Does Auto Insurance Drive You Crazy?

By Diane Tait

If you own or lease a vehicle in the state of Florida, you’re required by law to carry auto insurance.  Get
caught without it and you can expect to pay a hefty fine, have your driver’s license suspended and have your vehicle impounded.  Get picked up a second time and you could wind up behind bars.  That’s a pretty hefty penalty for failing to pay the piper.  Even if your current policy was to lapse, you could wind up being fined by both the state and your insurer who’s required to report the lapse. 

Of course, the cost to insure a vehicle doesn’t come cheaply these days.  Depending on your age, your vehicle and your driving record, the average yearly cost of an auto policy in Florida ranges from $5,983 for a 16-year-old to $1,672 for a 60-year-old.  That’s this year.  Year in and year out, auto insurance rates continue to rise.  This has some drivers seeing red.

The reason rates have risen has to do with several factors:

1.      The cost of automobiles continue to rise.  In 2000, the average cost of a car was $21,000.  In 2019, the average was more than $34,000, an increase of 61.7%.  They also cost significantly more to maintain nowadays than they did 20 years ago. 

2.      Medical costs have also skyrocketed in the past 20 years.  The average cost of a hospital stay in 2000 was $17,390.  According to healthcare.gov, a 3-day hospital stay today will set you back around $30,000.  That doesn’t include surgery, intensive care, post op care or rehabilitation costs associated with serious auto accidents.  

3.      Uninsured drivers cost everyone when one is involved in an accident.  That’s one reason why most drivers carry uninsured motorist coverage.

4.      The costs of lawsuits that sometimes result in the aftermath of auto accidents continue to climb.  The average cost of an auto accident settlement for serious car crashes in 2019 was $31,400. 

5.      Fraud is at an all time high when it comes to auto accidents.  According to insurancefraud.org, fraud accounts for 5-10% of claims costs.  These costs are caused by organized fraud rings that operate in collusion with shady health-care providers to steal billions each year.    

Suddenly, that $100-$200 per month cost to insure you, your passengers and your vehicle doesn’t sound quite so steep, does it?  In fact, auto insurance is like having four separate kinds of insurance coverage all bundled into one package.  Here are a few things you may not know about auto insurance:

Collision Coverage – When you get in an accident, there are several things that can happen to your vehicle.  It can be damaged or destroyed.  It can also damage other vehicles or property.  While in years past, minor damage to a vehicle could be hammered out and spray painted away, vehicle’s today that suffer minor front or rear end damage usually require extensive repair work.  If the accident occurs at a speed of 10 MPH or greater, one or more of the airbags will deploy.  Since the average cost to replace airbags after a crash can be anywhere from $1,000-$3,000, these and other restoration factors add up quickly.  Fortunately for those with auto insurance, the out of pocket cost to repair a damaged or totaled vehicle after a crash boils down to the deductible.

 Comprehensive Coverage – Sometimes bad things happen to good people.  When it comes to owning a car, there are many bad things that can happen to it even when it’s parked in your driveway.  Everything from lightning strikes to windblown debris and hail can damage an unattended vehicle.  While you sleep, a passing storm could cause the water to rise to inundate your vehicle or sweep it away.  A tree limbs or trunk can fall atop a car to do significant damage or total a vehicle. Some vehicles wind up being broken into or stolen outright.    While on the road, you may have a stone, an object or animal impact your vehicle.  Provided you carry comprehensive coverage, these and other non-accident related incidents are covered in full minus your deductible.

Medical Coverage – If you’re involved in an accident, there’s always the possibility that you, your passengers and/or the passengers in another vehicle and/or pedestrians could be injured.  If you don’t have auto coverage, you would bear the brunt of medical expenses caused in any at-fault accident.  As long as you’re insured, it is the insurer and not you who will pay the medical costs up to the limits of your policy.

Liability Coverage – Being that we live in a litigious society, it isn’t at all unusual for someone who’s injured in an auto accident to sue the at-fault driver for negligence, loss of income and mental suffering.  The cost to defend yourself in court can be prohibitively high, even if the jury finds in your favor.  Provided you have auto insurance, your insurer will pick up the court costs and legal fees, not to mention any judgments against you up to the limit of your policy.

Nobody is Made of Money

Hopefully, you have a better picture of how valuable auto insurance can be to the average motorist.  That being said, there are ten ways you can reduce the cost to insure your vehicle: 

1.      Increase your deductible

2.      Improve your credit score

3.      Pay every 6-months instead of every month

4.      Have your agent tell you about discounts offered by insurers they represent.

5.      Have your policy reviewed by your agent every year.

6.      Considering bundling your auto policy with other insurance policies you carry

7.      Take a defensive driving course

8.      Trade in that SUV or sports car for a less flashy ride

9.      Add anti-theft devices such as an alarm, ignition kill switch and/or steering wheel lock.

10.  Join a club or association that offers insurance discounts to members.

Diane Tait owns and operates A&B Insurance.  To find out more about how you can save money on insurance, go to her site or fill out the form at right.