Since the initial No-fault Insurance legislation, insurance companies have been permitted to offer an array of optional deductibles. In 1982, the Florida legislature reduced the optional deductibles to amounts of $250, $500, $1,000,and $2,000.

Under Florida Statute 627.739(1), an individual may elect a deductible on PIP coverage to apply to the individual alone or to the individual and dependent relatives residing in the same household. The deductible DOES NOT apply to any other person covered under the policy (i.e. passenger who is not a dependent relative, pedestrian or bicyclist).

The amount payable by the insurance company when the PIP Policy carries a deductible is computed by multiplying the total medical expenses by 80 percent and thereafter subtracting the deductible. Two examples of calculating PIP benefits when there is a deductible are shown below:

Case No.1
Total Medical Expenses:$100
Percentage payable under PIP statute:80 percent
Benefits applied to deductible:$80

Case No.2
Total Medical Expenses:$10,000
Percentage payable under PIP statute:80 percent
Benefits due but for the deductible:$8,000
Less deductible:$2,000
Benefits payable:$6000

It is important to note that the Florida Supreme Court has held that the maximum payout of an insurance policy carrying a $2,000 deductible is $8,000 and not the statutory $10,000 since the PIP limits themselves have been reduced by the deductible amount.