Statute Places Limits On What Insurance Companies Can Do To Raise Auto Insurance Rates

Many people that we talk to after being involved in car accidents are hesitant to assert insurance claims for their injuries or property damage for fear that they may either lose their insurance coverage through cancellation or nonrenewal, or see their premiums increased by their own insurance companies.

Fortunately, Section 626.9541 of the Florida Statutes provides consumers with some protection against insurance companies canceling coverage or raising rates for the wrong reasons.  Under Florida law, it is an unfair or deceptive act for an insurance company to drop a policy holder or raise premiums without a valid reason. If an insurance company is found to have committed an unfair or deceptive act, the company can be exposed to civil liability of up to $10,000.00 for each such act, as well as administrative penalties.

Here are some of the protections that policyholders in Florida enjoy:

• An insurance company cannot increase a premium or drop a customer for first-party coverages like Personal Injury Protection (PIP), Medical Payments, or Collision coverage after an accident unless the insurance company has information that the customer was substantially at fault for the accident.
• An insurance company cannot increase the cost of your Uninsured Motorist coverage solely because you were involved in a crash, or because you were adjudicated guilty for a moving violation.
• An insurance company cannot drop you – even if you were at fault for an accident – if it was your only accident in the last three (3) years.  However, an insurance company can drop you if you have had three or more accidents – regardless of fault – over the last three (3) years.  (Really, can you blame them? Three accidents in three years?)
• An insurance company cannot increase your premium or cancel your coverage over a traffic ticket as long as: (1) it does not involve speed more than 15mph over the limit, and (2) it is not your section ticket within 18 months, or third ticket within 36 months.
• If an insurance company does raise your premiums or drop you, you can get your money back or get your coverage back if you can demonstrate that (1) you were lawfully parked at the time of the accident, or (2) you have been paid by the other driver for the crash, or (3) you were struck in the rear and were
  not found guilty of a moving violation, or (4) you were struck by a hit-and-run driver and reported the crash within 24 hours, or (5) the other driver was convicted of a moving violation, or (6) you beat any ticket issued to you.
• If you ask, the insurance company has to tell you exactly why your rates were raised, or you were dropped, and has to provide the proof that it relied upon.

Obviously, this material is a lot to wade through. The simplest way to think about it is that, if you were not at fault for an accident, the insurance company generally has no business raising your rates or dropping you from coverage. That being said, insurance companies apply to the state of Florida all the time for permission to raise rates on all or some of their customers for reasons completely outside of your control. So just because you have a clean driving record doesn’t mean that your rates can’t be increased.