Hypothetical: A person who claims to be injured in an auto accident is asked to state under oath what happened. On some auto insurance policies, such sworn statements are required as a condition of approving Personal Injury Protection (PIP) claims.
Why? To fight PIP fraud, which is rampant in Florida. Auto insurers want to know that a claim is legitimate before writing a check.
Real world: The Florida Supreme Court says that insurance companies can no longer require people who made claims before Jan. 1 to sit for a legal examination. The court said that the requirement delays and denies benefits, contrary to the intent of an old PIP law to pay benefits as quickly as possible.
The likely result? Higher PIP premiums for a while. Stripped of that legal tool, auto insurers cannot scrutinize claims as closely. More PIP fraud means more insurance payouts, which means higher auto insurance rates.
Some Florida Supreme Court justices thought that legal examinations were reasonable. In a dissenting opinion issued June 27, Justice Charles Canady wrote: “The right to a ‘swift and virtually automatic’ recovery of benefits is a right properly enjoyed by those who in fact meet the legal requirements for the receipt of benefits and comply with the legal obligations of an insured. The EUO [examination under oath] provision of the policy is simply designed to ensure that the ‘swift and virtually automatic’ payment of benefits is made only to those who are entitled to those benefits under the law.”
The PIP reform law that took effect this year corrects the situation. It enables auto insurance companies to include examinations under oath in an insurance policy. Once the backlog of PIP claims clears – a process that could take years – a more balanced approach will be restored.