With home insurance premiums soaring, Florida motorists are in for a particularly nasty surprise this year: soaring rates for motor insurance renewals.
Ana Curbelo says her monthly premium went from $170 to $280 for her 2004 Toyota Camry. "It's crazy with so little coverage," she said. "And I'm over 50."
Jon Klapper says he just received a contract extension notice from Progressive that raised his premium for his nine-year-old Kia Optima by 26 percent. "I've never had any claims," he said.
Robin Phillips argues that monthly insurance premiums are now more than just a car payment. “The increases should apply to people who apply for and receive tickets and/or driving license points,” he said.
Experts say if it makes you feel any better, motor insurance premiums are rising across the country to keep up with post-pandemic inflation of repair and parts costs, increases in accidents due to more careless driving and higher vehicle prices.
Of course, because Florida is Florida, we have to pay very high premiums above the national average due to many of Florida's unique factors, such as hurricane damage, high rates of uninsured drivers, high rates of car theft and claim fraud.
The South Florida Sun Sentinel reviewed major auto insurers' filings with the Bureau of Insurance Regulation and found that nearly all major carriers had imposed multiple large increases that went into effect last year:
- The United Services Automobile Association (USAA), insurer of more than one million vehicles in Florida, has raised rates three times through August 2022 for each of its four insurance lines. Total increased rates range from 33.9 for the Garrison Property & Casualty line to 57.3 for the larger USAA line.
- State Farm Mutual Automobile Insurance Co., which insures 2.9 million vehicles in Florida, has raised rates three times this year, totaling 30.2 percentage points
- Since July 2022, Progressive has reported four increases, totaling more than 30 percentage points on each of its two main lines with more than 3.3 million vehicles in the state.
- Liberty Mutual's three increases, which began in June 2022, raised average premiums by a combined 44.3 percentage points for owners of the 156,654 cars it insures.
- And Geico General Insurance Co. has increased rates twice since July 2022, a total of 23.8 percentage points on 2.5 million vehicles in Florida.
- Auto Club South, also known as AAA, recently unveiled a plan to increase rates for members of its "old" brand by 39.7% and is due to be imposed over two years.
Asked by e-mail to explain the sudden increases, representatives of several companies gave similar reasons, including high inflation, material shortages and high labor costs.
By contrast, Andrew Fernath, a USAA spokesperson, noted that his company only sells to veterans and their families and offers "many opportunities for personal discounts that are not reflected in government statements."
It's not just Florida
Nationally, motor insurance rates have increased 17 percent since last summer, says Mark Friedlander of the industry-sponsored non-profit Insurance Information Institute.
Friedlander said the main reason is the increasing "frequency" of accidents, the number of accidents and the "severity" that insurers have to bear.
According to a June report by the Insurance Property and Casualty Association of America (APCIA), the average cost of vehicle damage claims in the United States increased by almost 50% and the average cost of personal injury claims increased by 40% between 2018 and 2022 .
The report found that the increase in drunk driving since Americans returned to the roads after the pandemic resulted in 420,000 more accidents, 1,000 deaths and $10 billion in damages by 2022, according to the report, citing data from Cambridge Mobile Telemetrics, which provides telemetry data to insurance companies. More and more drivers are using their devices more often on the road, which contributes to the increase in "screen time" by 23.4%.
More serious accidents lead to more claims resulting in lawsuits, which increases costs, he added.
The APCIA report cites a well-known complaint from insurance companies about rising litigation costs.
"In most cases, insurers see a huge increase in judgments, and therefore final costs of settling claims, due to abuses of the legal system that distort what is considered to be adequate compensation and how it is received," the report said.
The report found that more convictions were seen for single-fatal accidents, personal injury accidents, trucking or workplace class actions, and average convictions.
The average sentence for auto accidents with personal injury has increased from $39,300 in 2010 to $125,366 in 2020, it reports.
As individual rulings reach new heights, they set a new precedent and influence future rulings, "fueling the inflation of lawsuits across all industries," the report said.
Car thefts are on the rise, rising 7 percent last year to surpass one million for the first time since 2009, Friedlander said. It is especially easy to steal some Kia and Hyundai models without engine immobilizers, he added.
Finally, high levels of inflation caused by the pandemic have pushed up prices for new and used cars, parts and labor, Friedlander said. It said car replacement costs increased by 45.6% between 2019 and 2022, mainly because vehicles are becoming more complex and more expensive to repair.
Friedlander added that the higher premiums collected last year did not cover the "increasing solvency of claims". That's why "we've seen some insurance companies implement multiple rate increases this year," he said.
After the industry suffered heavy insurance losses in 2022, the institute is forecasting another year of losses in 2023, it said. This means that insurers as a whole will pay out more in claims than they take in premiums, requiring premiums to increase to return to profitability.
But Florida is worse
In addition to the national problems, a number of Florida-specific trends are exacerbating the situation for drivers in Sunshine State, he said.
These include the fourth highest vehicle theft rate in the country. Thieves lost 45,973 vehicles in Florida in 2022, up 6% from 2021.
The level of claim fraud is high in the state, especially with fake crashes in South Florida and windshield replacement scams statewide.
The number of pipelines resulting from glass replacement programs in 2023 is likely to surpass the 2022 record of 33,196, he said. Drivers' lawsuits, despite recent legal reforms that prohibit one-way attorney fees, average more than 50,000 a month statewide, Friedlander said.
Florida also has a high rate of accidents and fatalities, as well as a high rate of fatal accidents, he said. Meanwhile, 20.4% of drivers in Florida are uninsured. When they leave, everyone else will have to pay their bills.
Medical expenses for accident victims in Florida are on the rise, as are severe weather conditions that are forcing insurers to report total damage to vehicles, he said. Friedlander said Hurricane Ian destroyed more than 100,000 vehicles last September.
Logan McFaddin, vice president of government relations for the Property Insurance Association of America, said the reforms passed in the last legislative session in March will "stabilize" Florida's insurance market, but "the current wave of abuses of the legal system" will take some time to stop the flushing of the system. "
Here are the limited saving options
In the meantime, drivers may be wondering if there is anything they can do to lower their car insurance costs.
The answer is not really - unless you want to cancel your insurance or install a device that allows your insurer to track your driving habits.
With all major insurers raising their premiums by similar amounts, it will be hard for drivers to find better rates, admits Divya Sangameshwar, spokeswoman for consumer-focused insurance comparison site Value Penguin.
In fact, drivers who own older cars, have no fines or accidents, are homeowners, and have good credit are likely already paying the lowest interest rates they can get without lowering insurance or raising deductibles, says Sangameshwar.
While lowering your insurance or raising your deductible may help drivers who can't afford the higher rates, it's a risky move that could increase your risk of not being able to repair your vehicle or being sued by the occupants of a vehicle that hits you for uninsured expenses.
Drivers who most often choose discounts on purchases are those who do not have perfect credit, who insure newer, more expensive cars and already pay higher premiums, he added.
He recommends visiting an independent insurance agent with access to coverage for smaller, regional companies to see if cheaper plans are available.
Friedlander has provided a list of tips on how consumers can lower their car insurance costs:
- Get more quotes. "We recommend at least three quotes to compare costs - car insurance is very competitive and there can be significant price differences between insurers," he said.
- Sign up for a telematics plan, commonly known as usage-based insurance. Many companies now offer drivers the option to install an additional device or mobile app that can measure their driving habits and set rates accordingly. These devices track your average speed, braking force and frequency, acceleration speed, and the time of day you are driving. Safe drivers can save up to several hundred dollars, he said, but for unsafe drivers, the costs can add up.
- Combine your home and car insurance with the same insurer. (This is more difficult in Florida, where national insurance companies limit the types of homes they want to insure.)
- Avoid accidents and traffic offenses for three years and earn safe driving discounts.
- Pay the entire bill at the beginning of the period.
- Sign up for electronic billing.
- Take a defensive driving course.
- Take advantage of student and military discounts.
Ron Hurtibise covers business and consumer issues for South Florida Sun Sentinel. He can be reached at 954-356-4071, on Twitter @ronhurtibise or by email email@example.com.