Auto or car insurance coverage has two parts. The first is the liability section of the policy. It covers your financial responsibility for injuring others. Some liability coverage is required by most states.
The second part of auto insurance covers the car itself: comprehensive coverage reimburses losses from fire, theft or other perils; collision coverage pays to repair losses caused by an accident. Often this coverage is mandated by leasing companies or banks. There are also ancillary medical, car rental and other coverages which vary by state.
Utilizing high deductibles on the physical damage coverages can help reduce premiums. If you carry umbrella insurance, you must be sure that you carry the required amount of basic liability insurance to avoid a gap in coverage for a serious accident.
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THINGS TO CONSIDER BEFORE GETTING AN AUTO INSURANCE QUOTE
Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy.
Auto or car insurance coverage has two parts. The first is the liability section of the policy. It covers your financial responsibility for injuring others. Some liability coverage is required by most states. The second part of auto insurance covers the car itself: comprehensive coverage reimburses losses from fire, theft or other perils; collision coverage pays to repair losses caused by an accident. Often this coverage is mandated by leasing companies or banks. There are also ancillary medical, car rental and other coverages which vary by state. An auto insurance policy is comprised of several different kinds of coverage. Most states require you to buy some, but not all, of these coverages. If you’re financing a car, your lender may also have requirements.
What coverage is available for auto insurance in Florida?
Bodily Injury Liability – This pays the medical and other expenses of those people injured or even killed in accidents you cause. This is required by the State of Florida with a minimum coverage of $10,000 per person and $20,000 per accident. You can buy the minimum required by Florida law which is $10,000 person and $20,000 each accident or you can buy much higher limits say $500,000 or even $1,000,000. Remember that someone you hit can sue you for everything you have, except for the exempt assets Life Insurance, Primary Home, Annuities and Retirement Plans. You want to make sure you have enough to properly protect your assets and your income. Your wages are not protected so always err on the high side when choosing your limits. Remember that driving a car is probably the most dangerous thing will do so make sure you have the proper protection.
Property Damage Liability – This covers the damage your car causes to property. Usually, that’s the other car or cars involved in the accident but it also covers damage you do to any object you hit; garages, structures, lampposts, fences, etc. This is also required in Florida with a minimum limit of $10,000. Many years ago, $25,000 was considered the maximum limit most people needed for this coverage. Not anymore. There’s a lot of $50,000, $60,000 even $120,000 cars and sport utility vehicles on the road today. Because of all the high-end cars on the road, we recommend at least $50,000 for this coverage and most of the time $100,000 is a better limit. The price difference between a $50,000 limit and a $100,000 limit is minimal.
Collision – This covers the damage done to your car when it collides with other vehicles or other objects. The damage done under Collision is your fault and you are subject to your Collision deductible. Consider how much you can afford to pay to have your car repaired if you have an accident. Auto policies have several deductible options. The deductible is the part you pay before the insurance starts paying. You can buy deductibles of $100, $250, $500 or $1,000. The lower your deductible, the more Collision coverage will cost. Its probably best to have a $500 deductible. The deductible does not apply if someone else hits you and that person’s insurance is used to repair your car.
Comprehensive – The covers the damage to your car caused by something other than a collision with another vehicle. Examples include damage caused by vandalism, theft, fire, wind and flood and collision with an animal. Like collision coverage, there’s a deductible with Comprehensive although we recommend a lower deductible of $100 or $250. Comprehensive coverage is much cheaper than collision and comprehensive claims don’t count as severely against you because you are typically not at fault. While collision and comprehensive will pay for damage or loss to your car, neither coverage will pay for everything on or in your car. Most policies exclude items like CB Radios, Car Phones, Cds. If you add special features to pickups, vans or SUVs(like chrome wheels, camper tops, lighting) these items will probably be excluded but can be covered by adding special coverage for these items.
Personal Injury Protection – Also referred to as Florida No Fault Insurance, this covers you regardless of fault up to $10,000 of coverage. Your PIP will also cover your child, members of your household, certain passengers who lack PIP coverage as long as they don’t own a car. People riding in your car who carry PIP coverage will be covered under their own policy. PIP also covers your child if he or she injured while riding a school bus. PIP coverage protects you while riding in someone else’s car, as a pedestrian or bicyclist if you are injured in a crash involving a car. This coverage is required by Florida Law so the limit is $10,000. Some companies offer Extended PIP and Additional PIP. Other options are deductibles and coinsurance. It’s a good idea to discuss this coverage in detail before purchasing to be sure the best options are chosen for you and your family.
Medical Payments – This pays medical and even funeral expenses for you and members of your family and passengers in your car if involved in a collision regardless of who is at fault. It also covers you as a pedestrian if a car hits you. Because of the limitations under PIP coverage, a Medical payments limit of $2,000 or higher is recommended. Some people elect not to purchase this coverage because they think their health insurance provides coverage. Medical payments most often is used to cover the amount not covered by PIP. Because PIP is an 80/20 coverage up to $10,000, Medical payments coverage is needed to cover the $2,000 PIP does not cover. Because it is part of your car insurance policy, no coordination of benefits is necessary and the claim is paid quicker.
Uninsured Motorist – This pays for injuries to you, your family & passengers when in an accident caused by someone who does not have insurance or has minimal coverage and is underinsured. This important coverage also provides coverage for any injuries you suffer if you are hit while walking or riding a bicycle by a driver with no insurance or inadequate insurance. For most people, it’s a good idea to have the same limits for Uninsured Motorist as you have for Bodily Injury. Uninsured Motorist coverage is for the bodily injury you and your family sustain while in a car accident. Uninsured Motorist has very few limitation on what is covered so it can be a very valuable coverage when you are really hurt and the at-fault party does not have enough Bodily Injury coverage to take care of your injuries.
Who is covered under your auto insurance?
All the coverage in your auto policy applies when you are driving but it also applies when other people are driving your car. The coverage follows the car not the person. If someone is going to be a regular operator of your car, that person needs to be added to the policy as a driver. Your insurance company wants to know who’s going to be using the car. After all, you could be a great driver with no tickets or accidents but your spouse, your teenager or your cousin staying with you may be lousy drivers. If you let people regularly drive your car without telling the insurance company and these people get into accidents, your insurance company will not be happy and in fact may cancel your policy. Some companies are very strict on drivers and will not pay claims unless the driver involved in the accident is listed in the policy as a driver.
Why do you need auto insurance?
It’s really all about protecting yourself financially. If you’re in an accident or your car is stolen, it costs money, often a lot of money, to fix or replace it. If you or any passengers are injured in an accident, medical costs can be extremely expensive. If you or your car is responsible for damage or injury to others, you may be sued for much more than you’re worth. Not only is having insurance a prudent financial decision, many states require you to have at least some coverage.
How much auto insurance should you purchase?
Most states require you to have car insurance, but at minimum limits. In Florida you are required to purchase the following limits:
Bodily Injury Liability $10,000 per person / $20,000 per accident
Property Damage Liability $10,000
Personal Injury Protection $10,000 (Florida’s No Fault Law)
If you buy the minimum coverage required by Florida law, you are leaving your non-exempt assets at considerable risk. Generally speaking the following assets are exempt from lawsuits and are judgment proof except for IRS and Divorce judgments: Cash Value Life Insurance, Annuities, Retirement accounts including pensions and your Primary home. All other assets can be taken from you in a lawsuit and are at risk.