Florida, Michigan, and California attempt to shrink auto insurance rates

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auto insuranceMotorists in Florida, Michigan, and California are hopeful that the attempts being made by their states will be successful in lowering the rates that they pay for their auto insurance coverage.

Both Florida and Michigan have no-fault-based auto insurance systems, and these two states have been vigilantly examining their programs throughout their current legislative sessions. Florida has especially been in the spotlight, as it attempts to tackle a car insurance fraud problem that is spiraling out of control.

California insurance, on the other hand, is examining its own system based on its “persistency discount”, which has been allowing drivers to receive a reduced premium as long as they remain insured with the same company; though that discount is negated should they change to a new insurer.

The personal injury protection (PIP) element of Florida’s no-fault insurance law is taking the majority of the blame for the fraud that this state is experiencing. That state leads the country in the number of staged car accidents, and it is estimated that in 2011, residents paid $658 million more than they should have as a result of these fraudulent claims. Groups ranging from the state’s Chamber of Commerce to law enforcement organizations have been working together to drive changes in the law.

In Michigan, the no-fault insurance laws are also being blamed for the high premiums. The payouts for claims in this state are higher than anywhere else in the country, at an average of almost $37,000 each. Again, it is the state law makers that are working to make the changes necessary to this system.

In California, on the other hand, it is the voters who will be deciding on the changes that will be made to the new insurance laws in the state, as a result of a significant battle between George Joseph, a billionaire who chairs Mercury Insurance, and a consumer watchdog group. Voters will see the Automobile insurance Discount Act of 2012 on their November ballot.

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