November 18, 2011

Florida Car Insurance Rates Could Change After Recent Fraud Crackdowns

One of the largest problems facing the auto insurance industry is the continued rash of fraudulent or exaggerated claims made by unscrupulous policyholders. Cheap car insurance may become a thing of the past as more and more of these claims are made and insurance companies have to pay out millions not only to try to prevent the fraud from happening, but also to those who are successful in getting a fraudulent claim through. Florida car insurance rates in particular may change after a recent fraud crackdown in the state aimed at cleaning up some of the issues surrounding their no-fault policy.

In Florida, a no-fault insurance policy has been adopted, which means that in an accident, neither driver is declared to be "at fault," no matter the circumstance. This means that suing another driver in court is almost an impossibility, and all costs for each driver–the repairs of the vehicle, medical bills and any other personal damage costs–will be paid by the respective insurance companies, rather than by the insurance company whose insured is deemed at fault. In some respects, this makes for a more streamlined insurance system, but it can also lead to a situation in which clients try to claim fraudulent injuries in conjunction with a doctor who does not act honestly, or in which policyholders choose to stage accidents to claim more damages than actually occur. This fraudulent activity has led to millions of dollars being paid out by Florida insurance companies to those who did not deserve it.

As a result, Florida has made efforts to crack down on these types of accidents and claims, and requires a far higher level of diligence and attention from insurance companies–requiring them to adopt anti-fraud plans or hire fraud investigators. With this crackdown comes the possibility for change in the Florida insurance market, as companies are forced to spend greater amounts of money on defending against fraud rather than simply providing insurance. Florida drivers may see their rates increase across the board, even if they have never made a fraudulent claim, as companies are forced to spend more money both to deal with outstanding claims that are potentially fraudulent and to prosecute those that are responsible. Insurance fraud is pernicious, and it is in the best interests of Florida drivers to ensure that they report any potential abuse of the system immediately so that those committing these crimes can be dealt with and Florida car insurance rates can remain relatively low.

Cheap car insurance is something every Florida driver wants, and while the recent insurance fraud crackdown may limit the amount of overspending done by companies, it may also raise basic insurance rates.