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Bob Miller, CPCU - Brightway Palencia - 03/20/2017 - Auto insurance premiums are going up all over Florida for just about every insurance company, even for drivers who have been with the same company and who haven’t received a ticket or been involved in an accident. Companies do raise rates on individual policies when there has been an at-fault crash or for some moving violations. Additionally, rates can go up across the board for all classes of drivers.
One of the most important things to know about Auto insurance is that each company has developed its own rating process that fits its needs. Think about it: Each auto insurance company insures a unique set of drivers who have a unique set of accidents and other claims. On top of that, each company’s cost of doing business (administrative overhead, cost of salaries, real estate, information systems, telephony) is different. So, each company prices to its cost of doing business, including the claims they pay, to develop its rating process that ensures their cost of doing business is covered, along with some profit (usually).
Because of this, the smart consumer uses an insurance agent—an expert—to shop the market for them. In so doing, they can save hundreds of dollars for the identical policy from a different insurance company.
That being said, if you have multiple incidents or accidents, tickets and less-than-good credit, you will pay more for your car insurance. Conversely, if you are a good driver, you should consider options available for adding accident forgiveness or disappearing deductibles that many companies offer.
And, if your household has more cars than drivers, you should consider a “pay-as-you-drive” option now available.
Many companies now offer a version of a telematic device that can save you money. Everyone has probably noticed Progressive advertising its ‘SnapShot’. This device plugs into your vehicle’s “OBD II” (on-board computer) port (generally located on the underside of the driver’s side dashboard) and tracks how you drive. Some insurance companies track speed and distance while others track hard braking, fast acceleration, time of day, area of town and other factors. Your results, compared to an expected average, could result in premium savings.
If you don’t use a vehicle a lot, or are a very safe driver (you anticipate stops versus slam on brakes, accelerate in a controlled way, don’t drive during high-risk times (midnight to 3 a.m., for example)), you could save a lot of money on your premium.
Lower Gas Prices
Gas prices have remained low for the last year or two, which leads to people driving more. More driving and more vehicles on the roads results in more crashes.
The number of drivers and vehicles on our roadways has risen. With nearly 16 million drivers, the number of registered vehicles has grown 40 percent in the last 20 years from 11.6 million to 16.1 million registered vehicles in the Sunshine State.* That means sharing the road with more motorists than ever before in our state’s history.
Large Number of Uninsured and Underinsured Drivers
The estimate is almost half of all drivers in Florida have either no insurance or their liability limits are very low, and in many cases, too low to cover the cost of damage they may cause. Your best bet is to carry Uninsured and Underinsured Drivers coverage so that you are sure you are always properly protected.
Increase in Distracted Drivers
Many point to this area as the biggest reason rates are going up because distracted drivers can cause, or have a harder time avoiding, crashes. Not only is texting while driving a problem, but so is anything that takes your eyes and mind off the road, such as talking on the telephone, adjusting or viewing a navigation system and changing the radio station. Still common are people reading books, fixing hair, shaving, eating and attending to children, pets or others in the car. All of these can divert attention, even for a short time.
Lack of Courtesy
Tailgating, speeding, running red lights, turning right on red without even stopping are all symptoms of the lack of courtesy we all see every day that lead to the increase in accidents.
Higher Cost of Repairs
Cars cost more and are more complicated every year. There seems to be a lack of ‘minor’ accidents. (Remember when cars had bumpers that were actually functional?) A seemingly small bump in a parking lot can cause what looks like minor damage, but the actual repair cost can be significant. Any damage to the front-end, for example, can severely damage the complex engine, electronic and computer components.
Availability of Attorneys
There are no lack of attorneys who specialize in representing people who have been involved in accidents. Even if someone seems to be completely at fault, he can access an attorney to represent him in the hope of minimizing or avoiding any potential liability. Insurance companies incur costs since they defend you against claims in addition to paying for actual damages.
Increase in Fraud Cases
There are many cases of fraud that impact auto insurance premiums. Staged accidents, referrals to partner attorneys and medical clinics can lead to significant expenses that are billed to insurance companies.
Unintended consequences of no-fault seems to have led to higher costs and premiums. One goal of no-fault was to have each party to an accident collect from their own insurance companies for minor injuries. This would avoid lawsuits and attorney costs. Only if injuries exceeded $10,000 (or caused permanent injuries and a few other considerations) could someone look to the other’s insurance company and sue for damages. It does not take much to have costs for injuries exceed $10,000; a trip to the emergency room, extra tests, X-rays and specialists can drive up costs quickly. So, many costs for seemingly minor injuries suddenly can turn into major costs, which completely over-rides the intent of the no-fault coverage.
The bottom line: Auto insurance is a necessary evil. There are ways you can help control your own costs. While taking these steps into consideration, don’t be penny-wise and pound-foolish. At the end of the day, you must ensure you are properly protected to ensure your peace of mind and your other assets are safe.
Bob Miller is the Owner of Brightway, Palencia, located in St. Augustine, Fla. You can reach Bob and his team of all-star agents for more choice and expert counsel by visiting his website at BrightwayInsurancePalencia.com.
*Traffic Crash Facts, Annual Report 2015, Florida Department of Highway Safety and Motor Vehicles
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