The Myth of Full Coverage

“DON”T WORRY–I HAVE FULL COVERAGE”!
MYTH vs. TRUTH

Florida has some of the least protective automobile insurance laws in the nation.  To register a car in Florida, you only need to purchase insurance that has personal injury protection (PIP) benefits and property damage liability.  If your policy has these two basic elements of coverage you are deemed to have the required coverage under Florida law.  This is not full coverage.

Full coverage is a myth.  It does not exist.

Full coverage means that you have every kind of automobile insurance benefit sold and have no deductibles and unlimited coverage limits.  It’s impossible and it does not exist.  There is no full coverage.  On the other hand, there is adequate insurance coverage.  Adequate insurance means having coverage that is sufficient to protect you and your family members in the event of a motor-vehicle accident.

While there are many types of insurance products sold as part of your automobile insurance policy, the main ones you need to know about are as follows:

1. Bodily Injury. Bodily injury liability insurance is what your insurance company pays if you cause an accident and injure someone else.  Currently, there is no requirement for mandatory bodily injury insurance in the state of Florida.  Governor DeSantis recently vetoed the Bill that was enacted by congress this year, 2021, that would have required mandatory bodily injury insurance.  Bodily injury insurance coverage limits usually begin at a minimum of $10,000 per person and $20,000 per accident.  There is no limit on how much insurance one can carry.  The more money or assets that a person has, the more coverage for bodily injury insurance they need.  Typically, a well-insured driver in the state of Florida has a minimum of $100,000/$300,000 in bodily injury insurance.  Many people carry this coverage limit and then buy what is called an umbrella or excess insurance policy in addition.  Florida law does not limit or cap the amount of financial responsibility a driver has for the damage he or she causes.  You should absolutely carry bodily injury insurance on your automobile insurance policy! (Hopefully one day this will be a mandatory form of coverage-48 other States require it).  Remember, if you do not carry bodily injury insurance on your policy or, if you do not carry sufficient limits to cover the amount of damage that you potentially could cause, you could face a judgment following a jury trial that can spell financial disaster.  A judgment can be recorded against you and your assets can be seized, wages garnished, credit destroyed. This can also prevent you from getting a loan, mortgage, insurance or be precluded from other important financial transactions in the future as well.  Please add bodily injury insurance on your automobile insurance policy if you do not already have it.
2. Property Damage. Property damage liability insurance is what your insurance company pays to cover the damage to another person’s vehicle or property that you cause in an accident.  This insurance is to fix the other person’s car.  Property damage liability insurance only requires $10,000 in coverage.  $10,000 will usually be sufficient to cover smaller or minor accidents.  With the price of the average vehicle exceeding $40,000, $10,000 in property damage liability will never cover or protect you if you “total” or completely destroy another person’s late model vehicle. Remember, Florida law requires you to be responsible for the damage that you cause either to person or property.  If you total a $30,000 vehicle because of your carelessness, and you only carry $10,000 in property damage liability, you are going to personally owe $20,000.  My recommendation would be to carry sufficient coverage in property damage liability to protect yourself against the cost of repairing or replacing someone else’s car.  Please check with your agent or online insurance quote and see how much the difference is between $10,000 vs. $25,000 vs. $50,000 in property damage liability insurance.  Unless you have a terrible driving record and substantial accident/crash history, the difference in premium cost will not be great.
3. Personal Injury Protection. Personal injury protection benefits, also known as PIP, is a $10,000 required coverage in Florida.  Florida is a no-fault jurisdiction.  This means that regardless of who causes the accident, a person’s own insurance company pays up to $10,000 for their medical bills or lost wages.  PIP pays 80% of your medical bills up to $10,000 and 60% of your lost wages up to $10,000.  PIP is primary; this means that it must pay your medical bills before your health insurance. It protects you, and if you have a passenger in your car with no insurance or you hit a pedestrian with no insurance of their own, PIP will pay for them as well.  Think about it: the average cost of an emergency room visit for a trauma patient can exceed $10,000 on the first day.  PIP benefits of $10,000 are insufficient to cover any serious injury.  People should carry health insurance.  While PIP will provide a reasonable amount of coverage for a quick urgent care visit or short duration of physical therapy, it gets exhausted quickly.  This is especially important when thinking about bodily injury insurance which we discussed above.  When PIP runs out, the victim of an accident can then turn to the at-fault driver and say, “Ok, now you pay my medical bills at-fault driver”.  That’s where bodily injury insurance comes in, to protect the at-fault driver.  PIP is mandatory in Florida and you cannot register your motor-vehicle without it.
4. Uninsured Motorist. Uninsured motorist coverage pays for your injuries and losses and those of your passengers when the at-fault driver has no bodily injury insurance or insufficient coverage for the amount of damage that is caused.  Uninsured motorist coverage is the most important component of your insurance policy!  If you do not have uninsured motorist coverage, you do not have adequate insurance in the state of Florida. This is a fact.  Florida is the state with the highest rate of uninsured motorists.  According to data from the Insurance Research Council, Florida has a rate of 26.7% of uninsured motorists.  This is incredible: the average in America of uninsured motorists is approximately 13%.  What can you do about the alarming number of motorists on the road that have no bodily injury insurance coverage to protect from their carelessness – the answer is simple buy uninsured motorist coverage!  Uninsured motorist coverage is also referred to underinsured motorist coverage since it protects you in the event that the at-fault driver has minimal or insufficient coverage.  It is the only way to be certain that you will be protected in the event of a crash.

Remember, when an automobile accident occurs and you are injured, multiple negative events take place.  First, you will need to seek medical care and possibly hospitalization.  This is enormously expensive and time-consuming.  When family members or co-workers are counting on you, numerous arrangements need to be made to cover your absence. If you cannot work due to your injuries-PIP only covers 60%-up to $10,000 in wage loss.   You may need medication or physical therapy or other modalities of care.  Frequently, this requires payment in advance.  When your PIP is exhausted (again, this could be on the first day of your hospitalization), you then need to consider your co-payments, deductibles, co-insurance and other non-covered expenses.  You may need to hire people to assist you at home or with driving or with child care and an assortment of other needs.  Frequently, tasks, duties and responsibilities that you covered will now need to be covered by others – oftentimes at great expense.  The money you receive for your injuries relating to an automobile accident are monies that replace and repay all that you have lost.  Uninsured motorist coverage steps in to cover what the at-fault party either has not or cannot pay for.  In essence, uninsured motorist coverage is your self-insurance.  Uninsured motorist coverage also provides you with monies to replace lost income, lost wages, lost opportunity to earn money.  Mortgage payments, bills food and housing costs and other expenses do not stop simply because you have been in an accident.  Uninsured motorist coverage benefits will be there to cover those expenses and make up for those losses.   You need uninsured motorist coverage if you are going to drive a motor-vehicle in the state of Florida because most people either have no coverage or not enough to cover the damage they do.  Again, like bodily injury insurance, there is no limit as to how much coverage you can have; this is budget dependent.  We recommend our clients carry a minimum of $100,000 in uninsured motorist benefits if they can afford to.  Even a minimal amount of uninsured motorist coverage of $10,000 is better than nothing.

5. Comprehensive coverage pays to repair or replace a covered vehicle that is stolen or damaged by things like fire, theft, vandalism. A leased or financed vehicle is required to carry this type of insurance.
6. Collision Coverage. Collision coverage is insurance that helps to pay to repair or replace your car if it is damaged in an accident with another vehicle or if you are in a single-vehicle accident. Most people should carry this coverage since it will pay to repair your vehicle in the event someone with insufficient coverage hits your car.
7. Medical Payment. Medical payment insurance helps pay for medical and funeral expenses after an automobile accident. It is an optional form of insurance and supplements or pays in addition to PIP. If you have a high deductible on your health insurance, this often-inexpensive type of coverage serves to pay bills and other medical expenses.
8. Rental Car Insurance. In the event you are in an automobile accident and your car is damaged or destroyed, rental car coverage provides you with a daily amount to rent a vehicle for a specified period or until the coverage is exhausted. In the event the at-fault driver has no insurance, this type of coverage is valuable since you can have your own insurance company pay to rent you a car while yours is in the shop or until such time as you are given funds by your insurance carrier to purchase a new vehicle.
9. Towing, Storage & Other Incidental Expenses. This kind of coverage is inexpensive to purchase and provides payment for towing expenses, vehicle storage expenses and other incidental charges associated with damage or loss to a motor-vehicle from a crash incident.
10. Actual Cash Value vs. Replacement Coverage. Most automobile insurance policies provide coverage for the loss of your vehicle based on its actual cash value or ACV at the time of the crash. This value is usually derived from valuation companies or other databanks and frequently depreciates the value of your vehicle for things like age, mileage, wear & tear, body style changes, previous accidents, excessive repairs, etc. Replacement coverage is more expensive and allows you to purchase a replacement of your vehicle at its current cost.
11. Gap Insurance. Gap insurance is usually included in loans or leases since it pays the difference or gap between the actual cash value of the vehicle and the unpaid balance of the loan or lease. If you have a car that is financed or leased, you must check to be sure you have this valuable feature in your lease, loan documents or on your insurance policy.
12. Roadside Assistance.Roadside assistance pays for events related to mechanical breakdowns. If your car battery is dead, this kind of coverage will pay for the cost of a tow truck to come out and jumpstart the vehicle or even pay for a new battery. It may also cover the cost of towing.
13. Ride Share. Ride share coverage while limited to only a handful of states, helps protect individuals who drive for transportation network companies such as Uber or Lyft. Many times your own insurance policy will exclude ride share coverages. This means that if you are driving for Uber or Lyft or some other ride share service and you cause an accident, your own company may exclude coverage. In the event that Uber or Lyft does not step in to protect you, your own ride share coverage will.
14. Umbrella insurance or excess coverage is a separate layer of coverage that is in addition to your own liability insurance. This can also serve as an addition to your uninsured motorist coverage and provide extra benefits. This extra protection is surprisingly inexpensive and should be considered for your own protection, the protection of your family and as a measure of asset protection.

In addition to the coverages listed above there are other insurance products available for people who frequently rent vehicles and do not have their own insurance. This liability protection is referred to as Named Non-Owner Coverage.

The other issue that causes people to run into financial difficulties with their insurance carrier is the deductible.   Deductibles on PIP, Comprehensive and Collision coverage allow people to save money on their insurance premiums by “self-insuring” for the amount of the deductible.  Thus, if you have a $1,000 deductible on your PIP benefits, you are essentially agreeing to pay the first $1000 of medical bills out of your own pocket.  The same holds true for comprehensive or collision coverage.  While small deductibles do make sense as a way of cutting down on insurance premium costs, high deductibles often result in financial distress, especially following an accident when a person has numerous additional expenses all at once.

This outline of insurance is not designed to be exhaustive.  Before buying insurance or when taking a close look at your insurance policy to see if you are truly protected, consult with an agent, licensed insurance broker or attorney to truly understand your overall coverage needs and what your policy actually provides coverage for.  Insurance policies are difficult to read. Most people never bother to take the time to really understand what benefits they have and what limitations of insurance their policy contains.

At Davis Law we provide our clients with a free insurance evaluation and assessment.  We recommend all of our clients carry bodily injury and uninsured motorist coverage and review their insurance policy to be certain that they have adequate protection in the event of loss.  As the saying goes with insurance, “assume the worst and protect against it”.  There is no such thing as full coverage but there is adequate insurance protection.  To protect yourself, protect your loved ones and protect all that you have worked so hard to achieve, you should carry enough insurance and the right kind of coverages.  If you have any questions or wish to discuss your insurance concerns, please do not hesitate to contact us.  We specialize in injury law and deal with insurance companies on a daily basis.  We are bilingual and available on a 24/7 basis at (305) 577-3777.