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Miami Times

Auto Insurance increases Florida's cost of living

Mitch Perry Florida Phoenix Jan 4, 2023 Updated Jan 4, 2023

PIP car accident

While the average American motorist spends 2.57% of their annual income on auto insurance,
Florida drivers spend the second-highest proportion at 4.42%, trailing
only Louisiana, at 5.26%.
Of all the metro areas analyzed, Miami drivers spend
the absolute highest, at 5.58%.(Envato Elements)

Florida lawmakers returned to Tallahassee before Christmas for another special session to deal with the state’s property insurance crisis. But it’s not just homes and condos where Floridians pay high insurance rates – they’re also forking over large amounts for automobile insurance. In fact, Florida’s auto insurance rates are among the highest in the nation.

An analysis from Insure.com ranks Florida as the most expensive state in the nation for auto insurance, with the average premium at $2,560 a year. That’s a whopping 23% increase in rates from 2021. The average nationwide for full coverage car insurance is currently $1,682.

Another study, Bankrate’s True Cost of Auto Insurance Report in 2022, showed that the average annual full coverage car insurance premium for a Floridian is even higher at $2,762, the second-highest rate in the country.

A DeSantis veto

A majority of state lawmakers believed that they had addressed the issue to some extent in 2021, when they passed a bill (SB 54) co-sponsored by Tampa Bay-area state Sens. Danny Burgess (R- Zephyrhills) and Darryl Rouson (D-St. Petersburg) that would have repealed the state’s “no fault” insurance law that requires that motorists carry $10,000 in personal-injury protection (PIP) coverage.

It would have replaced PIP with mandatory bodily injury (BI) coverage of at least $25,000 per person and $50,000 per occurrence, and required insurers to offer medical payments coverage (though policy holders could opt out of that coverage).

Gov. Ron DeSantis vetoed the bill, saying that the measure did “not adequately address the current issues facing Florida drivers.”

It definitely would have raised car insurance rates, according to a report commissioned by the Office of Insurance Regulation published right before that veto.

The study from Pinnacle Actuarial Resources determined that if “no fault” was repealed, motorists would have seen their insurance premiums increase by 13%, or approximately $202 per vehicle annually. And the liability premium would go up nearly 20% for motorists who purchased medical payment coverage with a $10,000 limit.

Some think motorists would have been better off if the legislation had passed.

“When I see people move to Florida who come from other states that have mandatory bodily injury liability, their premiums always seem to be lower,” said Brandon-based insurance agent Kevin Swanson, who says he hasn’t read enough studies to have a firm opinion on the issue.

“PIP is riddled with fraud. It is a problem,” said Michael Carlson, president and CEO of the Personal Insurance Federation of Florida (PIFF). “We have state law enforcement constantly working to root it out.”

That fraud plays itself by in several ways, Carlson says, such as a “whole cottage industry of phony medical providers” that send fraudulent medical bills to auto insurance companies.

There are also incidents with motorists staging accidents, and Tampa and Miami are known as being among the top cities in the country where such fraud is prevalent.

Rampant fraud

In July, Florida’s chief financial officer, Jimmy Patronis, announced the arrest of Angela Ippolito Duncan, owner of the Ybor Medical Center, for allegedly planning and participating in staged car accidents to submit more than $970,000 in fake accident automobile insurance claims.

“Scam artists are working every day to drive up your insurance rates to line their own pockets,” Patronis said after the arrest was made.

Another factor driving up rates is glass replacement fraud, which observers say has gone unchecked for years. This is where contractors will go after motorists in parking lots, gas stations or knock on their front doors to inform them they can have their windshields replaced for no cost if they have comprehensive insurance coverage, which about 90% of Florida drivers do, according to Mark Friedlander with the Insurance Information Institute.

What motorists don’t realize, however, is that once they sign the paperwork with those contractors to get their windshield replaced, they have “assigned” a law firm to handle the issue with their insurance company. That has led to an explosion of lawsuits filed in Florida over the past decade by more than 4,000%, according to a consortium of organizations calling themselves “Fix the Cracks.”

“This is an area of law where these cases were virtually nonexistent 10 years ago and now they’ve perforated into the thousands, and the only explanation is that there was either a massive meteorite shower that went over the state of Florida, or the incentive for attorneys’ fees is driving this …” said William Large, the president of the Florida Justice Reform Institute.

The Bankrate report also states that Florida drivers spend the second-highest proportion of their money on car insurance at 4.42% of their income, trailing only Louisiana at 5.26%. And of all the metro areas in the nation analyzed, Miami and Tampa drivers spend the highest percentage of their annual income on car insurance coverage, at 5.58% and 4.49%, respectively. The average American motorist spends 2.57% of their annual income on auto insurance.

Climate & inflation

Another factor in Florida’s high auto insurance rates are frequent storms and flooding, and the fact that the state simply sees a lot of auto accidents.

There were 3,737 fatalities from car crashes last year, making Florida the third-most dangerous state to drive in the country, according to the National Highway Traffic Safety Administration. There were more than 400,000 automobile crashes in Florida in 2021, resulting in more than 252,000 injuries.

Also, 1 in every 5 drivers (20.4%) in the state is uninsured, the sixth-highest rate in the nation.

While the issues in Florida contribute to higher-than-average premiums, national and global issues play a part as well, such as inflation and the breakdown in the supply chain that has raised rates everywhere.

“When an insurance company has to make you right after a crash, they (now) have a bigger payout. And if they have a bigger payout, they have to recover that somewhere,” said Michael Giusti, a senior reporter and analyst for InsuranceQuotes.com.

Whether the Legislature is poised to take up any of these issues next year isn’t certain, but observers note that after the DeSantis veto, the appetite for auto insurance reform in Tallahassee chilled considerably.

So will the Legislature attempt auto insurance reform in 2023?

“I don’t think so,” Large said. “I think that the advocates who are moving for a bill to go from PIP to BI probably got a very clear message from Gov. DeSantis vis a vis his veto, and I don’t think they’re going to try to bring up a bill up in 2023.”

But the future isn’t all bad news for Floridians hoping to save on auto insurance bills. Unlike property insurers, who are dissolving and abandoning Florida at an alarming rate, the auto insurance industry remains robust in Florida, with more than 50 companies writing policies for motorists.

“If you look at all the insurance products around the country, auto insurance is the most competitive,” said Friedlander. “Rates vary significantly between companies. And we always recommend (that you) shop your coverage if your rates are going up, because you can get multiple quotes and different discount programs that will help you.”

PIP chart