Robert - its likely that your friends/relatives do not live in one of the no-fault states, and/or have considerable assets to protect other than their house.
The term "no-fault" auto insurance is often used loosely to denote any auto insurance program that allows policyholders to recover financial losses from their own insurance company, regardless of fault. But, in its strictest form, no-fault applies only to state laws that both provide for the payment of no-fault first-party benefits and restrict the right to sue, the so called “limited tort” option. The first party benefit coverage is known as personal injury protection (PIP).
Under current no-fault laws, motorists may sue for severe injuries and for pain and suffering only if the case meets certain conditions. These conditions, known as a threshold, relate to the severity of injury. They may be expressed in verbal terms (a descriptive or verbal threshold) or in dollar amounts of medical bills, a monetary threshold. Some laws also include minimum requirements for the days of disability incurred as a result of the accident. Because high threshold no-fault systems restrict litigation, they tend to reduce costs and delays in paying claims. Verbal thresholds eliminate the incentive to inflate claims that may exist when there is a dollar "target" for medical expenses. However, in some states the verbal threshold has been eroded over time by broad judicial interpretation of the verbal threshold language, driving up costs.
Currently 12 states and Puerto Rico have no-fault auto insurance laws. Florida, Michigan, New Jersey, New York and Pennsylvania have verbal thresholds. The other seven states — Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota and Utah — use a monetary threshold. Three states have a "choice" no-fault law. In New Jersey, Pennsylvania and Kentucky, motorists may reject the lawsuit threshold and retain the right to sue for any auto-related injury. Colorado’s law reverted back to the tort liability system in July 2003.
Florida’s no-fault law is scheduled to expire in October 2007 unless reenacted. Insurers would like to see it replaced by a new law based on the tort system because personal injury protection benefits, which pay for medical care and related treatment, have been subject to fraud and abuse. Under the current system, unscrupulous medical clinics and attorneys can run up medical care costs for minor accidents, pushing up the cost of coverage for everyone else. Insurers say that a return to the tort system could save policyholders as much as $250 a year. Lawmakers could not agree on a fix by the end of the regular session but will have one last chance during the special session in June. The state’s governor, Charlie Crist, seems to favor no-fault over a traditional tort system. The Senate passed a bill, S.B. 1880, which would have extended the law through 2012, provided significant additional funding for antifraud efforts and required regulators to carry out a study of the current law. The proposal in the House, H.B. 7215, would have replaced the current $10,000 in personal injury protection with $15,000 in emergency care. The trigger for coverage would have been an emergency room visit. At present any health care claim, whether it comes from a chiropractor or emergency room physician, can trigger benefits, leading to abuse of the system.
A study by the Property Casualty Insurers of America (PCI) shows that auto injury claim costs have risen faster in Florida than the national average. During the first quarter of 2005, the average PIP claim cost shot up more than 17 percent, resulting in an overall increase of 44 percent since 2000. In terms of average auto insurance expenditures, Florida ranked 5th in 2003, up from 7th in 2002, according to data from the National Association of Insurance Commissioners. Among the explanations for soaring costs are a higher-than-average number of office visits to medical practitioners, higher health care costs and more sprain and strain soft-tissue injury cases that are harder to evalu
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