Florida lawmakers are scheduled to return to Tallahassee soon for another special session to address the state’s property insurance crisis. However, it’s not just houses and condos where Floridians pay high insurance costs, it’s cars as well.
In fact, Florida auto insurance rates are among the best in the country.
An analysis from insure.com ranks Florida as the most expensive state in the country for auto insurance, with average premiums at $2,560 per year or $213 per month. That’s a 23% increase in rates from 2021.
Ohio was listed as the lowest, with an average premium of just $1,023 a year, insure.com reported. The national average for full coverage auto insurance is $1,682 in 2022.
Another study, Bankrate’s True Cost of Auto Insurance Report in 2022, found that the average annual premium for full auto coverage for a Floridian is $2,762, the second highest rate in the nation and behind Louisiana, at $2,864. Florida’s average is nearly $1,000 above the United States’ average annual premium of $1,771.
Why are the numbers so high? There are a myriad of reasons, some originating in Florida and some attributable to national trends that have affected the entire industry since the outbreak of the pandemic.
Most state lawmakers thought they had solved the problem to some degree in 2021 when they passed a bill (SB 54) co-sponsored by state Sens. Danny Burgess (R-Zephyrhills) and Darryl Rouson (D-St. Petersburg) that would repeal the state’s the “no-fault” insurance law, which requires motorists to carry $10,000 in Personal Injury Protection (PIP) to help pay for medical expenses after accidents.
It would replace PIP with mandatory bodily injury (BI) coverage of at least $25,000 per person and $50,000 per occurrence, and require insurers to offer medical payments coverage (although policyholders could opt out of this coverage).
However, Gov. DeSantis vetoed the proposal, saying the measure “does not adequately address current issues facing Florida drivers” and could have unintended consequences that would be bad for consumers and the auto insurance market.
According to a report commissioned by the Insurance Regulatory Authority that was released just before the veto, it would definitely increase auto insurance rates. A study by Pinnacle Actuarial Resources found that if “no-fault” was repealed, motorists would see their premiums increase by 13%, or about $202 per vehicle per year. And liability premiums would rise nearly 20% for motorists who purchased health insurance with a $10,000 limit.
But there are those who think motorists would be better off if the legislation passed.
“When I see people move to Florida that come from other states that have mandatory personal liability, their premiums always seem to be lower,” says Brandon-based insurance agent Kevin Swanson, who says, that he hasn’t read enough studies to have a strong opinion on the issue.
Insurers were happy that DeSantis vetoed the bill, even though they recognize that PIP reform is necessary.
“PIP is riddled with fraud. It’s a problem,” says Michael Carlson, president and CEO of the Personal Insurance Federation of Florida (PIFF). “We have state law enforcement agencies that are constantly working to root this out, to prosecute those people who have committed this.”
Carlson says the scam plays itself out in several ways, such as “a whole cottage industry of bogus medical providers” who send fraudulent medical bills to auto insurance companies. “They’ll charge for different kinds of soft tissue treatments…they’ll charge until they get to $10,000, and then all of a sudden the patient is fine and they won’t charge anymore.”
There are also incidents of motorists who stage accidents, and Tampa and Miami are known as some of the major cities in the country where such scams are prevalent.
In July, CFO Jimmy Patronis announced the arrest of Angela Ippolito Duncan, owner of Ybor Medical Center, for allegedly planning and participating in staged car accidents to submit more than $970,000 in false accident insurance claims. According to a news release from the CFO’s office, the investigation revealed that Duncan hired an undercover detective to attend an intentional motor vehicle accident, secure the vehicles for the occupants and direct all involved to Ybor Medical Center for treatment.
“Fraudsters work every day to raise your premiums to line their own pockets,” Patronis said after the arrest.
Another factor driving up rates that state lawmakers haven’t addressed is replacement glass fraud, which observers say has gone unchecked for years. This is where contractors will literally go up to motorists in parking lots, gas stations, or knock on their front doors to inform them that they can get their windshields replaced for free if they have comprehensive insurance coverage, which about 90% of Florida drivers have. Mark Friedlander with the Insurance Information Institute.
What motorists don’t realize, however, is that once they sign the paperwork with these contractors to have their windshield replaced, they have “commissioned” a law firm to handle the issue with their insurance company. That allocation of benefits (AOB) with auto glass has led to an explosion of lawsuits filed in Florida by more than 4,000% over the past decade, according to a consortium of organizations calling themselves “Fix the Cracks” that want the state to address the problem. problem.
“This is an area of the law where these cases were virtually non-existent 10 years ago and now they’ve ballooned into the thousands and the only explanation is that either a massive meteor shower hit the state of Florida or Attorney Fee Incentives are the driving force and loophole, that was allowed to be created for auto glass claims still exists,” says William Large, president of the Florida Justice Reform Institute.
The Bankrate report also states that Florida drivers spend the second highest share of their money on car insurance at 4.42% of their income, behind only Louisiana (5.26%). And of all metro areas analyzed, Miami and Tampa drivers spend the highest percentage of their annual income on auto insurance, at 5.58% and 4.49%, respectively. The average American motorist spends 2.57% of their annual income on car insurance.
Another factor in Florida’s auto insurance rates being among the highest in the nation is the frequent storms and floods and the fact that we have many traffic accidents. And keep in mind that Florida has a very high percentage of seniors 65 and older, according to US Census data.
According to the National Highway Traffic Safety Administration, there were 3,737 deaths in car crashes last year, making Florida the third most dangerous state in the country to drive. In 2021, there were more than 400,000 car crashes in Florida, resulting in more than 252,000 injuries from those crashes.
Also, one in every 5 drivers (20.4 percent) in the state is uninsured, the sixth highest rate in the nation.
While Florida’s issues contribute to our higher than average premiums, national and global issues like inflation and supply chain disruption are also playing a role, which has driven up rates everywhere.
“You had inflation affecting new vehicles, the price of used vehicles, the availability of spare parts and the cost of labour. So all this means is that if the insurance company has to do you right after the accident, they have a bigger payout. And if they have a bigger payout, now they have to claim it somewhere,” says Michael Giusti, senior reporter and analyst for Insurancequotes.com.
Whether the Legislature is ready to take up any of these issues next year is uncertain, but observers note that appetite for auto insurance reform has cooled significantly in Tallahassee after the governor vetoed the PIP bill in 2021.
So will the legislature attempt auto insurance reform in 2023?
“I don’t think so,” says Large. “I think the advocates trying to get the bill to go from PIP to BI probably got a very clear message from Gov. DeSantis about his veto, and I don’t think they’re going to try to trigger the bill in 2023.”
But the future isn’t all bad news for Floridians hoping to save on their auto insurance bills. Unlike property insurers, which are dissolving and leaving Florida at an alarming rate, Florida’s auto insurance industry remains strong, with more than 50 companies writing policies for motorists.
“If you look at all the insurance products across the country, auto insurance is the most competitive,” says Friedlander. “Rates vary significantly between companies. And we always recommend (that you) shop around for your coverage if your rates go up because you can get multiple quotes and different discount programs to help you.”
Here’s a list of auto insurance rates by state and Washington, DC in 2022, from insure.com’s analysis:
|State||2022 Full coverage (year)||Difference from national average ($1,682 in 2022) in %|
|New Jersey||$1,901||13 %|
|South Carolina||$1,894||13 %|