injury liability coverage for yourself, it will usually cover
your spouse, children, and other family members who live with you. This
makes sense, given that people who share a household often share cars too.
There is one particularly important exception, though: the named driver
exclusion for household members. The named driver exclusion permits an
insurance company to restrict coverage within the household to specific
people. The exclusion might bar coverage for a teenager in the home, even
though it covers both the teenager’s parents.
This type of exclusion can create serious problems. If a teenager is excluded,
an accident victim might not have anywhere to turn for compensation. The
insurance company can refuse to pay for a teenager’s error which
causes an accident, even if it would have covered the parents if they
were driving the same car.
However, it’s not just the accident victim who could be in trouble.
The parents of the negligent teenager could be in a financial bind too.
Under Florida law, they are required to be responsible for the driving
mistakes made by their teenage driver. Thus, even though they’re
legally responsible for their teenager, they won’t actually have
insurance coverage for that responsibility. They could end up stuck with
personal financial responsibility to the injured person.
The bill now pending in the Florida legislature would end the named driver
exclusion for household members. This would prevent the types of unfortunate
scenarios described here. At the same time, it would allow the person
buying insurance to get a break on their insurance costs by excluding
other drivers, such as relatives who don’t live in the home.
We support this common-sense change to Florida law. It will simplify auto
insurance coverage and prevent unpleasant surprises for accident victims
and family members. We urge all Florida drivers to support it, both for
their own benefit and for the benefit of others who use our roads.