Why is Florida Car Insurance so Expensive?
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Why is Florida Car Insurance so Expensive?

By Autolist Editorial | April 9, 2020

When it comes to auto insurance, Floridians pay some of the United States' highest car insurance rates. Why is Florida car insurance so expensive? There are several reasons, some of which might surprise you. Others might help you find insurance companies that offer the lowest rates.

Why is Florida Car Insurance So Expensive?

Auto insurance premium costs in Florida have increased steadily since 2009. The Sunshine State ranks third in the United States for auto insurance rates, an average of $2,219 annually as of April 2019, reports Insure.com. The most expensive states for average annual auto insurance premiums are Michigan, $2,611 and Louisiana, $2,298. The average cost of Florida's auto insurance premiums is 52% higher than the national average. By comparison, New York's average rate is $1,789 and California's is $1,846.

More than a dozen insurance companies operating in Florida offer auto insurance policies, but State Farm, Travelers, Geico, USAA, and Florida Farm Bureau offer the state's lowest rates, according to a 2019 ValuePenguin study. The cost of annual premiums depends on several factors, including where drivers live, the number of uninsured drivers, driving records, credit scores, and insurance claims filed. The national average for 2019 is $1,457, a $92 increase from $1,365, the 2018 national insurance price.

Uninsured and High-Risk Drivers Boost Auto Insurance Rates

The Florida Department of Highway Safety and Motor Vehicles requires all drivers to have minimum levels of car insurance coverage. Motorists in Florida must have liability coverage of $10,000 for property damage liability. Drivers must also have $10,000 in personal injury protection (PIP). PIP covers you up to your policy limits whether the accident was your fault or not. It's wise to carry bodily injury liability insurance, too, although it's not required. If you cause an accident with your car, bodily injury liability insurance pays for severe and permanent injury or death others suffer.

One reason why Florida car insurance is so expensive is that Florida ranks number one nationally in the category of uninsured drivers. Approximately 26.7% of its drivers operate vehicles without insurance. If authorities stop an uninsured motorist, their driving privileges may be suspended. There's no temporary license provision for work or school. These drivers also risk up to three years of vehicle registration suspension.

States with high percentages of uninsured motorists see insurance companies raise the cost of auto insurance premiums. If you have a car accident with an uninsured motorist, your insurance company pays for your damage and loss under the uninsured motorist coverage on your policy. The claims insurers pay for drivers without insurance mean higher premiums.

Also, Florida has a sizeable high-risk driver population. The state is home to a large population of elderly drivers, as well as host to tourists, visitors unfamiliar with highways, streets, and roads, and students attending the state's numerous colleges and universities. These circumstances help explain why the state's insurance rates exceed the national average.

Bad Weather Increases Car Insurance Rates

True, Florida is known for its beautiful weather year-round. But what happens when a hurricane or violent storm hit a town and destroys or floods thousands of vehicles? Thousands of property damage claims follow. Insurance companies pay claims for repairing those vehicles or totaling them and paying their cash value. Florida auto insurance companies make up losses by setting higher rates that take into account risk factors related to weather. Residents near the coast, waterways, or low-lying terrain where flooding may occur should expect to pay more in premiums.

Car Insurance Companies Consider Where Floridians Live

Car insurance companies use location to set auto insurance premium costs for Floridians. If you live in Miami, the average annual insurance policy premium is $2,198, and in Tampa, you'll pay an average of $1,841. In St. Petersburg, the average is $1,497, in Orlando, it's $1,417, and in Gainesville, it's $961. Those cities' average insurance costs are much higher than if you live in Jacksonville, Florida's largest city. Jacksonville's average annual premium is only $640.

Rates vary within communities in the same city. Before setting premiums, insurers check the numbers of car accidents, crimes, and claims in neighborhoods. Insurance companies set insurance coverage rates higher in areas with higher neighborhood risks. Additionally, car insurance rates between companies in the same city can vary by more than $1,000 in annual premiums. The ValuePenguin and Insure.com websites offer search engines that find the lowest rates based on ZIP codes and driver ages.

Driving History and Credit Score Matter

A good driving history helps you avoid paying higher premiums. Generally, drivers under 25 years old should expect to pay more. Married couples often pay less. DUIs, speeding, driving with no insurance, and at-fault accidents lead to higher car insurance premiums.

Paying your bills on time helps, too. Nationwide says it's among the 92% of all insurers who use credit scores when setting premiums. These insurers look at your length of credit history, and types of credit you have, including loans and credit cards. Your payment history, including delinquencies or late payments, also matters. To increase your chance of getting the cheapest car insurance, keep a clean driving record and good credit.

Companies Offer Cheap Car Insurance in Florida

When shopping for cheap car insurance in Florida, ValuePenguin says look at Florida Farm Bureau, GEICO, Travelers, and State Farm. These companies offered drivers coverage at an average annual cost of $529, a savings of $569 annually.

USAA offers reasonable car insurance rates for veterans' and military families. Florida Farm Bureau offers the cheapest car insurance, $381, compared to $1,098, the state average premium.

Inquire About Discounts to Lower Costs

You may qualify for discounts to lower your auto insurance rates. Ask about discounts for car safety features, anti-theft devices, multiple cars and defensive driving courses. Mature drivers, senior citizens, veteran or military service members, and good students often receive lower car insurance rates. Driving a low-mileage vehicle or carrying other insurance policies with the same company might reduce your premium payments.

Now you know the answer to the question, "Why is Florida car insurance so expensive?" You also know things within your control to obtain the cheapest car insurance available. Maintain good credit, keep a clean driving record, get several car insurance quotes, and ask for discounts before paying your next premium.

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