What insurance do I need? What levels of insurance coverage should I have? These are questions that we have all had to answer at one point or another. Since there are countless types of insurance available that will cover everything from A to Z, wading through them all can seem daunting.
When it comes to cars, it’s important to know what types of insurance Florida law requires every car owner to carry. Let’s start with an overview of the typical types of insurance you may or may not be familiar with.
Is no-fault insurance mandatory in Florida?
Florida is a no-fault state and it is mandatory that you have both property damage (PD) and personal injury protection (PIP) for the standard minimum of $10,000.
Is just $10,000 in PIP and PD enough? Many agents will say it is, but in fact, it’s far from enough. In fact, it’s the lowest coverage you could possibly purchase. They call it “full coverage,” but it is the bare minimum.
What is no-fault insurance?
No-fault insurance dates back to the early 1970s. The intent of the law was to replace the ability (or need) of an injured person to ever file a lawsuit against the at-fault driver.
What is the purpose of no-fault insurance?
The purpose of no-fault insurance was to guarantee that you would be compensated for medical expenses and lost wages no matter whose fault the accident was.
It sounds great, but there is a downside. Reimbursements are far from being quick and the minimum requirement of $10,000 becomes the maximum compensation and is often far from adequate. Back in the 70s the compensation was ample. However in today’s world, $10,000 hardly covers anything.
Another drawback is that PIP doesn’t pay your entire medical bills or lost wages – it only covers 80% of your medical bills and up to 60% of your lost wages. Often there is a misunderstanding with PIP and the payout rules. The facts are that PIP does not cover $10,000 of your medical bills and then an additional $10,000 for your lost wages. It pays no more than $10,000 period. If you spend time in the hospital and miss a good deal of work, or worse yet, find yourself with a permanent injury, that $10,000 will be used up in a nanosecond.
The Other Types of Insurance
Here’s a list of the other types of insurance you need to know about:
Property Damage (PD): Florida’s other required insurance. This insurance pays to fix your car.
Health Insurance: PIP will pay your medical bills first in an auto accident and then your health insurance plan may kick in. For non-auto accidents, health insurance is the primary source of payment for your medical bills.
Medical Payments (MedPay): Typically, MedPay picks up the 20% gap that is not covered by your PIP in auto-related accidents.
Bodily Injury (BI): An optional type of liability insurance that pays for another person’s physical injuries (if you injure them due to your bad driving).
Uninsured/Underinsured Motorist Coverage (UM): covers your physical injuries and other losses if the at-fault driver does not carry bodily injury as part of his/her insurance policy (or doesn’t carry enough).
Homeowners or Renters Insurance: liability insurance that pays out if someone is injured on the property due to the negligence of the property owner/renter.
Umbrella Insurance: protects you if you cause an accident as it pays in addition to your regular insurance and is intended to more fully protect your assets from a liability claim.
These are just a few of the more common and more important types of insurance that you should have. Complete coverage is important as there are many underinsured or completely uninsured drivers out there.
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