Orlando, Orange County and Central Florida Personal Injury and Complex Litigation Attorneys
THE DO'S AND DON'TS OF PURCHASING AUTOMOBILE INSURANCE COVERAGE.
"More than any country, ours is an automobile society". President Lyndon B. Johnson, message to Congress, February 8, 1965.
Ideally, for every automobile, there should be accompanying insurance coverage. Unfortunately, we know all too well that such is not the case. We also know that in many instances the automobile insurance in effect is inadequate.
As trial lawyers who specialize in the area of personal injury litigation, we are regularly confronted with reviewing automobile insurance policies and the coverage afforded under such policies. On occasions too numerous to mention we have been advised by a client or prospective client that he or she has "full coverage." Upon examining the actual insurance policy, it all too often becomes clear that the coverage in effect is anything but "full coverage." For this reason, it is extremely important to have a basic understanding of the available types of automobile coverage. We also provide some suggestions for the types of coverage every person should have.
The typical automobile insurance carrier provides the following types of available coverage: Liability, No-Fault, Uninsured/Underinsured Motor Vehicle, Medical Payments, Comprehensive, Collision, Emergency Road Service, and Car Rental Expense. Unfortunately, the agents that sell such insurance coverages rarely provide a detailed, understandable explanation as to what such coverages apply to. This is particularly true when dealing with the "fast buck" agents who advertise the cheapest rates in town. The old adage "you get what you pay for" is truly applicable to the polices sold by such agents. There are many reputable and knowledgeable insurance agents in the Central Florida area. Choosing an agent is critical to obtaining the proper insurance coverage that provides the most protection taking into account all surrounding circumstances, including financial ability.
The basic available coverages, as previously noted, are as follows:
LIABILITY INSURANCE COVERAGE
Liability coverage protects you in the event you injure someone as a result of the automobile you own being involved in an accident. Absent a special exception, the coverage follows the vehicle, not the individual. Thus, the vehicle must be listed on your policy of insurance in order for the coverage to apply. For example, if you own a Ford that is listed on your insurance policy with $100,000.00 of liability coverage and you are involved in an accident that causes injury to another, you are protected up to $100,000.00 for the injuries you caused while operating your Ford. On the other hand, if you own a Chevrolet in addition to the Ford, but the Chevrolet is not listed on the policy of insurance, you are not allowed to apply any of the $100,000.00 of coverage to an accident involving the Chevrolet. This premise may sound simple, however, it is important in that there are situations where other types of insurance coverage may apply though you may not initially think so.
Most reputable insurance companies do extend your liability insurance coverage to situations where you are operating a rented or borrowed vehicle. So, if you are on vacation, and rent a car, your personal automobile policy will generally protect you. Similarly, if you borrow a friend's car, your liability coverage will follow you.
In choosing the amount of liability coverage to purchase, you do of course have to take into account your financial ability. Do not, however, under any circumstances purchase the lowest limits and cheapest coverage available. The cost to increase the amount of coverage is usually reasonable (as opposed to the initial cost of purchasing any liability coverage). In addition, a judgment obtained in Florida is good for 20 years and renewable for an additional 20 years. It can be devastating to a family to be involved in accident that requires personally paying off a judgment. This is true for a claim involving personal injury, as well as a claim involving property damage. If you damage another's vehicle and do not have the appropriate insurance to cover your liability for such damage, it can be very costly. Additionally, your registration and driver's license can be suspended until the judgment is paid off. Therefore, it is quite important to make sure you are as protected as possible by purchasing adequate insurance coverage based on your individual needs and financial ability.
The law requires that any registered owner of a vehicle have at least $25,000 in coverage for property damage. While this is generally sufficient, please note that this does not protect you for claims of personal injury. We recommend generally that you carry, at the very minimum, $25,000.00 of personal injury liability insurance coverage as well, and would strongly recommend that most people carry $100,000 in coverage. In any event, you should carry liability limits high enough to protect your personal assets. You should attempt to place a value on the assets that you own, including all cash assets, and make sure that you have liability insurance coverage that exceeds the total value of assets owned.
One of the most confusing areas of automobile insurance coverage is that entitled No-Fault Coverage. You may have heard that Florida is a "No-Fault" state. This means that your insurance carrier, regardless of whose fault the accident in question was, provides payment for medical treatment and lost wages incurred as a result of the accident. Florida law requires that each and every automobile owner carry a policy of No-Fault insurance. Unfortunately, as you might guess, there are many individuals who choose not to follow the law. Many times prospective clients come to me inquiring as to why the party at fault is not responsible for payment of medical bills and the like. "Why should I have to report an accident to my insurance company and have my insurance company pay for the medical bills and lost wages incurred if the accident was not my fault?" That is a question that we hear over and over from both friends and clients. The reason is, to put it simply, because the law says so. For example, even if you drive your automobile into a tree and you were solely responsible for causing your own injuries, your insurance carrier is going to pay your medical bills and lost wages based on the "No-Fault" benefits that you have. Similarly, if you are driving your automobile and someone driving another automobile runs a red light and smashes into you, causing injury, your insurance carrier is still going to pay for your medical treatment and lost wages. Regardless of fault, your insurance carrier is going to pay. It is, therefore, very important that you carry an appropriate amount of No-Fault insurance coverage.
Typically, No-Fault insurance policies provide for 80% payment of medical bills and 60% payment of lost wages up to a cap of $10,000.00. You can purchase what is known as "Extended" or "Excess" No-Fault coverage and we recommend that you do so if possible. You can also purchase Medical Payments coverage that also pays for medical bills, usually at 100% of those bills. Medical Payments coverage pays hand in hand with your No-Fault coverage for medical treatment received. For example, if you have the typical 80% No-Fault coverage for medical treatment and you incur a medical bill in the amount of $1,000.00, you are going to be responsible personally for the $200.00 not paid by your No-Fault coverage. If you have medical payments coverage in addition to typical No-Fault coverage, the medical payments coverage will take up the "slack", the 20% unpaid by No- Fault coverage thus giving you 100% payment for the medical bill incurred. Medical payments coverage will continue to pick up the "slack" up to the limit of the policy, which typically is available in the $2,000 to $5,000 range. We would recommend Medical Payments coverage of $5,000.00 to accompany the typical $10,000.00 No-Fault insurance policy.
The typical No-Fault insurance policy is available with a wide variety of deductibles. Some deductibles run as high as $2,000.00. In other words, the first $2,000.00 of medical treatment and/or lost wages incurred will have to be paid and/or suffered by you personally before the insurance policy takes effect. Obviously, this type of occurrence can place a great deal of pressure on you. NEVER PURCHASE A NO-FAULT INSURANCE POLICY WITH A DEDUCTIBLE OF $2,000.00. The cheap, roadside insurance agent is the typical one trying to sell you a No-Fault insurance policy with a $2,000.00 deductible. Again, the old adage "you get what you pay for" is applicable. We cannot tell you the number of times that we have talked to folks with $2,000.00 deductibles who regret dearly the purchase of such useless coverage. Whatever you pay in the form of an insurance premium is not going to be as financially detrimental as having an accident with a $2,000.00 deductible. If you can afford it, I would recommend that you purchase an extended No-Fault insurance policy that provides for 100% of your medical treatment and 80% of your lost wages, up to the limit of the policy, and in addition, would recommend that you purchase medical payments coverage in the minimum amount of $5,000.00.
UNINSURED/UNDERINSURED MOTOR VEHICLE COVERAGE
Uninsured/Underinsured Motor Vehicle Coverage is extremely important, but the most frequently misunderstood and least purchased form of coverage. In our view, it is the MOST IMPORTANT form of automobile insurance coverage. The reason is quite simple. Uninsured motorist coverage protects you and the members of your family in the event one of you is involved in an accident with a vehicle owner who either has no insurance or who has insufficient insurance coverage. If I have a choice, I am going to make sure that I protect myself and my family first before I worry about my potential liability for injuring someone else. Of course, ideally you would purchase both types of coverage in adequate amounts to cover both instances. However, if you have to opt for one or the other due to financial capability, I would most certainly opt for the uninsured/underinsured motorist coverage first. Additionally, uninsured/underinsured motorist coverage is almost always less expensive than liability insurance coverage. I recommend that the typical individual carry a minimum of $50,000.00 of uninsured/underinsured motorist coverage and, if possible, $100,000.00 or more in uninsured motorist coverage. You should also be aware of the possibility of "stacking". If you own more than one vehicle and each vehicle has uninsured/underinsured motorist coverage on it, you may be able to "stack" the policies and thereby increase significantly the amount of coverage available. For example, if you own two cars and each car carries an uninsured/underinsured motorist policy of $50,000.00, you may be able to 'stack' the coverage and make available the sum of $100,000.00 in the event of an accident. You should of course check with your insurance carrier to make sure that "stacking" is an option available to you. If so, it can help alleviate some of the financial burden associated with purchasing this type of coverage while at the same time making sure you and your family are adequately protected.
MEDICAL PAYMENTS COVERAGE
See the discussion of medical payments coverage under Section 2 above.
Comprehensive insurance coverage is that which typically covers damage to your vehicle caused by fire, theft, vandalism and similar occurrences. It can be purchased with or without a deductible. Often times the deductible is less than the deductible you would have with your "collision coverage. For example, if someone vandalizes your car and you have comprehensive coverage with no deductible, you would be allowed to have your car fixed completely without incurring any out of pocket expense. Often times people believe that such an incident would require making a claim under the collision portion of the insurance policy where the deductible might be $250.00 to $500.00 or more. Comprehensive coverage generally is not expensive and can alleviate some of the financial pressure associated with an incident covered under this section of your policy primarily due to the fact that the deductible is often less than under other sections of the policy.
Collision coverage applies to damage done directly to your vehicle. It is important to carry adequate collision insurance coverage as you simply cannot rely on the "other guy" carrying insurance coverage at all in the event that you are involved in an accident that is not your fault. Also, if the accident is your fault, your own collision coverage will still pay for the damage done to your own vehicle. Collision insurance deductibles are established based on financial ability, but more commonly now are set at $500. Higher deductibles might be available, but are not recommended, and are usually prohibited by the bank or leasing company if the vehicle is financed.
CAR RENTAL EXPENSE
An additional area of automobile insurance coverage that often is overlooked is car rental expense coverage. It rarely costs more than about ten dollars a year to purchase the coverage. If you have ever had an accident and have been deprived of the use of your automobile, you know the importance of obtaining such coverage. Additionally, as with the other types of coverage involved, it is much easier to rely on your insurance carrier to assist you than it is to rely on "the other guy" or his insurance company to assist you. Therefore, we recommend the purchase of car rental expense insurance coverage for your automobile.
In summary, it is recommended that you purchase the best overall coverage you can based on financial ability. You should take into account the value of personal assets owned in deciding the amount of liability insurance coverage to purchase. You should take into account the person or persons to be protected, the lower cost of coverage, and the number of vehicles owned in deciding on the amount of uninsured motorist coverage to purchase. You should purchase No-Fault insurance coverage with no deductible or a minimal deductible and, additionally, with accompanying medical payments coverage. Never, under any circumstances, purchase a No-Fault insurance policy ( also called "PIP" or personal injury protection policy) with a $2,000.00 deductible. Based on the type of vehicle involved and financial ability, you should purchase appropriate comprehensive and collision insurance and, if possible, you should also obtain car rental expense coverage, particularly, in the event the vehicle in question is your primary mode of transportation. The goal is to obtain truly "full coverage '' that actually provides full protection.
If you have any questions, do not hesitate to contact us and discuss your situation. We are here to help.
Allen & Murphy. determined. focused. fearless.
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