Florida lawmakers will soon return to Tallahassee for another special session to address the state’s property insurance crisis. But it’s not just houses and apartments where Floridians pay high insurance costs, but also cars.
In fact, Florida auto insurance rates are among the top in the country.
An analysis by insure.com ranks Florida as the most expensive state in the country for auto insurance, with an average premium of $2,560 per year or $213 per month. That is a rate increase of 23% from 2021.
Ohio was listed as the lowest, with average insurance premiums of just $1,023 per year, insure.com reported. The average nationwide full coverage auto insurance policy is $1,682 in 2022.
Another study, Bankrate’s True Cost of Auto Insurance Report in 2022, showed that the average annual full-coverage auto insurance premium for a Floridian is $2,762, the second-highest rate in the country and trailing only Louisiana, at $2,864. The Florida average is nearly $1,000 above the United States average annual premium of $1,771.
Why are the numbers so high? There are myriad reasons, some native to Florida and some attributable to national trends that have influenced the industry at large to emerge from the pandemic.
A majority of state legislators believed they had addressed the issue to some extent in 2021, when they passed a bill (SB 54) co-sponsored by the State of Tampa Bay, Senator Danny Burgess (R-Zephyrhills) and Darryl Rouson (D-St. Petersburg) which would have repealed the state’s “no fault” insurance law that requires motorists to carry $10,000 in Personal Injury Protection (PIP) to help pay for their post-accident medical expenses.
It would have replaced PIP with mandatory bodily injury (BI) coverage of at least $25,000 per person and $50,000 per event and required insurers to offer coverage for medical payments (although policyholders could choose to waive that coverage ).
However, Gov. DeSantis vetoed the bill, saying the measure “does not adequately address the current issues drivers face in Florida” and could have unintended consequences that would be bad for consumers and the auto insurance market.
It certainly would have raised auto insurance rates, according to a report commissioned by the Office of Insurance Regulation released just before that veto. The Pinnacle Actuarial Resources study found that if “not a fault” had been repealed, motorists would have seen their insurance premiums increase by 13%, or about $202 per vehicle per year. And the liability premium would increase nearly 20% for motorists who purchased medical payment coverage with a limit of $10,000.
But there are those who think motorists would have been better off if the legislation had been passed.
“When I see people moving to Florida who come from other states with mandatory personal injury liability, their premiums always seem to be lower,” says Brandon-based insurance agent Kevin Swanson, who says he hasn’t read enough studies to make a decision. strong opinion on the matter.
Insurance companies were pleased that DeSantis vetoed the bill, though they recognize that PIP reform is needed.
“PIP is full of fraud. It’s a problem,” said Michael Carlson, President and CEO of the Personal Insurance Federation of Florida (PIFF). “We have state law enforcement officers who are constantly working to stamp it out, to prosecute the people who commit it.”
That fraud plays out in a variety of ways, says Carlson, such as a “whole cottage industry of fake medics” who send fraudulent medical bills to auto insurance companies. “They’ll charge for different types of soft tissue treatments … they’ll charge it until they hit $10,000 and then all of a sudden that patient is fine, and they won’t charge anymore.”
There are also incidents of motorists staging accidents, and Tampa and Miami are known to be among the top cities in the country where such fraud is prevalent.
In July, CFO Jimmy Patronis announced the arrest of Ybor Medical Center owner Angela Ippolito Duncan for allegedly planning and participating in staged car accidents to make more than $970,000 in false auto insurance claims. According to a press release from the CFO’s office, the investigation revealed that Duncan recruited an undercover detective to participate in an intentional motor vehicle traffic accident, cared for the passengers in the vehicles, and sent all participants to Ybor Medical Center for treatment.
“Scammers work every day to jack up your insurance rates to line their own pockets,” Patronis said after the arrest.
Another factor driving up rates that hasn’t been addressed by state lawmakers is glass replacement fraud, which observers say has gone unchecked for years. Here, contractors literally go after motorists in parking lots, gas stations, or knock on their front doors to inform they can get their windshield replaced for free if they have comprehensive insurance coverage, which about 90% of drivers in Florida have, according to Mark Friedlander of the Insurance Information Institute.
However, what motorists don’t realize is that once they sign the paperwork with those contractors to have their windshield replaced, they’ve “assigned” a law firm to handle the issue with their insurance company. That benefit allocation (AOB) with car windows has led to an explosion in lawsuits filed in Florida over the past decade by more than 4,000%, according to a consortium of organizations calling themselves “Fix the Cracks” that want the state the matter.
“This is a jurisdiction where these cases were virtually non-existent 10 years ago, and now they’re punched into the thousands, and the only explanation is that there was a massive meteor shower that swept across the state of Florida, or the attorney fees incentives here are the driving force and loophole that was allowed to be made for auto glass claims still exists,” said William Large, the president of the Florida Justice Reform Institute.
The Bankrate report also states that drivers in Florida spend the second highest portion of their money on auto insurance at 4.42% of their income, behind only Louisiana (5.26%). And of all the nation’s metropolitan areas analyzed, drivers in Miami and Tampa spend the highest percentage of their annual income on their auto insurance, at 5.58% and 4.49%, respectively. The average American motorist spends 2.57% of his annual income on auto insurance.
Another factor in Florida’s auto insurance rates being among the highest in the country is our frequent storms and floods, and the fact that we have many car accidents. And keep in mind that Florida has a very high percentage of seniors age 65 and older, according to US Census data.
Last year there were 3,737 deaths from car accidents, making Florida the third most dangerous state in the country, according to the National Highway Traffic Safety Administration. In 2021, there were more than 400,000 car accidents in Florida, with more than 252,000 injured as a result of those accidents.
Also, one in five drivers (20.4 percent) in the state is uninsured, the sixth highest rate in the country.
While Florida’s problems contribute to our above-average premiums, national and global issues also play a role, such as inflation and supply chain collapse that have driven up rates everywhere.
“You had inflation affecting new vehicles, the cost of used vehicles, the availability of spare parts and labor costs. So that means that when an insurance company needs to reimburse you right after a crash, they have a bigger payout. And if they have a bigger payout, they have to get it back somewhere now,” said Michael Giusti, a senior reporter and analyst for insurancequotes.com.
Whether the legislature is ready to address any of these issues next year is not certain, but observers note that after the governor vetoed the PIP bill in 2021, the appetite for auto insurance reform in Tallahassee has decreased significantly.
So will the legislature try to reform auto insurance in 2023?
“I don’t think so,” says Large. “I think the advocates advocating for a bill to move from PIP to BI probably got a very clear message from Gov. DeSantis regarding his veto, and I don’t think they will try to push a proposal forward. settle in 2023.”
But the future isn’t all bad news for Floridians hoping to save on their car insurance bills. Unlike property insurers, which are dissolving and leaving Florida at an alarming rate, the auto insurance industry remains robust in Florida, with more than 50 companies writing policies for motorists.
“When you look at all insurance products across the country, auto insurance is the most competitive,” says Friedlander. “Rates differ significantly between companies. And we always recommend (that you) buy your coverage if your rates go up because you can get multiple quotes and different discount programs that will help you.
Here is a list of auto insurance rates by state and Washington, DC in 2022, based on an analysis by insure.com:
|State||2022 Full coverage (year)||Difference with national average ($1,682 in 2022) in %|