August 26, 2011

Why Florida Car Insurance Costs May Rise Next Year

In line with prices throughout the rest of the economy, auto insurance costs have been slowly but steadily inching upwards over the last few years. Costs have risen more in some states than others but, in particular, Florida car insurance rates have seen some of the highest and most rapid increases in the country. This makes it especially difficult for Florida residents because they already pay among the highest auto insurance premiums in the United States and the increases are added on top of already expensive insurance costs. Since past insurance rate statistics are usually able to predict future trends, Floridians stand a good chance of being faced with increases in auto insurance costs again next year.

Some of the underlying factors behind the increases in Florida car insurance rates relate directly to the drivers and conditions in the state itself. The increasing population in several of Florida's major population centers has led to more cars on the road. Naturally, more drivers on the road lead to more accidents. Insurance claims related to accidents represent costs to insurance companies since, depending on who is at fault; they have to pay for legal fees, car repairs and bodywork, as well as medical expenses ranging from hospitalization through physical therapy and other outpatient care. With these kinds of costs on a rapid upswing for insurance companies, they have been steadily raising premiums for all drivers not just those involved in accidents.

The current economic downturn in the national economy also plays a complex role in the steady increase in Florida car insurance rates. Unemployment rates remain higher than usual and the longer the recession continues, the more financially strapped drivers become. This leads drivers to either drop or reduce their coverage as a way to make ends meet. Insurance companies, then, are collecting less revenue in the way of premiums to offset their already increasing costs. This is especially true of Florida which ranks among the top five states in having the highest number of uninsured drivers on the road.

Difficult economic conditions across the state have also lead to an increase in auto insurance fraud and staged crashes. Individuals are setting up crashes and then submitting false insurance claims for bogus damages and personal injuries. Increased fraud has led directly to increased premiums for all drivers.

In the near future, analysts do not anticipate a change in the conditions causing the rising auto insurance costs in Florida. Consequently, it is anticipated that premiums will continue to rise next year. Drivers looking to buy car insurance or renew existing policies should comparison shop among companies to get the lowest rates possible.