Let’s discuss the different types of insurance coverages that one can select when either purchasing insurance for the first time or renewing their coverage.
Our hopes in presenting this information to you is that you will become a more educated buyer when the time comes.
Many people purchase insurance without fully understanding the different coverage options; and, when an accident does happen, they do not have the proper coverage to adequately compensate them for their injuries.
We will specifically discuss different coverage options available including personal injury protection or no fault insurance, property damage, bodily injury, uninsured or underinsured motorist, as well as medical payments or med pay coverage, comprehensive coverage and collision coverage.
There seems to be a misunderstanding with the term, fully covered. Many people come into our office and state, “I am fully covered.” When they are really not. The term fully covered just means that you have the coverage that is mandated by Florida law.
Most of the time, the coverage mandated by Florida law does not provide enough protection.
In Florida, in order to be compliant with state law, one must have at least $10,000 in property insurance coverage or property damage coverage, and $10,000 of personal injury protection or no fault PIP benefits.
Personal Injury Protection
First type of coverage I’d like to discuss is personal injury protection, or PIP. Florida is a no fault state. The term, no fault insurance, simply means that if you are injured or your car is damaged in an accident, then you deal with your own insurance company regardless of who is at fault.
In essence, your insurance company will pay for your medical expenses. This is paid through your personal injury protection coverage. In Florida, when you buy car insurance, it has to come with personal injury protection in an amount $10,000.
That PIP insurance will pay 80% of any medical bills and 60% of lost wages up to $10,000 as long as the injury and lost wages are the result of a motor vehicle accident. PIP does not pay for any pain and suffering.
These PIP benefits are paid directly to your doctors and it pays for your hospital bills. However, you can also claim lost wages if you are forced to miss time from work. These lost wages will be paid directly to you.
As I said, PIP pays only 80% of medical bills. The other 20% would rest on you and would hopefully be reimbursed by the at-fault party’s insurance once a settlement is reached. However, you are not entitled to pain and suffering until you can prove that you suffered a permanent injury, which is usually a question that you would ask your treating doctors.
Pain & Suffering
According to Florida Statute 627.737, a person injured in an automobile accident that is receiving personal injury protection benefits to pay for medical expenses cannot recover for pain and suffering either past or future unless and until it is determined that the person involved in that accident sustained a permanent injury.
In essence, once your injury is determined to be permanent by your treating doctor, then you can go after the at fault party and collect damages for pain and suffering. What you will go after is the at fault party’s bodily injury coverage, which we will discuss in a second.
How to get full coverage with personal injury protection
In order for PIP to kick in and start paying on bills or lost wages, one must treat with a doctor within 14 days following the accident.
Also, in addition to treating within 14 days, a doctor must determine that as a result of the accident you suffered an emergent medical condition.
An emergent medical condition really means that you have acute injuries, which jeopardize your health.
In essence, you suffered injuries as a result of the motor vehicle accident in which you needed to get treatment for or otherwise, you would be severely limited because of the pain and the extent of your injuries.
If a doctor does not determine that you have what’s called an emergent medical condition, then your PIP benefits are limited to only $2,500 towards your medical treatment. If however a doctor determines that you have an emergent medical condition, and many emergency rooms do today, then you’re entitled up to the full $10,000 of PIP coverage towards your medical bills.
For more information on PIP coverage, take a look at Michles & Booth website in blog section. Look for the blog titled, Personal Injury Protection, Florida’s No Fault Benefits. This blog will explain personal injury protection in more detail.
Property Damage Liability Coverage
If you are found legally responsible for a car accident, property damage liability coverage is the part of your insurance policy that pays for the cost associated with repairing or replacing another person’s property. This typically means damage to someone else’s car but it could apply to any other type of property you damage in an accident.
This coverage is required in Florida just like the personal injury protection benefits discussed above.
Typically, property damage liability insurance covers repair and/or replacement of the damaged vehicle but it could also pay for other property such as a house, a fence, or a lamppost.
Your property damage liability limit is a dollar amount that represents the maximum amount of property damage your insurance policy will cover. If you have a $50,000 coverage limit, your policy will only cover up to this amount and you would be responsible for covering what remains.
A minimum amount of property damage liability coverage may not be enough to cover the total amount of damages to the other vehicle or property.
Selecting a low property damage amount could place your personal assets and future earnings at risk for financial loss if the other party decides to sue you personally for an amount over your policy limits.
Bodily Injury Coverage
Bodily injury coverage is put in place to protect your personal assets in the event that you contribute to or cause a motor vehicle accident.
If you are involved in an automobile accident, which is totally or partially your fault and anyone is injured, the injured party or the parties can sue you.
This is the case if you are driving the automobile or if you own the automobile which was involved in the accident.
If you don’t have bodily insurance coverage, which many people in Florida do not, and the injured person decides to sue you personally, they may be able to obtain a judgment against you for damages they sustained on account of your negligence. Your personal assets can be in serious jeopardy.
Further, you will either have to defend yourself in court or hire an attorney at your own expense to do so. However, if you have bodily injury coverage, your insurance company will provide you with an attorney and will pay for the bodily injury up to your policy limit.
Under-insured Motorist Coverage
Though underinsured motorist coverage is not required, if you ask a handful of personal injury attorneys which type of coverage is the most important, I can guarantee they will all agree that under-insured/uninsured motorist coverage is crucial to have and can protect you.
Like no-fault or PIP benefits that are paid directly to your medical providers or that only compensate you for certain portion of your lost wages, UM coverage is there to pay you in one of two situations.
The first is if you are hit by an individual driving without insurance. That driver is considered uninsured, and your UM coverage will actually act as insurance for that driver.
The other case is if you are seriously injured in an auto accident and if the person who hit you doesn’t have enough insurance. In that case, they are considered underinsured; and again, your UM coverage would act as an additional insurance for that individual.
UM coverage comes in two flavors, you can stack your UM policy or you can get unstacked coverage. For more information, visit Michles & Booth website and under the blog section, and click on the blog titled, What is the Most Important Type of Car Insurance Coverage.
In essence, if you choose UM stacking, the policy applies to all vehicles you have. If you have two vehicles and select to stack your UM coverage, both vehicles will be covered. In most cases, that stacking coverage only benefits you or a resident relative. If you have kids that live with you, or your wife, spouse, husband and any family members that live in the household are usually covered.
On the other hand, non-stacking obviously, will only apply to your one vehicle for which you select to insure with the UM motorist coverage.
Understanding Your Insurance Policy
When selecting liability insurance such as bodily injury, and uninsured, or underinsured motorist coverage, you are presented with many different options and numbers. It is important to understand how to read those numbers so you can pick the one that’s best for you.
The way that liability insurance is usually written is by two numbers which are separated by a punctuation, slash. For example, $100,000/$300,000.
All this means is that if I was in an accident, my policy would pay up to $100,000 per person that was injured. However, the maximum my policy would pay is $300,000. No matter how many people were injured in the accident, the policy would pay no more than $300,000.
The number to the left of the punctuation, slash, represents the amount per person that the policy will pay. The number on the right of the punctuation, slash, is the maximum amount that will be paid for the whole accident together.
Sometimes it is written out with three numbers. For example, an insurance policy with split limits of $25,000 /$50,000 /$10,000 means $25,000 is the maximum amount payable by the policy for bodily injury per person, $50,000 is the maximum payable by the policy per accident, and the third number usually deals with the property damage amount.
Usually, the higher the numbers the more money you would pay in premium. However, it also protects you more in that you would be protecting yourself from any out-of-pocket liability.
Medical Payments Coverage
Medical payments coverage, also known as med pay coverage, pays medical expenses for you and any passengers in your vehicle who are injured during an accident or auto-related injury.
Medical payments coverage applies no matter who was at fault and covers the cost of reasonable and necessary medical care provided to the individual as the result of the vehicle accident.
The coverage is often limited to a specified time period following the accident, usually three years, and the amount of coverage the policy holder chooses.
Additionally, medical payments insurance may help pay for funeral expenses, injuries sustained by passengers in your vehicle, injuries you sustained as a pedestrian or bicyclist after a car hits you, or necessary dental care as a result of a car accident.
Since medical payment coverage protects you, your family, your employees, and other passengers in your car and can be an important insurance to help protect both you and those you care about.
For example, if you’re driving in your lane and another vehicle runs you off the road, after the accident you may feel fine but three days later your arm really hurts. Also, your wife who was riding with you hit her forehead on the side of the window, and now has a lump and a bad headache.
If you choose medical payments coverage and selected a $2,000 limit, your insurance would pay the $1,000 charge to have your arm x-rayed, and let’s say the $750 charge to have your wife’s lump on her head looked at and her headache examined.
Since each of your expenses was less than your $2,000 per person limit, medical payment coverage would cover your cost. Again, this is good to select to help pay for any unforeseen medical bills as a result of the accident.
Collision Coverage & Comprehensive Coverage
Two additional protections which one can purchase is either collision coverage or comprehensive coverage, or one can purchase both. We recommend purchasing both.
Under collision coverage the insurance company pays for damages if the insured vehicle overturns or if it collides with another vehicle or object such as a mailbox, fence, or tree.
Under comprehensive coverage, the insurance company pays for damage to the vehicle by an event other than a collision such as a fire, theft, vandalism, hail, or flood damage.
Comprehensive also covers damages for a collision with an animal. Also, if the insured’s car is stolen, comprehensive will cover the cost of a rental, which is subject to a daily limit.
Collision and comprehensive coverage also involve a deductible amount that the insured selects when he or she purchases his or her policy. This amount, typically $250 or $500, is the amount the insured is required to pay in the event a claim exceed the deductible amount.
For example, the insured is involved in a crash that results in $8,500 worth of repairs to his or her vehicle. The insured has a $500 deductible. Therefore, the insured only pays $500 while the insurance company pays the remaining $8 thousand.
Both comprehensive and collision insurance is good to have and can help you save on an unexpected expense. Without comprehensive and collision insurance, you are at a risk for covering all repairs or total replacement of your car out of pocket.
Unlike liability coverage that comes with a specified coverage limit, collision and comprehensive insurance tops out at the actual cash value of your vehicle minus your deductible.
As you can see, having an understanding of insurance is important before deciding which insurance coverage to select and which coverage to waive. Waiving certain coverage could put you at risk if an accident does occur.
Before renewing or purchasing insurance, if you have any questions we advise that you give us a call. An attorney here at Michles & Booth will be more than willing to sit down with you for a free policy evaluation.
If you or a loved one has been injured in a car accident, give us a call for a free, no-obligation consultation with a personal injury attorney. We can go over the details of your case and provide advice on the best actions to take. Give us a call at (800) 848-6168.