III: Easy to see why Florida insurance rates are rising
A recent report from the Insurance Information Institute (I.I.I.) took a close look at why insurance premiums are rising in the state of Florida and found a straightforward answer.
Insurance claims are steadily increasing in Florida and insurance premiums in the state are increasing as a result. According to the I.I.I., rates for auto insurance, business insurance and home insurance in Florida are all rising as claims and claim payments trend upward in the state.
For, example, Florida home insurance claims (reopened and new) have caused insurance company losses to rise 80 percent since 2005, the I.I.I. said, and insurers are responding by requesting rate increases.
According to the I.I.I., there are two main reasons for the rising cost of Florida home insurance claims:
- Insurers in Florida are required to pay full replacement cost for home repair upfront. In other states, insurers can pay a portion after completion of work.
- A provision gave insured homeowners up to five years to file a claim for hurricane damage. New legislation now puts this limit at three years.
The cost of auto insurance claims in Florida has also skyrocketed, according to the I.I.I. From 2008 to 2010, the average claim for an auto accident rose from $5,808 to $8,096. Much like the result of rising home insurance claim costs, these increases are results in higher auto insurance rates for drivers in the state.
Florida is one of a dozen states that have a no-fault law in place. This permits the filing of claims due to injuries incurred in an auto accident regardless of fault. According to the I.I.I., this law has led to much fraudulent activity and the Florida Division of Insurance Fraud is working to squash this type of abuse.