Everyone needs car insurance…but few of us enjoy making decisions about it or buying it! However, when an accident occurs, your car insurance coverage may become extremely important. Decisions you made quickly or in the name of saving money may be regretted in the end.
On the other hand, you obviously don’t want to spend too much on benefits you don’t need. As lawyers, we can provide a little bit of clarity on car insurance and the various choices we all have to make.
What is Liability Insurance?
Liability coverage is needed to cover losses to other people. It is what kicks in when you damage other people’s property or injure others. (It does NOT cover damage to your own car–that is covered by your physical damage insurance.) There are two types of liability coverage:
- Bodily injury liability: This covers injury caused to other people by you, by other people driving your vehicle, or by other people on your policy.
- Property damage liability: This covers damage to other people’s cars (and to buildings, street signs, etc.) caused by you, by other people driving your car, or by other people on your policy.
Your liability insurance will often be quoted with a set of three numbers, like 10/20/10 (the minimum in Florida) or 100/300/100 (a more generous policy). These numbers represent multiples of $1000 (so, $10,000/$20,000/$10,000, in the first example). This is the maximum amount your insurance will pay out in three different situations.
- The first number represents the maximum amount paid out to ONE person in an accident caused by you
- The second number represents the maximum amount paid out to MULTIPLE people in an accident caused by you
- The third number represents the maximum amount paid out to other people for damage caused by you
A surprising fact about insurance in Florida is that drivers are not required to carry bodily injury liability insurance. They only need to carry so-called PIP (personal injury protection–see below) and property damage coverage. This can cause some confusing situations.
How Much Liability Coverage Should I Carry?
We advise all people to purchase liability coverage equal to their assets. If you do not have significant assets, then anyone who can afford it should purchase at least $25,000/$50,000 of Bodily Injury Liability protection. This is often enough, because most accidents are relatively minor.
As stated, bodily injury liability insurance is not required in Florida (although it may become legally required by a court if you cause an accident), but if you do purchase it, it will be quoted at a minimum of 10/20 (thousand). The minimum amount of property damage liability required in the state of FL is $10,000.
What is Medical Payments Insurance/Personal Injury Protection Insurance?
Medical payments insurance, also called Personal Injury Protection (PIP), covers you and your passengers in case of an accident. It also covers you and other people on your policy if you are hurt in a car driven by someone else, or as a pedestrian or cyclist. PIP benefits can also cover lost wages.
Because Florida is a no-fault state, this insurance pays out regardless of who was at fault, and it is separate from your liability insurance.
Typically, when an accident occurs, your own insurance company pays first out of your no-fault coverage and then out of your Med Pay coverage if you have chosen to purchase it. This can change if you do not own a vehicle.
How much Medical Payments Insurance/Personal Injury Protection Should I Carry?
Every Florida driver is required to have $10,000 in PIP coverage. You can purchase extra PIP coverage and Med Pay coverage. Whether or not you need to also depends on what if any health insurance you may have.
What is Uninsured and Underinsured Motorist Insurance?
It’s illegal to drive without car insurance–but people still do it, and you could suffer the consequences. Meanwhile, other drivers out there on the road are insured, but carry very little coverage.
This is why car insurance companies offer uninsured/underinsured motorist coverage. If you get into an accident with one of these drivers, you’ll still be protected.
As with PIP, this insurance is quoted with a set of numbers–only two this time, like 50/100.
- The first number represents the maximum amount paid to ONE person in your car in an accident caused by an uninsured/underinsured driver
- The second number represents the maximum amount paid to MULTIPLE people in your car in an accident caused by an uninsured/underinsured driver
How Much Uninsured/Underinsured Coverage Should I Carry?
As we advised for Bodily Injury coverage, a minimum of 25/50 would mean that if you were injured by an uninsured or underinsured person, you would then have at least an additional $25,000 to claim against. If you are very seriously injured, this of course would not be enough, but most folks buy the insurance they can afford. The greater the coverage, the higher the premiums.
What is Physical Damage Insurance?
Physical Damage Insurance covers damage to your own car caused by accidents, theft, and other hazards, like vandalism, bad weather, etc. There are two types:
Collision insurance: This covers damage to your car in case of an accident. Fault is not a factor.
Comprehensive insurance.This covers damage caused by all other problems.
How Much Physical Damage Coverage Should I Carry?
You’ll want to consider the value of your car for this coverage and purchase enough to replace it in the event of a total loss. If it isn’t worth much, you may be able to get away with less coverage.