Which Insurance Option is Right for You?
There are 6 main types of automobile coverage: auto liability coverage, uninsured and underinsured motorist coverage, comprehensive coverage, collision coverage, medical payments coverage, and personal injury protection.
Depending on what state you live in different minimum coverages may be required, while others are optional or not offered at all.
Florida requires that certain minimum coverages be met, these coverages are $10,000 for personal injury protection (PIP) and $10,000 for property damage liability (PDL).
Auto Liability Coverage
Auto liability insurance is a type of car insurance coverage that’s required by law in most states. This insurance is for when you cause or are at-fault liable for a car accident and pays for the other person’s expenses Auto liability coverage comes in two forms: bodily injury liability coverage and property damage liability coverage. Drivers in most states must have both types of coverage.
Bodily injury liability coverage (BI) is used if you’re at fault for an accident that injures another person to help pay for their medical expenses, and property damage liability coverage (PD) is used if you cause an accident that damages someone else’s property (their car, for example), to help pay for repairs. This coverage does not normally cover expenses for damage to your own car after an accident, it also does not extend to costs associated with your own injuries after an accident you cause.
The limit on auto liability coverage depends on the limit you choose when buying the coverage, while states set minimums for bodily injury liability and property damage liability you can decide to purchase extra coverage. For property damage liability, bodily injury liability (per person), and bodily injury (per accident) there are different limits, see below.
Property damage liability limit: This is the maximum amount your insurer would pay to repair the damage you cause to another party’s property. The maximum payout would not exceed the limit you’ve set.
Bodily injury liability limit per person: This establishes a maximum payout for each individual who is injured in an accident that you cause.
Bodily injury liability limit per accident: This sets a cap on the total amount that your insurance provider will pay out for all medical expenses other people incur from a single accident you cause. It’s important to set this limit at an amount that makes you comfortable, as it may be needed to help pay for the medical expenses incurred by multiple people.
Uninsured and Underinsured Motorist Coverage
Uninsured motorist coverage is part of your car insurance policy that helps pay for medical bills or car repairs if you are hit by a driver who does not have a car insurance. When you are in an accident and the other driver is at fault, his or her auto liability coverage would help pay for any medical bills or car repairs you may have to pay for. However, if the at-fault driver does not have insurance, or if their insurance is not enough to cover your medical bills, you may have to pay for those bills yourself.
Uninsured coverage offers two types of protection: UMBI and UMPD.
Uninsured motorist bodily injury coverage, also known as UMBI, helps pay for your medical expenses resulting from a crash caused by an uninsured or underinsured driver. In some states, protection may extend to a family member who is driving your car, or to your passengers.
Uninsured motorist property damage coverage, also known as UMPD, helps pay for repairs to your vehicle after a crash caused by an uninsured or underinsured driver. This protection is not available in all states.
Underinsured motorist coverage is a protection that helps pay for your expenses if you’re hit by an underinsured driver. In some states, uninsured and underinsured motorist coverages are bundled together and offered as single protection on your car insurance policy. An uninsured motorist is defined by the state you live in, but the basic definition is that the driver does have auto liability insurance but either: their liability limits aren’t enough to cover your bills after an accident, or their liability limits are less than or equal to your underinsured motorist coverage limit. Underinsured motorist coverage only offers one type of protection and that is helping pay for medical bills if you are hit by an underinsured driver.
Uninsured motorist coverage may be required by law, but underinsured motorist coverage is optional in most states. While most states require by law that drivers carry auto liability insurance one in eight drivers are uninsured, so while it is not required by law in Florida it could help unforeseeable expenses in the future.
Comprehensive coverage helps pay or repair your vehicle if it is stolen or damaged in an incident that is not a collision. If you’re financing or leasing your car, your lender likely requires comprehensive coverage. If you own your vehicle outright, it’s an optional coverage on your car insurance policy.
Comprehensive Coverage covers, theft, vandalism, fire, natural disasters (like a hurricane or a tornado), falling objects, damage done to your car by animals, a civil disturbance (like a riot that results in damage or destruction of your car). It does not cover, damage to your car from a collision, damage to another person’s vehicle from a collision, your (or your passengers’) medical expenses after an accident
When purchasing comprehensive coverage, you have the ability to set a deductible, which you will pay out of pocket toward the covered claim. Let’s say you choose a $500 deductible, and your car is later damaged by hail in a covered claim. If it costs $1,500 to repair your car, you would pay your $500 deductible, and your insurance would pay the remaining $1,000.
Comprehensive coverage has a limit, or the maximum amount your policy will pay toward a covered claim. The limit on comprehensive coverage is typically the actual cash value of your vehicle.
Collision insurance is a coverage that helps pay to repair or replace your car if it’s damaged in an accident with another vehicle or object. If you’re leasing or financing your car, collision coverage is typically required by the lender. If your car is paid off, collision is an optional coverage on your car insurance policy. Collision coverage covers a collision with another vehicle, a collision with an object (such as a fence or tree), and a single-car accident that involves rolling or falling over. However, it does not cover damage to your vehicle not related to driving (examples: hail or theft), damage to another person’s vehicle, medical bills (yours or another person’s).
Collision coverage does have a deductible, you can typically choose the amount of your deductible when you buy the coverage but the amount that must be paid before the insurance company will pay for your claim. The limit on collision coverage is normally the actual cash value of your vehicle, minus depreciation, which is the maximum the policy will pay toward your covered claim. If you are leasing your vehicle then collision coverage is normally required by lenders or leaseholders, it is also mandatory if you owe money on your car. However, if your car is paid off the coverage is optional.
Medical Payments Coverage
Medical payments coverage (MedPay) is part of an auto insurance policy. It may help pay your or your passengers’ medical expenses if you’re injured in a car accident, regardless of who caused the accident. This coverage is optional and not available in all states. MedPay covers health insurance deductibles and co-pays, doctor or hospital visits, surgery, x-rays or prostheses, ambulance, and emergency medical technician fees, professional nursing services.
MedPay does have a coverage limit, it is the maximum amount in which your insurer will pay for a covered loss, you choose this limit when you buy the insurance. You should choose the limit that best fits your needs, considering all possibilities and medical expenses you may be responsible for if the coverage does not cover the full amount.
Personal Injury Protection
Personal Injury Protection (PIP) or No-Fault Insurance’s purpose is to cover medical expenses for the driver and passenger of a vehicle in an accident regardless who is at fault. Additionally, PIP is used for defending yourself against minor lawsuits that require additional funds to pay for the damages you could be held responsible for. PIP may also help cover other expenses that you have incurred because of your injuries, like childcare, loss of income (not available in all states), health insurance deductible, expenses that exceed your health insurance coverage limits, funeral expenses.
PIP does not cover damage to your vehicle, vehicle theft, damage to other people’s property, medical expenses that exceed your coverage limits. PIP normally has coverage limits, states that require PIP coverage have a minimum amount of coverage you must have, you do however have the ability to buy extra coverage. Florida does have a minimum PIP coverage of $10,000.
Other types of optional car insurance that vary by insurance company and state are as follows but not limited to:
Classic car insurance
New car replacement coverage
Personal umbrella policy
Rental reimbursement coverage/transportation expense coverage
Sound system coverage
Towing and labor cost coverage
Failure to maintain required insurance coverage in Florida may result in the suspension of your driver license/registration and a requirement to pay a reinstatement fee of up to $500.