By: Preston Mangus
When I first started working in the family insurance business years ago, I heard clients ask my father, “Do I really need all this insurance?” My dad would reply, “Not unless something bad happens!” Now I know that bad things can and do happen to us. So the better we understand our auto insurance options, the smarter decisions we can make when buying a policy.
The state of Florida requires residents to purchase insurance in order to legally operate a vehicle on the road. But here are two realities about auto insurance coverage in Florida that you may not be aware of:
Considering how many autos on the road are uninsured—and that many insured motorists only carry only the minimum required—the risk profile for Florida drivers is dramatically different from that of other states. With that said, it’s crucial that we are familiar with the following five types of car insurance in order to protect our financial interests.
In the event that you are involved in a car accident that results in injury or vehicular damages, liability insurance will cover the cost of any bodily injury and property damage that you are legally liable for, up to the limit of liability declared in the policy. In Florida, property damage (PD) liability is required, but bodily injury (BI) coverage is not. This is why state minimum or required policies can be inadequate. BI claims are typically much more costly than PD claims. Make sure you have BI and PD liability limits that are adequate for protecting your financial exposures. Remember: When the liability limit is reached, you may be held responsible for the additional monetary damages.
This coverage pays for damages to your vehicle, and it is typically required when there is a lien on the car. Collision is also subject to a deductible paid by the insured, and it is designed to return your vehicle to its pre-accident condition, or replacement in the event of a total loss.
Also known as “other than collision,” comprehensive coverage insures your vehicle against fire, theft, vandalism, flood, etc., and it is also required when a lien is on the car. Make sure that you comply with lenders’ maximum collision and comprehensive deductibles, and add them to the policy as lien holder effective on the date of the loan. Otherwise the lender may place expensive “single interest” physical damage coverage on the vehicle and charge your account.
This is required in Florida, and it provides coverage for your bodily injury—regardless of fault—in an auto accident, as a bicyclist or a pedestrian. It covers you and your family members, and it may also cover passengers in your car. Keep in mind that PIP coverages follow the policyholder.
This is possibly the least understood of these coverages. UM/UIM covers you if the party at fault that caused your injury is either uninsured, or has liability limits below the threshold of your injuries (underinsured). This coverage is available only if you purchase BI liability, and it can only be purchased at the same limit or a lesser amount. For example, if your policy provides $300,000 combined BI/PD coverage, you could purchase UM/UIM coverage up to that limit or, say, a $100,000 limit of coverage. So if the party at fault has no insurance or only minimal limits, you could collect from your insurer instead. You must select in writing to accept or decline this coverage on your policy.
You most likely have a few questions about your auto insurance coverage after reading this blog post, but that’s the point. Insurance is a complicated subject. If you’re improperly insured, it could lead to serious financial hardships for many years to come. It’s important that you talk with an auto insurance professional about your specific needs.
It’s critical to make sure you are up to speed with the unique challenges of purchasing auto insurance in Florida. Shop smart and spend your money wisely in order to protect your assets and your future.
The content provided in this blog consists of the opinions and ideas of the author alone and should be used for informational purposes only. VyStar Credit Union disclaims any liability for decisions you make based on the information provided.