Packing for a trip takes planning and a mind for the possibilities of each type of vacation. Camping might require bug spray, tents, and sleeping bags, while a trip to Disney World might instead require backpacks, cameras, and themed clothing. Choosing insurance can be a bit like packing for a trip. You need to think ahead to determine whether you have enough insurance to cover the possibilities. It’s important to think not only about what you might need to cover should you cause an accident, but whether the other party has enough to cover the damage if they are at fault.
In fact, this was my experience just the other day!
I met with another client today who was significantly injured in a motorcycle accident. Of course, the accident was the other driver’s fault, and that person has minimal coverage with a terrible company. Hard lesson learned for my client: Even if you think that you are a great driver, there are many on the roads here in South Florida who are bad drivers or just aren’t paying attention while driving. Unfortunately, these bad drivers have limited or no insurance coverage. Do yourself a favor — look at your auto/motorcycle insurance policy and make sure you have purchased uninsured/underinsured motorist coverage.
Insurance can feel confusing if you don’t really know what you’re looking at. At its core, insurance is a contract in which an insurer promises to pay the insured party a sum of money if one or more specified events occur in the future, in return for regular small payments – known as premiums. The purpose of insurance is to reduce your exposure to the effects of particular risks.
We wanted to help cut through the confusion by breaking down some of the most important things to look for when choosing an auto insurance policy.
First and foremost, it is vitally important that you maintain continuous insurance coverage that meets your state’s minimum insurance requirements for liability and property damage for you to continue to legally drive. You risk huge fines and the loss of your driver’s license without it. All that being said, here is a breakdown of the areas to evaluate when looking at insurance options.
- Bodily Injury Liability: If you are considered at fault in a car accident, liability coverage will pay for medical costs and pain and suffering for injuries suffered by others in your vehicle and/or others in the vehicle which you ran into.
- Collision: If you hit another vehicle or an object, your collision coverage will pay for damages or repairs to your vehicle after you pay a deductible (up-front amount). In other words, if you have collision coverage with a $500 deductible and you suffer damage that costs $1,500, your collision coverage will pay $1000 after you pay the first $500.
- Comprehensive: Comprehensive coverage, which is also known as “other than collision,” pays for losses to your vehicle if it suffers damage from something other than an accident. For example, if a branch from a tree falls on your car. Just like collision, a deductible applies.
- Medical Expenses: This coverage pays for the medical bills incurred, that you, a family member or anyone else riding in your vehicle may suffer in an auto accident, regardless of who is at fault. It also pays for medical bills you or your family members may incur while riding in other vehicles. This coverage will pay bills after PIP has paid 80% of the bills.
- PIP: This stands for Personal Injury P This is an extension of car insurance that covers medical expenses and, a portion of your lost wages. It is also sometimes referred to as “no-fault” coverage because it pays the medical bills, regardless of who is determined to be at fault in an accident. PIP pays 80% of your medical expenses and often has a deductible. PIP is mandatory in the State of Florida.
- Property Damage Liability Coverage: Part of an auto insurance policy, property damage liability coverage helps pay to fix damage you may cause to another person’s vehicle or property in the case of an accident. For example, say you hit the gas instead of the brake and you run into a friend’s garage door while parking. Most states require this type of coverage but the coverage limits vary. Making sure you have a higher limit of liability coverage can keep you from having to pay for any damage out of pocket in the event of an at-fault accident. Property Damage Coverage is mandatory in the State of Florida.
- Uninsured/Underinsured Motorist: This coverage pays for injuries you suffer in an accident when the driver at fault either is uninsured or does not have enough insurance to cover your injuries and damage. It will also cover you in the event that a hit-and-run driver flees the scene and you cannot file a claim against that driver’s insurance company. This is what can save you when you face the type of issue my client I mentioned above did. Due to the fact that Florida allows drivers to purchase insurance without bodily injury liability coverage, the only way to collect money for injuries as well as pain and suffering if hit by a driver with no bodily injury coverage is if you have uninsured/underinsured motorist coverage. This coverage is by far the most important coverage to keep you from owing money to hospitals and doctors, even if you are not at fault for the accident.
When evaluating how much insurance to purchase, you should take into consideration the values of the cars in your driving area, how often and how far you drive, how densely populated your area is, and how much you want your deductible to be based on the amount of money you have readily available. A higher deductible can mean lower premiums, but that also means you may have to come up with $1,000 or more for an at-fault claim.
We hope that you never have to experience a catastrophic claim, but if you do and feel unsure of how to proceed, I would encourage you to reach out to us for help, either at the office or on my cell.
Have you checked your insurance coverage lately?
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