Can Your Auto Insurer Raise Your Rates or Cancel Your Policy Because of Your Car Accident or Traffic Ticket?

So, you were in an auto accident. Your insurance policy requires you to timely report all accidents to your insurance company, regardless of fault.  However, you’re reluctant to do so, because you are afraid that after you report the accident, your company will:

• Increase your insurance premium; or
• Cancel your insurance policy; or
• Refuse to renew your insurance policy

Does Florida law permit your insurance company to take any of these actions, just because you were in an accident?

Florida Law Restricts When Your Auto Insurer Can Increase Your Premium or Cancel Your Policy, Just Because You Were In an Accident

Florida law prohibits your insurance company from raising your insurance premiums or canceling your insurance policy, just because you were in an accident— if you were not “substantially at fault” for the accident. Your auto insurance policy contains several different types of auto insurance coverages. Section 626.9541(1)(o)(3) (a), Florida Statutes, forbids your insurance company from raising premiums for the following coverages within your policy:

• Liability (Bodily Injury–BI);
• Personal Injury Protection (“PIP”);
• Medical Payments (“Med Pay”); or
• Collision

solely because you were involved in a motor vehicle accident, unless your insurance company’s file contains information from which the company, in good faith, determines that you were substantially at fault for the accident.

What Does “Substantially At Fault” Mean?

• Section 626.9541, Florida Statutes does not define what it means to be “substantially at fault.” However, “substantially at fault” likely means to be more at-fault than not (e., 51 percent at fault).
• Consider the following scenario:
  • Another vehicle headed in the same direction struck your car in the rear (and you did not receive a traffic citation);
  • The other driver’s insurance company found that driver to be 100 percent at fault for the accident;
  • Because Florida is a No-Fault state, you used your PIP coverage to pay your medical bills, before filing a bodily injury claim with the other driver’s insurance company;
  • Because you used your PIP coverage, your insurance company increased your insurance premium.
• In this scenario, your insurance company had no good faith basis for increasing your premium. The other driver’s insurance company determined that its insured driver was 100 percent at fault. Your insurance company could not have, in good faith, concluded that you were substantially at fault for the accident. Therefore, in increasing your premium, your insurer violated Section 626.9541, Florida Statutes.
• If, on the other hand, the other driver’s insurance company determined that both your brake lights were out right before the accident (making it difficult for the other driver to realize that your vehicle was stopped or slowing down before the accident), then you could be found to be 60 percent at-fault for the accident.
• That 60 percent share of fault would make you “substantially at fault” for the accident. Therefore, in that scenario, your insurer could legally increase your premium after the accident.

Florida Law Requires Your Insurance Company to Act In “Good Faith” In Its Dealings With You. So, What Exactly Does That Mean?

• Florida law requires your insurance company to act fairly and honestly toward its insured (you, the policyholder), and with due regard for your interests. An insurance company has a duty to use the same degree of care and diligence as a person of ordinary care and prudence would exercise in the management of his or her own business. Boston Old Colony v. Gutierrez, 336 So.2d 783 (Fla. 1980). So, that is what an insurance company’s duty to act in good faith toward you means: acting fairly and honestly toward you at all times, and handling your affairs with the same degree of care, as the company would handle its own affairs.
• Section 626.9541(i), Florida Statutes, known as Florida’s “Unfair Insurance Trade Practices Act” lists a number of unfair and illegal insurance practices that the State of Florida prohibits. Another statute, Section 624.155(1)(b), Florida Statutes, lists other prohibited insurance practices. Section 624.155 specifically permits someone harmed by an insurance company’s violation of any of these statutory sections, to file suit against that insurer.
• Florida law makes it an unfair or deceptive act for an auto insurer to increase a policyholder’s premium, or cancel the policyholder’s policy, without a legally valid reason.

What You Can Do If Your Insurance Company Increases Your Premium or Cancels Your Policy, In Violation of Florida Law

If you believe your auto insurer increased your premium or canceled your insurance policy without a legally valid reason, you should:

• Ask your insurance company for the reason it:
  • Increased your premium; or
  • Canceled your policy
• You should also ask the insurance company to give you the proof that it relied upon, as a basis for its action. Your objective is to determine whether the company had a good faith basis for the action it took.

If your insurance company:

• Refuses to give you the requested information; or
• Gives you a reason that appears invalid under the law, then you can

file a consumer complaint with the Florida Department of Financial Services (DFS) Division of Consumer Services.

• If you file a consumer complaint, your insurance company must:
  • Respond, in writing, to the complaint; and
  • State the reason for:
    • Increasing the premium, or
    • Canceling the policy.
  • If your insurance company fails to respond to your complaint, then it may be required to pay a fine.
  • If your insurance company is found to have committed an unfair or deceptive act, the company may be exposed to civil liability penalties of up to $10,000.00 for each such act, as well as administrative penalties from the State of Florida.

How Do Accidents Where You Were At-Fault Affect Your Insurance Policy?

• In Florida, an insurance company cannot refuse to renew your policy – even if you were at fault for an accident – if it was your only accident in the last 3 years.  Section 626.9541(1)(o)(3)(c), Florida Statutes.
• However, an insurance company can refuse to renew your policy–if you have had 3 or more accidents – regardless of fault – over the last 3 years. Section 626.9541(1)(o)(3)(c), Florida Statutes.
• For example, if you are involved in:
  • 3 different accidents;
  • in 3 years; and
  • are not at-fault for any of them,

then your insurer can still refuse to renew your policy.

• However, if you cause:
  • 2 accidents
  • in 2 years,

then your insurer might be breaking the law, if it refuses to renew your policy.

Can Your Insurance Company Increase Your Premium or Cancel Your Policy If You Receive A Traffic Ticket?

Your insurance company cannot raise your insurance premium or cancel your coverage, because you received a traffic ticket, as long as:

• You were not traveling more than 15 mph over the speed limit; and
• It is not your second ticket within 18 months; or
• It was not your third ticket within 36 months.

Section 626.9541(1)(o)(3)(b), Florida Statutes states that if your insurer unlawfully increases your premium, or cancels your coverage, you can:

• Get your money back; or
• Get your coverage back, if you can demonstrate that:
• You were lawfully parked at the time of the accident; or
• The other driver has paid for damages you suffered in the accident; or
• You were struck in the rear, and were not found guilty of a moving violation; or
• You were struck by a hit-and-run driver, and reported the accident within 24 hours; or
• The other driver was convicted of a moving violation; or
• You beat any ticket issued to you.

Again, if you ask, your insurance company has to tell you exactly:

• Why your premium was increased; or
• Why your coverage was canceled; and
• Has to provide you the proof upon which it relied in taking the action.

Do You Think Your Insurer Has Acted in Bad Faith? Call Us For Help.

If your auto insurance company raised your rates or canceled your insurance policy, after an accident caused by another driver, we can help you prove your insurance company acted in bad faith. Do not feel as if you need to deal with your insurer alone.  Also, if you were in a Palm Beach County car accident that was caused by another’s negligence, we can help you get the compensation you deserve. Call the Law Offices of Andrea McMillan today at (561) 612-5700 to schedule a free case consultation. We are here for you.