The truth about Florida Minimum Required Auto Insurance
A white paper from Florida's Insurance Source®, Ace Underwriting Group.
Plantation, FL updated 01/06/2020
For over 30 years, the Ace Underwriting Group has been writing Auto insurance for clients in all parts of Florida from Pensacola to Key West. Every day, we receive requests to write Florida Minimum Required Auto Insurance. Here's the truth behind what we sell, and why we sell it...
Understanding the Florida Laws that apply to Auto Insurance requires specialized training in the law, and in insurance. The professionals at Ace Underwriting Group have received this training so they can better serve your needs. Under the Florida Law, there are two key statutes that govern what can be sold as minimum coverage. Florida Statute 727.7275 requires a minimum amount of coverage that every insurance company must offer to clients. This amount consists of $10,000 in Personal Injury Protection (PIP) coverage with a maximum deductible of $1,000 and $10,000 of Property Damage (PD) coverage with no deductible. No insurance company can produce an Auto Insurance policy in Florida with less coverage. Because this statute is written to require compliance by all insurance companies writing business in Florida. You can't find a policy to offer less coverage because the insurance industry has been limited under this statute from providing less. PIP/PD policies are available from a host of carriers and at a variety of rates and coverage forms. Each with its benefits and shortcomings. As agents, we sort through these different forms and policies to find the ones that provide the best protection at the lowest cost. Unfortunately, this isn't the last word on Florida Minimum Required Auto Insurance coverage. PIP/PD meets the requirements that the State of Florida mandates for insurance company compliance, but the State of Florida has another requirement on the books, one that only applies to the owner of the vehicle, not their insurance company.
Florida Statute 324.021 known as the Florida Financial Responsibility (FR) Law requires the owner of a motor vehicle to have, in force at the time of an accident, Bodily Injury (BI) coverage for $10,000 for injuries caused to any one person and a minimum of $20,000 for injuries caused to multiple persons in any one accident. The FR law does NOT require insurance companies to provide this coverage to the policy owner, unless requested to do so by the owner of the vehicle. To operate a vehicle in Florida without BI coverage, is a violation of the FR law should you have an accident. Since the FR law applies to the owner of the vehicle and NOT to the insurance companies providing Auto Insurance in Florida, it is possible to purchase Auto Insurance without BI coverage. To do so, puts the owner of the vehicle (and the driver if not the owner) at risk of violating the FR law, if an accident occurs. This seems to be a contradiction to the minimum requirements of FSS 727.7275 as the two laws do conflict with each other. But to understand the reasons for these different sets of rules, you have to examine the legislative intent of the two laws.
The minimum BI Coverage required under the FR law can actually be rendered through a cash deposit with the Florida Department of Highway Safety and Motor Vehicles (FDHSMV), through a Surety Bond issued on the owner's behalf and held by the FDHSMV or by a Florida Auto insurance policy. Few, if any, people in Florida want to deposit $30,000 in cash with the FDHSMV, nor are there many bonding firms willing to issue such bonds, except to very large corporations that tend to self-insure anyway. This leaves the only two options, BI coverage on an Auto Insurance policy, or the hopes that without carrying BI coverage, the owner will not be subject to an accident, and therefore will not suffer the penalties of non-compliance. Since we are unaware of any crystal balls, clairvoyants or other methods of predicting with certainty that an accident will not occur over any period of time, the Auto insurance policy is the only method readily available to vehicle owners to protect from non-compliance with the FR law in Florida. But, since the ability to post cash or a bond with the FDHSMV is available, the legislature does not require insurance companies to require BI coverage on the Auto Insurance policies they write. Under the Florida Law, as written, it can be safely said that anyone who doesn't post cash or bond of $30,000 with FDHSMV is therefore required to have Auto insurance, at the time of an accident, that includes PIP, PD and BI coverage. This is the legislative intent, and the minimum requirements under both FSS 727.7275 and 324.021 as written.
How does this affect the common vehicle owner in Florida? With the way the two laws are written, tens of thousands of vehicle owners in Florida are driving without BI coverage at this very moment, under the impression that their Auto insurance with PIP and PD complies with Florida law. In fact, these policies do comply with FSS 727.7275 and so long as these consumers never have an accident, they will remain in compliance with FSS 727.7275. The FDHSMV will continue to issue license tags for their vehicles because compliance with FSS 324.021 doesn't affect anyone until they have an accident. These consumers also enjoy paying far less for their insurance policies without BI coverage, although they are technically failing to comply with the FR law. In the eyes of the insurance industry, they are "uninsured" because they choose not to properly insure their vehicles with BI coverage as required by FSS 324.021 even though they carry PIP and PD. This is where the cloud of uncertainty begins to creep into the sale of PIP/PD policies, use of their vehicles without the BI coverage and ultimate discovery of the problems and pitfalls in not carrying BI coverage.
Then...The inevitable occurs. The consumer causes an accident. People are injured, some critically injured. The consumer turns to his Auto insurance for assistance in paying the claims of those injured through his negligence. The consumer is now shocked to learn that his Florida Minimum Auto Insurance Coverage he requested at the point of purchase doesn't include coverage for BI as required by FSS 324.021. Those he has injured are now his personal responsibility under the law. The FDHSMV immediately suspends his drivers license and registration tags. He becomes personally liable for the extent of the injuries he's caused, beyond the PIP coverage available. If the injuries are severe enough, crossing one of the four thresholds of Death, Disability, Disfigurement or Dismemberment, the consumer could be held liable for tremendous costs for pain & suffering in addition to the medical expenses of those injured. All which must be paid before his driving privileges are restored, and his license and registrations are reinstated. The consumer must find alternative ways to remain employed without the ability to drive, fund the medical expenses of those injured and if he's capable of all these things, then buy Auto Insurance with an SR-22 filing, requiring him to now buy Auto Insurance (including BI) at a much higher rate, than was available to him prior to the accident for the following three years. Very few consumers can afford to carry such a huge burden and go into a financial melt-down over these ever increasing responsibilities.
Agencies like Ace Underwriting Group advise all our clients to purchase Florida Minimum Required Auto Insurance, including BI coverage and require sign-off forms that warn clients when they choose to purchase PIP/PD coverage without the BI coverage. The most in need of the BI coverage are also the first to part with it due to the increased cost of the BI coverage. While seemingly unaware of the dangers posed by driving without the BI coverage, folks who can not afford BI, without financial abilities to pay the medical bills of those they might injure, are the consumers who will most always choose the PIP/PD alternatives to save money, when in fact, they are the ones most dependent on Auto Insurance should they injure someone. So dependent that they can't afford NOT to buy the BI coverage. This is the unintended result of the legislature's efforts and their two conflicting laws.
BI coverage is therefore considered by Ace Underwriting Group and our agents to be required under the Florida law. We will continue to recommend the purchase of BI coverage on all Auto Insurance policies and require strict sign-off with a 72 point-type warning for our clients who choose to purchase Auto policies without it. We hope you've gained understanding into the Florida Minimum Required Auto Insurance the legislative intent and reasons for carrying BI coverage on your Auto Policy. If you have questions, please consult with your licensed insurance professionals at the Ace Underwriting Group. You can e-mail us with the link below or call our toll free help line at (800)368-4227 for more information on Florida Minimum Required Auto Insurance from one of our licensed insurance professionals.