Auto Insurance is complicated. Let an experienced Injury Lawyer explain some of the mystery.
When your automobile insurance bill arrives in the mail, it shows the premiums broken down into different sub-totals. Each one corresponds to a particular “coverage” or type of auto insurance. So what are they? Here is a quick primer…
1. PIP Insurance
In “no-fault” states like Florida, the basic coverage is Personal Injury Protection or “PIP” insurance. This insurance covers the driver and any uninsured passenger in the car (or any uninsured pedestrian or bicyclist) up to a particular “coverage limit” for medical expenses, lost wages or any out-of-pocket expenses arising from an accident.
It pays regardless of whether you are responsible for the accident or someone else is. That is why this coverage is sometimes called “no-fault.”
In Florida, PIP is the only kind of insurance that a driver needs in order to become licensed to drive. It covers 80% of medical expenses and 60% of lost income, up to $10,000.
2. Liability Insurance
Wherever you are, you should have “liability insurance.” This insurance covers injuries and damages, which you cause to others while you are driving. It pays if you are sued PLUS it pays for your defense. Each policy of liability coverage is either for property damage or bodily injury. Usually, those coverages are separate amounts. Typically, a driver might have $50,000 in property damage liability and perhaps $100,000 in bodily injury liability coverage.
Many policies have "per person" policy limits and "per incident" policy limits. For example, a policy might cover $100,000 in bodily injury per person, but with a "per incident" limit of $300,000. That means if five people are injured in a crash, they would split the $300,000, with no individual receiving more than $100,000.
Your liability insurance also provides you with an attorney at the insurance company's expense to protect your interests. In some cases, this is more important than coverage for the actual amount of the damages.
3. Medical Payments
This insurance is similar to PIP insurance, as it pays for your own medical expenses (and those of your passengers) regardless of who causes the accident. In “no-fault” states like Florida, it is supplemental to your PIP coverage, and covers both your PIP deductible and your medical expenses in excess of the mandatory PIP coverage.
4. Collision Coverage
This is coverage for damage, which occurs to your car in a collision. It is usually subject to a deductible, but the deductible might be reimbursed by the other person's liability insurance, if he or she is at fault for the crash.
If you have collision coverage, your insurance company pays for your property damage (less your deductible) and then goes after the other person's insurance company for reimbursement.
If the other person has no insurance, then your damages are paid for (less your deductible) and your insurance company takes the loss. If your collision coverage pays, then it is up to your lawyer to go after the other person's insurance company for the return of your deductible.
5. Comprehensive Coverage
This is very similar to “collision coverage,” except it covers damage to your car from anything other than a collision. This includes flood damage, wind damage, vandalism or the like. Once again, this coverage is subject to a deductible.
Every driver should have Uninsured/Underinsured Motorists insurance (UM). It is a separate policy of liability insurance to cover irresponsible drivers who crash into you and not have insurance (or not have enough insurance.) It's important because your PIP insurance may not be enough to pay for all of your damages. And there is nothing more frustrating than to find out that the person who ran into you has no insurance.
When you buy insurance, you get “UM/UIM” automatically unless you affirmatively decline it. It is remarkably inexpensive and is worth having. DO YOURSELF A FAVOR AND DON'T DECLINE IT!
Insurance companies aren't always easy to love, but they perform a very important function. Never forget that driving is a dangerous activity, and any driver can be responsible for a catastrophic crash with just a moment's inattention. Having adequate insurance coverage is absolutely essential. Don't sell yourself short… it can happen to you.