As is the case in all American states, there’s a Financial Responsibility Law to produce a situation in which the owners of vehicles both protect themselves and other road users from financial loss. It came into force in 1947 and, until 1978, Florida had a mandatory system for everyone to buy a minimum amount of liability insurance. But as from January 1, 1978, Florida joined the small number of states applying the no-fault insurance approach to private vehicles — commercial vehicles are still mandated to buy liability insurance. This does not exclude the possibility of self-insurance if you can meet the current capital holdings currently set by the DMV. You are required to carry proof of insurance with you when you drive and to produce it when stopped or involved in an accident.
The change to no-fault has not been without its problems and, for a number of reasons, the average annual premium rates are little better than average. The saving in most other countries and states from no-fault has produced lower rates. Avoiding the need to litigate which driver is at fault in any accident, reduces delay in settling claims and, except in more unusual cases, means there’s no need for the services of a car accident attorney. But sacrificing the test of the facts through the courts has opened the car insurance companies to a mass of fraudulent claims. Unless the insurers have reason to suspect dishonesty, they pay out. To spend resources investigating the detail of every claim would be a waste. It’s unfortunate, but the state has become a magnet for staged accidents and other frauds.
The minimum amounts required for the registered owner of the vehicle (not the driver) are:
$10,000 to cover the cost of medical treatment for one person;
$20,000 to pay towards the cost of treating two or more people;
$10,000 to cover property damage.
Given the rapidly rising costs of medical treatment, the majority of people who do not hold separate health insurance, buy additional cover for their own treatment. Similarly, since the amount of cover is to pay for damage to your own vehicle, you will be required to buy more cover if you have an auto loan or someone else holds a lien over the vehicle.
The state has an electronic reporting program for car insurance companies. They are required to notify the DMV of new policies within 30 days of their issue. Cancellations are to be reported within 45 days. This allows a continuous verification of the insurers’ and the DMV’s registration records. If there’s a mismatch, the DMV asks the insurer for verification of the cover. If no policy is in force, enforcement action follows.
Every driver involved in an accident is required to produce evidence the vehicle is insured at the scene. Remember the obligation is on the owner to insure so if the owner is not driving, a delay of 30 days is allowed. However, if anyone has been injured and the proof of cover cannot be produced at the time, the owner comes under a three-year regime. Proof of insurance is formally required together with a release given by the injured party. Failure to supply this information means the loss of driving privileges for three years. If the driver is uninsured, driving privileges will also be suspended if he or she does not compensate anyone injured.
The cost of insurance
In a recent survey, insurers in every state were asked to provide auto insurance quotes for a hypothetical driver aged 40 who had a 12 mile commute. The rates quoted in the majority of states cluster so even though Florida ranks the 29th most expensive state, it’s only $42 less than the overall average.
A better guide comes through the good offices of the Florida Office of Insurance Regulation (http://www.floir.com/choices/Home/Examples/1). The Insurance Commissioner for the state has a rate comparison system. It does not quote for individual drivers. Rather it provides a number of examples to help people get a feel for the average cost of car insurance based on:
• who is covered;
• the make and model;
• the type of cover; and
• the amount of cover.
So a single female driver with one car and one accident in the last three years, driving a Toyota Camry in Franklin County, would pay between $912 and $3,971 depending on the choice of insurer. The same driver in Palm Beach County would pay between $1,539 and $7,320. In other words, there are major variations in the rates depending on where you live.
A family with parents both aged 50, a single son aged 20 and a daughter aged 18, has two cars, no claims or violations in the last three years in Suwannee County in the north of the state, and would pay between $2,320 and $5,316. But if the same family lived in Palm Beach County, the lowest rate would be $4,197 and the highest $13,375.
A senior married couple, he aged 70, she 65, with a single car and no accident or violation, and living in Gulf County, would pay between $619 and S1,382. Move to Palm Beach County and the rates vary between $856 and $4,132.
You will notice some auto insurance companies use artificially high rates to discourage certain types of driver.