Florida Auto Insurance
To many, Florida is the best state in America. With a whole coast of beautiful beaches, a warm climate, and a variety of landscapes that include the Everglades and natural springs, Florida has a lot to offer. That's why young singles, families, and retirees looking to escape cold climates all enjoy calling the Sunshine State home.
While living in Florida has its perks, residents who live there also have a responsibility to obey state-mandated laws. If you own a vehicle and you're a permanent resident of Florida, it's your duty as a vehicle owner to purchase insurance.
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If you're buying insurance for the first time or you need to transfer your coverage before you relocate, here's what you need to know about auto insurance requirements and your options to build the best policy.
Auto Insurance is Mandatory in Florida
If you own a vehicle with at least four wheels that is registered in the state of Florida, auto insurance is mandatory. You'll need to purchase sufficient coverage from a company that is licensed by the Florida Department of Insurance to comply with the law. Florida state officials require both liability and no-fault coverage.
What does it mean when they say Florida is a "no-fault state"?
In the world of insurance, there are two types of auto insurance systems — no-fault insurance systems and fault-based tort systems. While tort systems are common, Florida operates under a no-fault system where all drivers are required to carry medical coverage to pay for their own medical expenses.
What is the purpose of a no-fault auto insurance system?
It would seem as if every state would allow auto insurance carriers to use fault allocation after investigating an accident, but that's not the case when it comes to injury claims. The purpose of the no-fault system is to reduce the state's reliance on the justice system to settle accident claims.
Unfortunately, since no-fault coverage is paid out rather quickly to prevent the need for litigation, opponents of the system claim that the system is being abused. This abuse is why the state spends a lot of money running the Florida Department of Financial Services which investigates fraud to ensure that people are not exaggerating their injuries.
How much insurance is required in Florida?
Knowing about the insurance system is helpful, but what's more important is that you know how much insurance you're required to carry. In Florida, you must carry at least a minimum amount of no-fault and liability coverage. All providers must sell you the state minimum unless you've returned your plates and only require storage insurance.
Failing to carry the appropriate amount of coverage can land you in hot water with the state. If you're not familiar with the minimum coverage requirements, here's a breakdown of what you must carry, the limits that you must have, and how the coverage protects you:
- Personal injury protection (PIP) – $10,000 limit per person; under the No-Fault Law, you must have at least $10,000 in PIP that pays for your medical bills and other related bills that you incur after injury in an auto accident. No-fault coverage pays for up to 80% of medical bills, 60% of lost wages and $5,000 for death benefits. Coverage applies to drivers on the policy and their relatives.
- Bodily injury liability (BI) – not generally required; bodily injury liability is a third-party coverage that's generally required in tort states. Since Florida has a no-fault system, BI isn't generally required by law. The only time that you're required to carry BI is when you've been convicted of a DUI in the past. If so, you must carry $10,000 per person and $20,000 per accident in BI.
- Property damage liability (PD) – $10,000 per accident; unlike bodily injury, property damage is a required third-party liability coverage. It doesn't pay for medical bills but it does cover the cost to repair property owned by others. This is the one coverage where fault is used to determine which policy will pay. You must have at least $10,000 per accident in PD coverage.
Are there other types of coverage types available for added protection?
Purchasing the state minimum coverage options will satisfy the law, but the limits won't necessarily pay for all of the damages in even a minor accident. Since the cost of medical care and the cost of labor is higher than ever, it's important to consider raising your limits and electing to carry optional coverage.
Here's some of the coverage that you can add:
- Uninsured motorist coverage (UM) – All policyholders must be offered the option to buy uninsured motorist coverage as long as they are carrying bodily injury liability. If you're carrying BI to protect yourself against lawsuits, consider adding UM to pay for your own lost wages and medical bills after a non-fault accident with an uninsured motorist.
- Physical damage coverage – Physical damage isn't required by Florida law. It is, however, required when you are leasing or financing your car. Physical damage consists of comprehensive and collision coverage. While collision pays for damage to your car if you collide with an object, comprehensive pays for losses apart from collision like fire, flood, and theft.
- Rental car reimbursement – Paying for a vehicle replacement can be difficult when you're trying to pick up the pieces after a loss. If you're looking for coverage to pay for a rental car, you can add rental car reimbursement coverage that provides you with a daily benefit if you need a car after a covered physical damage loss.
Do you really need Uninsured Motorist Coverage?
Every state has a unique demographic. Some states have higher incidences of uninsured drivers simply because of the region they are in.
Researching the rate of uninsured drivers in Florida might help you decide if you need to spend the extra money to put an optional UM coverage on your policy.
Based on the statistics, Florida has the third highest number of uninsured motorists in the nation. Currently, 23.8 percent of drivers in Florida have no insurance. Since there are about 19.71 million registered cars in Florida, that translates to about 4.69 million uninsured cars, which is a major reason you should consider adding uninsured motorist protection.
Do you need physical damage coverage?
No-fault laws keep auto insurance premiums pretty high for things like PIP and liability. It might be surprising to learn that the average premiums for comprehensive and collision coverage in Florida are lower than most states. In Florida, the average policyholders pay $106.83 for comprehensive and $242.48 for collision per year.
Even though physical damage premiums are fairly low, it doesn't always make sense to add the coverage to your policy. If the value of your car isn't high enough to justify the cost, it might make more financial sense to take on the risk of self-insuring. That's something you'll need to research by looking at the actual cash value (ACV) of your car.
Does it make sense to carry only comprehensive?
You may have noticed that comprehensive costs almost one-third of the cost of collision. That's because comprehensive claims usually involve no fault of your own. If you want to protect yourself against thieves and vandals, having comprehensive might make sense.
To really get a good idea of whether or not you need theft protection, look at what property crime rates are like throughout the state. In Florida as a whole, the rate of motor vehicle theft is 2.14 per 100,000 residents.
Your chance of being a victim is 1 in 29. In light of this, having comprehensive coverage is a good idea.
How are your auto insurance rates determined?
Premiums in Florida can be exorbitantly high. That's especially true if you're considered to be a high-risk driver. Insurance companies use several different factors to determine whether or not you're a high-risk driver.
Some classifications used to put you in a rating category include:
- Years of driving experience
- Age, gender, and marital status
- Garaging zip code (some FL zips are much more expensive than others)
- Driving habits and annual mileage
- Drivers in the home
- Accident records within the last three years
- Credit-based insurance score
- Convictions for minor and major infractions
- Coverage limits carried
- Prior insurance and lapses
The only way to really see how much you'll pay for Florida insurance is to compare premiums. You can get quotes from each provider individually or you can use an online comparison shopping tool to get dozens of quotes at once. If you're looking for convenience, enter your zip code and compare quotes from your home or your office today.
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