Insurance Blog

Auto insurance sticker shock hitting South Florida drivers


Recently besieged by steep rate increases for health insurance and homeowner’s insurance, South Florida residents are getting zonked again this year with unexpectedly high auto insurance price hikes.

Rates are higher across the nation, up an average 8.5 percent over the year ending January 2018 and 7.5 percent the previous year, according to statistics from the U.S. Department of Labor. That’s especially bad news for South Florida drivers, who are already paying among the highest rates in the nation.

People with clean driving records — meaning no tickets, no crashes, no insurance claims — are getting renewal notices with premium increases between $200 and $800 — “almost double in some cases,” said Corey Broder, a service agent at Seeman Holtz Property & Casualty Inc. The company, headquartered in Boca Raton, has about 77,000 clients in 11 states, Broder said.

Young adults and drivers with less-than-perfect records can expect to take the worst hits. One client, a single mom who bought her 19-year-old son a used car, recently saw her premium for a six-month term jump by $800 to $2,616, Broder said.

Experts are blaming the rate hikes on increased risks on the roads: Too many drivers are staring at their smartphones from behind the wheel. Cheap gas is causing us to log more miles, and the strong economy is putting more vehicles on the roads.

More crashes lead to more claims. More claims lead to higher costs for insurers. Higher costs for insurers must be recouped by charging everyone more.

In metro regions like South Florida, “high density development is putting more cars on the road, increasing likelihood of accidents,” said Lynne McChristian, Florida representative for the Insurance Information Institute, an industry trade group. “And distracted driving is a huge problem coast to coast.”

Statewide, the number of motor vehicle crashes increased 15 percent between 2014 and 2016, more than three times as fast as the state’s population rate grew during that time, according to data from the Florida Department of Highway Safety and Motor Vehicles. Crashes with fatalities increased 27 percent — from 2,494 to 3,176.

Crashes and fatalities in the tricounty region increased at a slightly lower rate over the same period — crashes increased 12 percent and fatalities jumped 24 percent.

After hovering around 250,000 since 1997, the annual number of crashes statewide began trending upward in 2011, coinciding with the beginning of the economic recovery and the rise in popularity of smartphones. Crashes have increased each year since — from 227,998 in 2011 to 395,785 in 2016, state data shows.

The sharpest price increases are coming from a handful of companies, Broder said, including Safeco Insurance, Nationwide Insurance and Hartford Insurance Company of the Southeast.

According to rate filings with the Florida Office of Insurance Regulation, Safeco, a Liberty Mutual company, hiked its rates for Florida drivers an average of 12.2 percent. That took effect Oct. 14 for new customers and Dec. 20 for renewing customers.

Nationwide received approval for an average 8.2 rate increase that took effect Feb. 15. Hartford Insurance Company of the Southeast is seeking a 7 percent rate increase that would take effect April 21. It would follow a 15.9 percent hike in 2017 and an 18.5 percent increase the year before that.

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Three Florida cities were among the 10 most expensive large cities for auto insurance in the United States in 2017, according to a new report by The Zebra, a price comparison website founded in 2012. Hialeah, in Miami-Dade County, was the third most expensive with an average annual premium of $2,709 for a single driver. Miami was fourth at $2,651 and Tampa was eighth at $2,553.

The two most expensive cities were Detroit, Mich. ($5,414), and New Orleans, La. ($3,433).

Florida’s average premium of $1,878 was fifth-largest in the United States, following Michigan, Louisiana, Kentucky and Rhode Island. North Carolina was lowest at $865.

The national average of $1,427 increased about 20 percent since 2011, the report said.

Rates can also be affected by high numbers of claims after catastrophic weather events, and 2017 saw plenty, the report said. The year started with hail in Colorado and tornadoes in the midwest and ended with hurricanes Harvey, Irma and Maria, and California wildfires.

Drivers in states with heavy losses from those weather events won’t start to see effects on rates for several months up to a year afterward, the report said.

Of all those events, Florida was impacted most by Hurricane Irma. But McChristian said losses from hurricanes would have a minimal effect on auto insurance rates compared with what widespread wind damages will do to homeowner insurance rates.

Nicole Beck, spokeswoman for The Zebra, countered that hurricane-related losses inevitably work their way into insurers’ rates: “Irma will most certainly affect rates in 2018,” she said by email. “We do not have data nor can we provide anything more than speculation, but whenever disasters like that hit an area, it results in enormous losses for the carriers, and so to survive they have to raise rates.”

South Florida’s high rates are driven by congestion and fraud, said Adam Lyons, founder and executive chairman at The Zebra. “South Florida is more populous than central and northern Florida. This congestion leads to higher amounts of accidents and vehicle damage, therefore leading to more claims and then higher premiums,” he said.

Examples of fraud that lead to higher premiums include a Personal Injury Protection (PIP) scam ring that investigators said defrauded 10 insurance companies out of more than $23 million between 2010 and 2017, Beck said.

Of the 50 most expensive of Florida’s 616 cities and census-designated places, 44 are in the tricounty region, according to data provided by The Zebra. The other six are in Hillsborough County, where, according to McChristian, an increase in deaths near U.S. 19 has driven rates higher for people who live near that highway.

Broder said many of his sticker-shocked South Florida customers are responding to price increases by shopping around. Money-saving options include companies that encourage customers to buy their own policies online, including Geico, Progressive and (an Allstate company). These companies have rapidly increased market by passing along savings from cutting agents out of the transaction.


“We are seeing the trend to direct [policy writing],” he said, “which is unfortunate for us as an agency, but by going online, companies can cut out the commission, cut out the middleman.”


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Don’t Assume Earth Movement Coverage Is Standard In Your Home Insurance


by Thomas Zuo

While home insurance policies are sometimes known as “all-risk” policies, they do not always cover all risks that may cause damage to your home. One of the more commonly excluded perils on most policies is earth movement, which includes earthquakes. The reason it’s called “earth movement” is that the exclusion itself is much broader than just earthquakes. Many types of shifting or moving earth are not covered by your policy, and you may be surprised to find that some of these cannot easily be insured, no matter how much premium you may be willing to pay. Earth movement coverage is not something that is needed in California alone.

Earth Movement Exclusions

The standard home insurance policy’s definition of excluded earth movement includes sinking, rising, shifting, and the expanding or contracting of earth. And all of these exclusions can be combined with water or not. This means if you think of earth movement only in terms of earthquakes and other seismic activity, you are missing some key exclusions that can cause substantial uninsured damage to your home. Let’s look at each of these excluded movements in a little more detail:

  • Sinking – If the ground under your home settles, it is generally defined as sinking. This can be the result of many factors, such as erosion due to water or poor compaction when the home was built.

  • Rising – The opposite of sinking, if the soil under your home rises, bulges, or heaves, it will cause damage to your foundation and the house itself. While water can cause erosion, too much water in the soil can also cause it to expand.

  • Shifting – With sinking and rising covering the vertical movement of earth, shifting covers the potential lateral movements that will also impact your home.

  • Expanding – As if rising earth was not broad enough of an exclusion, the policy includes expanding earth as an additional exclusion. These exclusions are similar to each other, but the redundancy of the policy exclusion leaves no ambiguity of its intent to exclude earth movement damages.

  • Contracting – Sinking earth is similar to contracting earth, but as with expanding and rising earth, the home insurance policy seeks to broaden its exclusions, allowing no room for potential coverage.

The earth movement exclusion includes all of the above directions in which the earth can move and cause damage that is not covered by your policy. In addition to these definitions, the policy also excludes the following types of phenomena that are more commonly understood: earthquake, landslide, mudflow, mudslide, sinkhole, subsidence, erosion or movement resulting from improper compaction, site selection, or any other external forces. Additionally, the policy further excludes earth movement resulting from volcanic explosion or lava flow.

Essentially, virtually anything that causes your house to move or shift is excluded by the home insurance policy. However, direct fire caused by any of the above is usually still covered. For example, if a mudslide moved your house several inches and severed a gas line, which then resulted in a fire, the loss of your home due to fire would be covered. However, if the movement resulted in a cracked or shifted foundation, those specific damages would still not be covered, as the foundation is not a loss resulting from the ensuing fire.

Getting Coverage for Earth Movements

Unfortunately, many homeowners recently found out just how far-reaching earth movement exclusions can be after Hurricane Sandy. Even those who had purchased flood policies were still uninsured because their flood policies contained exclusions for earth movement, even if they were caused by floods. The Insurance Journal reports that the State of New York is now using some of its emergency funds to help the affected homeowners. But homeowners cannot always rely on a governmental agency to step in on their behalf if they are not properly insured.

To avoid many of the earth movement exclusions, homeowners can purchase insurance that will add the coverage back to their home insurance policies, or they can purchase separate policies separate from their existing policies. In some states, insurance companies may even be required to offer you the option of purchasing earth movement coverage.

For instance, in California, insurance companies selling home insurance policies must offer earthquake coverage to their customers, though customers do not have to elect that coverage. But this is helpful in that it reminds homeowners that they must make a conscious decision to accept or reject coverage.

Much like national flood insurance policies, California earthquake insurance is available through a special agency set up to handle the unique risk. Insurers in California can choose to offer the coverage through their own resources, but the majority elect to participate in the California Earthquake Authority (CEA) program for insurers. If you are a California resident and elect to purchase coverage from your home insurance company, it’s possible they are still providing the coverage to you through the CEA. However, you are issued a policy directly from your insurer.

Specialty Exclusions Homeowners Should Understand

Even with agencies such as the CEA setting up special programs to cover earth movement, there are still some circumstances under which no policy will insure a loss. A common example of excluded earth movement is loss due to a manmade condition. Insurance companies are particularly uncomfortable with these risks because they are unpredictable, and therefore difficult to underwrite. So even though no one can really predict an earthquake, scientists do have some information about where faults are located and therefore the expected severity of damages. This amount of data assists the insurance companies in modeling potential losses and helps them to set what rates to charge.

However, with manmade conditions, it’s impossible for the insurance company to foresee when such an activity might take place. The most common types of manmade earth movement are those from nearby construction activity. In these situations, your only recourse is usually to pursue a liability claim against the party responsible for causing damage to your home. While that process is challenging and not nearly as straightforward as a first-party home insurance policy, it’s certainly better than no recourse at all. If you have a particularly valuable home, you might be able to find an insurance agent that has the ability to access Lloyd’s of London, where virtually any risk can be insured – albeit for a price.

Earth movement is an inescapable risk facing all homeowners and there is limited insurance coverage available. Before making any assumptions about what is or is not covered, you should carefully read your policy. If you are concerned about the lack of coverage, ask your insurance company or agent about buying back some of the excluded coverages. In the event of a catastrophic loss, you will be glad you did.



Five insurance mistakes to avoid... (and still save money)



Avoid these pitfalls when buying auto, home, flood and renters insurance.



Saving money feels good. And shopping around when you’re looking for insurance coverage is a great way to do it. However, simply reducing your coverage or dropping important coverages altogether is like diet without exercise—focused only on numbers, not on results. Don’t risk ending up dangerously underinsured and on the hook for much bigger bills in the event of a disaster.

Following are the five most common auto, home, flood and renters insurance mistakes people make, along with suggestions to avert those pitfalls while still saving money (we call them, “better ways to save”):

1. Insuring a home for its real estate value rather than for the cost of rebuilding.

When real estate prices go down, some homeowners may think they can reduce the amount of insurance on their home. But insurance is designed to cover the cost of rebuilding, not the sales price of the home. You should make sure that you have enough coverage to completely rebuild your home and replace your belongings—no matter what the real estate market is doing.

A better way to save: Raise your deductible. An increase from $500 to $1,000 could save up to 25 percent on your premium payments.

2. Selecting an insurance company by price alone.

It is important to choose a company with competitive prices. But be sure the insurer you choose is financially sound and provides good customer service.

A better way to save: Check the financial health of a company with independent rating agencies (some well-known ones: A.M. Best, Moody's), and ask friends and family members about their experiences with insurers. Select an insurance company that will respond to your needs and handle claims fairly and efficiently.

3. Dropping flood insurance.

Damage from flooding is not covered under standard homeowners and renters insurance policies. Coverage is available from the National Flood Insurance Program (NFIP), as well as from some private insurance companies. You may not be aware you’re at risk for flooding, but keep in mind that 25 percent of all flood losses occur in low risk areas. Furthermore, yearly weather patterns—spring runoff from melting winter snows, for example—can cause flooding.

A better way to save: Before purchasing a home, check with the NFIP to determine whether a property is situated in a flood zone; if so, you may want to consider a less risky area. If you are already living in a designated flood zone, look at mitigation efforts that can reduce your risk of flood damage and consider purchasing flood insurance. Additional information on flood insurance can be found at

4. Only purchasing the legally required amount of liability for your car.

The minimum is just that—the least you can get away with by law. So buying only the minimum amount of liability means you are likely to pay more out-of-pocket later. And if you are sued, those costs can jeopardize your financial well-being.

A better way to save: Consider dropping collision and/or comprehensive coverage on older cars worth less than $1,000. The insurance industry and consumer groups generally recommend a minimum of $100,000 of bodily injury protection per person and $300,000 per accident.

5. Neglecting to buy renters insurance.

A renters insurance policy covers your possessions and additional living expenses if you have to move out due to an insured disaster, such as a fire or hurricane. Equally important, it provides liability protection in the event someone is injured in your home and decides to sue.


A better way to save: Look into multi-policy discounts. Buying several policies with the same insurer, such as renters, auto, and life will generally provide savings.