Published Aug. 15
As homeowner insurance premiums skyrocket, Florida drivers are getting an extra nasty surprise this year: Sharply increased auto insurance renewal rates.
Ana Curbelo says her monthly premium increased from $170 to $280 to insure her 2004 Toyota Camry. “It’s crazy for this minimal coverage,” she said. “And I’m over 50.”
Jon Klapper says he just received a renewal notice from Progressive that increased his premium on his nine-year-old Kia Optima by 26%. “Never had a claim,” he said.
Robin Phillips says monthly insurance premiums are now higher than car payments. “The increases should be for those that are making claims and getting tickets and/or points on their license,” she said.
If it makes you feel any better, auto insurance charges are going up nationwide, experts say, to catch up with post-pandemic inflation in repair and parts costs, increases in crashes as we drive more carelessly, and higher vehicle prices.
Of course, Florida being Florida, we get to pay extra-high increases over and above the national average due to a number of unique Florida factors like hurricane damage, a high rate of uninsured drivers, high auto theft rates and claims fraud.
The South Florida Sun Sentinel reviewed major auto insurers’ rate filings with the Office of Insurance Regulation and found that nearly all of the largest carriers imposed steep increases several times that took effect over the last year:
- United Services Automobile Association (USAA), insurer of more than 1 million vehicles in Florida, increased rates three times since August 2022 for each of its four lines of insurance. The total increased percentage rates range from 33.9 for its Garrison Property & Casualty line to 57.3 for its largest USAA line.
- State Farm Mutual Automobile Insurance Co., which insures 2.9 million Florida vehicles, took three rate increases this year totaling 30.2 percentage points.
- Progressive took four increases since July 2022 totaling more than 30 percentage points for each of its two major lines that cover more than 3.3 million vehicles in the state.
- Liberty Mutual’s three increases since June 2022 drove average premiums up a total 44.3 percentage points for owners of the 156,654 cars it insures.
- And Geico General Insurance Co. hiked its rates twice since July 2022, totaling 23.8 percentage points for its 2.5 million Florida vehicles.
- Auto Club South, also known as AAA, recently submitted a plan to increase rates for members of its “legacy” brand by 39.7%, to be imposed over two years.
Asked by email to explain the sharp increases, spokespersons for several of the companies cited similar reasons, including high inflation, material shortages and high labor costs.
And Andrew Fernath, spokesman for USAA, pointed out that his company only sells to veterans and their families and offers “many personal discount opportunities that are not reflected in state filings.”
It’s not just Florida
Nationally, auto insurance rates have increased 17% since last summer, says Mark Friedlander, of the industry-funded nonprofit Insurance Information Institute.
A big reason is escalating accident “frequency,” the number of crashes, and “severity,” what insurers must pay out, Friedlander said.
Average cost of vehicle damage claims across the United States increased by nearly 50% and average bodily injury claims rose 40% between 2018 and 2022, according to a June report by the American Property and Casualty Insurance Association.
Increases in distracted driving since Americans returned to the road following the pandemic caused 420,000 more crashes, 1,000 more fatalities, and $10 billion in damages in 2022, the report said, citing data by Cambridge Mobile Telemetrics, which provides telemetrics applications to insurers. More drivers are interacting with their devices, and more often, while on the road, contributing to a 23.4% increase in “screen interaction time.”
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More severe accidents are leading to a higher volume of claims that result in lawsuits, which drives up costs, he said.
The American Property and Casualty Insurance Association report cites a familiar complaint by insurers — rising costs of litigation.
“Across most lines, insurers are seeing an outsized growth in lawsuit verdicts, and in turn ultimate claims settlement costs, resulting from legal system abuses that are distorting what is considered appropriate compensation and how to obtain it,” the report states.
Increased verdicts are being seen for single-fatality crashes, crashes resulting in personal injuries, verdicts involving trucking or workplace class actions, and average verdicts, the report says.
The median verdict awarded in personal injury crashes has increased from $39,300 in 2010 to $125,366 in 2020, it said.
As individual verdicts reach new heights, they establish new precedent and influence future judgments — “fueling lawsuit inflation across all lines of business,” the report said.
Auto thefts are on the rise, spiking by 7% last year and surpassing 1 million for the first time since 2009, Friedlander said. Certain Kia and Hyundai models that lack engine immobilizers are especially easy to steal, he said.
Finally, high levels of inflation since the pandemic have increased prices of new and used cars, replacement parts, and labor, Friedlander said. Auto replacement costs rose 45.6% between 2019 and 2022, largely because vehicles are becoming more complex and expensive to repair, he said.
Friedlander added that higher premiums imposed last year weren’t covering “the escalating losses being paid out.” It’s why “we have seen some auto insurers implement multiple rate increases this year,” he said.
After the industry posted high underwriting losses in 2022, the institute is forecasting another year of losses in 2023, he said. That means insurers as a whole will pay out more in claims than they collect in premiums, requiring premium increases for them to climb back into profitability.
But Florida is worse
In addition to national issues, numerous Florida-specific trends are sharpening the bite for motorists in the Sunshine State, he said.
They include the nation’s fourth-highest vehicle theft rate. In 2022, Floridians lost 45,973 vehicles to thieves — a 6% increase over 2021.
Claims-fraud levels are high in the state, particularly staged accidents in South Florida and windshield replacement scams across the state.
The number of lawsuits stemming from those glass replacement schemes in 2023 will likely surpass 2022′s record of 33,196, he said. Lawsuits by drivers, despite recent legal reforms banning one-way attorney fees, are averaging more than 50,000 a month in the state, Friedlander said.
Florida also experiences high crash and fatality rates, and high rates of deadly “hit-and-run” crashes, he said. Meanwhile, 20.4% of Florida drivers are uninsured. When they crash, everyone else has to pay their bills.
Medical treatment costs for accident victims are rising in Florida, as are severe weather events that cause insurers to declare vehicles total losses, he said. More than 100,000 vehicles were destroyed by Hurricane Ian last September, Friedlander said.
Logan McFaddin, vice president of state government relations for the American Property Casualty Insurance Association, said reforms enacted in the last legislative session in March will “restabilize” Florida’s insurance market, but it will take time for “the current wave of legal system abuse to wash through the system.”
Here are your limited options to save
Meanwhile, drivers may wonder if there’s anything they can do to reduce their auto insurance costs.
The answer is not really — unless you are willing to reduce your coverage levels or install a device that lets your insurer monitor your driving habits.
With all of the major insurers increasing premiums by similar amounts, drivers will have a hard time shopping for better prices, acknowledges Divya Sangameshwar, spokeswoman for the consumer-focused insurance price-comparison website Value Penguin.
In fact, drivers who own older cars, have no tickets or accidents, own their homes and have good credit scores are likely already paying the lowest rates they can get without reducing coverage levels or increasing deductibles, Sangameshwar says.
While reducing coverages or increasing deductibles can help drivers who can’t pay higher rates, it’s a risky gambit that can increase chances you’ll be left unable to repair your vehicle or be sued for uncovered expenses by occupants of the vehicle you hit.
Drivers with the best chances of shopping for discounts are those with less-than-ideal credit who are insuring newer, more expensive cars and already paying higher insurance premiums, she said.
She recommends visiting an independent insurance agent with access to coverage from smaller, regional companies to find out if there are any available lower-priced plans.
Friedlander provided a list of tips for ways consumers can reduce their auto insurance costs:
- Get multiple quotes. “We recommend a minimum of three quotes to compare costs — auto insurance is very competitive and there could be significant price differences between insurers,” he said.
- Enroll in a telematics program, commonly called usage-based insurance. Many companies now offer drivers the opportunity to install a plug-in device or mobile app that can measure driving habits and price coverage accordingly. These devices track your average speed, how hard and how often you brake, how quickly you accelerate, and the time of day you drive. Safe drivers can save up to several hundred dollars, he said, but unsafe drivers could see their costs rise.
- Bundle home and auto coverage with the same insurer. (This is more difficult in Florida, where national insurance companies restrict the types of homes they are willing to insure.)
- Avoid accidents or moving violations for three years and earn safe-driver discounts.
- Pay your bill in full at the beginning of your term.
- Enroll in paperless billing.
- Take a defensive driving course.
- Take advantage of student and military discounts.