Why is Car Insurance So Expensive in Florida?

Last Updated on November 5, 2022

Drivers in Florida pay some of the highest car insurance rates in the United States.

What makes Florida such an expensive place to insure a vehicle? Why are car insurance premiums so high in Florida? Today, we’re explaining all of the reasons why Floridians pay more for car insurance.

Why is Car Insurance So Expensive in Florida?

Florida is Consistently Among the Top 10 Most Expensive States for Car Insurance

First off, let’s get something out of the way. You’re not crazy: it’s relatively expensive to insure a car in Florida. In fact, Florida regularly ranks as one of the top 5 or top 10 most expensive states in America in which to insure a vehicle.

On average, Florida drivers pay approximately $1,650 per year for car insurance. The nationwide average in the United States is about $1,325.

Michigan and Louisiana consistently rank higher than Florida as the two most expensive states in the country for car insurance, although Florida is never far behind.

We get it: Florida drivers pay a lot for car insurance. Now let’s look at some of the reasons why.

Why Do Florida Drivers Pay More for Car Insurance?

Drivers in Florida pay more for car insurance for an obvious reason: insurance companies have comparatively high expenses in Florida compared to other states in the United States.

Insurance companies have high expenses because they handle a lot of losses and a lot of claims. It’s that simple.

The next question is: why do Florida drivers make more claims than drivers in other parts of the United States? Florida doesn’t get winter weather. There are no mountains with dangerous driving conditions. It’s sunny and warm year-round. Why do Florida drivers make more claims and drive up costs for insurance companies?

One big reason is that Florida is one of the states that require drivers to have Personal Injury Protection insurance, or PIP.

Approximately 20% of your auto insurance policy in Florida can go towards PIP coverage. According to Florida’s Sun Sentinel, Florida drivers pay approximately $3.5 billion per year in PIP premiums. Some drivers pay as much as $2,000 per year for PIP coverage alone.

Another reason is that Florida has some of the lowest required coverage limits in the country. That may sound like it would drive down costs. However, it really just increases prices for drivers who want coverage of $300,000 to $500,000 or wish to pay for underinsured motorist coverage. Drivers with “bare minimum” insurance policies pay relatively low rates, while the average driver with a “peace of mind” plan pays a relatively high rate.

Coverage TypeAmount Required
Bodily injury liability coverage*$10,000 per person
$20,000 per accident
Property damage liability coverage$10,000 per accident
Uninsured motorist coverage*$10,000 per person
$20,000 per accident
Personal injury protection$10,000
*Note - Bodily injury liability coverage and uninsured motorist coverage can be waived for drivers without DUI's.

There are other reasons why Florida drivers pay more for car insurance. Florida drivers tend to be more litigious than drivers in other parts of America. Florida drivers are more likely to seek compensation via a lawsuit, which drives up costs for insurers.

Florida is also heavily urbanized. The vast majority of the population lives in big cities or medium-sized cities. Drivers in urban areas are more likely to make claims than drivers in rural areas. Remember: with a population of 21 million people, Florida is the third most-populated state in America. The only two states with more people than Florida are California (the third-largest state in America) and Texas (the second-largest state). Florida, meanwhile, is the 22nd largest state. All of those people are crammed together – and that means a higher accident rate than in other, less urbanized states.

Why Does Florida Require Personal Injury Protection Insurance?

The main reason car insurance is so expensive in Florida is that, as mentioned above, the state requires drivers to have Personal Injury Protection (PIP) coverage.

So why is Florida one of a handful of states requiring PIP coverage? Why is the state driving up insurance costs?

The Sun Sentinel has a good explanation of the issue here. Essentially, Florida used to have a no-fault insurance system. That made it easy for drivers to claim $10,000 in coverage after every accident. Here’s what happened next, according to the Sun Sentinel:

This being Florida, scammers went after that $10,000 like sea gulls after fish parts. Fraud rings staged accidents, with “victims” piling out of vehicles. Bogus clinics ran up just enough “bills” to keep under that $10,000 limit.

The state has made various attempts to reform the system over the years. in 2012, they tried PIP Reform 9.0. The goal was to reduce PIP premiums by prohibiting drivers from using PIP to cover expenses like acupuncture and massage therapy. Non-emergency costs were limited to $2,500. The end result was good: insurance companies saved $2 billion per year.

Nevertheless, Florida drivers still pay some of the highest insurance prices in the United States. The best thing you can do is compare quotes with as many insurance companies as possible to make sure you’re paying the best possible rates for car insurance in Florida.

James Shaffer
James Shaffer James Shaffer is a writer for InsurancePanda.com and a well-seasoned auto insurance industry veteran. He has a deep knowledge of insurance rules and regulations and is passionate about helping drivers save money on auto insurance. He is responsible for researching and writing about anything auto insurance-related. He holds a bachelor's degree from Bentley University and his work has been quoted by NBC News, CNN, and The Washington Post.
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