But I Have Full Coverage!
Actually, no, you don’t.
That’s because in Florida, there is no such thing as “full coverage.”
It’s an absolutely meaningless phrase both legally and practically.
In Florida, as of August 2013, the only required coverages are $10,000 in personal injury protection (“PIP”) and $10,000 in property damage (“PD”). That’s it, and that doesn’t go far. Many people, in fact, have $10K PIP and PD only policies, and they mistakenly think that they have “full coverage.”
I’ve even heard insurance agents–the people who sell these policies to the public!–use the phrase “full coverage” to refer to PIP and PD only policies. In reality, you can purchase every available type of coverage, including collision, comprehensive, extended PIP coverage, medical payment (“Med Pay”), bodily injury (“BI”), and uninsured motorist (“UM”) coverage, and you still may not be fully covered for an expensive loss. What matters more than having the different types of coverage is having the proper limits of coverage for each loss.
Let’s briefly examine each type of coverage and what each one covers. I’ll discuss the first-party coverages first:
PIP covers you and any passengers in your vehicle (unless they have their own PIP coverage) for the first $10,000 of your injuries in a loss. PIP covers the person, and if you own an operational automobile in Florida (meaning it runs or can easily be made to run–a flat tire doesn’t excuse you from having PIP coverage, for example), then you must as a Florida resident, maintain PIP coverage. The only time PIP coverage applies to a third-party is if you were to run over a pedestrian who doesn’t have PIP coverage. PIP coverage pays your medical bills at 80% and necessary services (if, for example, you needed to hire a housekeeper while you are injured) associated with a crash at 60%, regardless of your fault. You may also have up to a $1000 deductible on your policy, meaning you pay the first $1000, and then PIP pays your bills at the standard rates. Note that PIP applies to automobiles, not motorcycles and other vehicles. Using PIP, by the way, doesn’t increase your insurance rates. That’s another myth.
Extended PIP pays your medical bills at 100% and services at 80% (minus any deductible you elected). You can also buy extended PIP at higher amounts than $10,000.
Med pay is another “first party coverage” that protects you in a crash even if it’s your fault. Med pay only pays for medical expenses, not personal services or lost wages like PIP . While PIP and extended PIP do not cover motorcycles, med pay does (if you buy it). So do all the other first-party coverages we are discussing.
UM is another first-party coverage that pays for your injuries if an at-fault party injures you and doesn’t have BI coverage or doesn’t have enough BI coverage. If you only have PIP, and an uninsured driver hits you, guess how much money you get if you lose an arm? You get only $10,000 for your medical bills and lost wages. How much is your arm worth? Your life? Surely more than $10,000, correct? Buy as much UM coverage as you can afford.
Collision coverage covers your car if it is damaged in a crash. The only time collision coverage may cover another car is if you are driving a rental vehicle or someone else’s vehicle that doesn’t have collision coverage (or in rare cases, that person does have collision coverage but your deductible is lower than his, he can use your deductible amount and have your insurance company pay the difference between the two). The only crashes collision coverage doesn’t cover is animal impacts or intentional acts. (You cannot intentionally run your car into a tree and profit from it.)
Comprehensive coverage is commonly called “age of God” coverage. It protects against weather-related issues such as lightning strikes and floods, electrical and other fires not due to poor maintenance or your own acts of arson, and impacts with animals. These things are considered acts of God and unpreventable. It also compensates you if a thief steals your vehicle.
Now, let’s discuss BI and PD coverage:
BI coverage protects third-parties from your negligence or the negligence of others operating your vehicle (including motorcycles).
Most people realize that Florida is one of the few states that regards vehicles as “dangerous instrumentality,” and if you allow someone else to drive your vehicle, any negligent act that person commits is your responsibility. Never loan your car to anyone. You’re responsible for anything they do with your car.
In some cases, even if your vehicle is stolen, but you were negligent in how you stored its keys, you will be responsible for the thief’s negligence. Leaving keys where minors or thieves can access them is a huge liability, yet I have seen many cases in which keys were left in vehicles and the owners were found to be liable when the car’s thief injured someone.
Your BI coverage will always be “primary,” meaning that even if the person who is driving your car has his own BI coverage, you are responsible and your insurance coverage will pay for whomever the driver injures or damages. The driver’s own insurance would be excess, so if you have an insufficient amount of insurance coverage, his kicks in after yours is “exhausted.” Let’s say you have $10,000 of bodily injury liability insurance, and the person driving your car has $100,000 of bodily injury coverage. If that driver injures someone and that person has an injury worth $50,000, then your insurance would pay $10,000 toward that injury, and the insurance company for the guy driving your car would then pay $40,000 as the “excess carrier.”
PD covers third parties for their property damage. If you are at-fault in a crash, PD will pay for the other party’s property damage. Like BI. PD follows the vehicle it insures.
If someone driving your car injures someone or damages another person’s property, then your insurance rates go up, not the driver’s in most cases. Never loan your car to anyone. Never let anyone else drive your car. My wife doesn’t drive my car and I don’t driver hers unless it is absolutely necessary.
By the way, if your name is on the registration or title of a car, you’re responsible for whatever damage that car does or injuries it causes. Never co-sign for another person’s car loan. Never buy a car with someone else. My car is only in my name. My wife’s car is only in hers. I’m not responsible for her crashes–if any–and she is likewise not responsible for any of mine (unless one of us is driving the other’s car).
But what if you have all the different types of insurance coverage I mentioned?
That’s still not good enough.
The problem comes into play when you (or someone driving your car) injures a person or damages property in excess of your available liability limits or you are injured in excess of another driver’s liability limits. Despite the fact that you purchased every available coverage, you may not have sufficient insurance coverage. In other words, you aren’t “fully covered.”
Let’s look at a few scenarios:
You or someone else driving your car kills someone. Even if you have a million dollars of BI coverage, that probably won’t adequately compensate a person’s heirs for the death of a neurosurgeon in his prime earning years. If you have a lot of assets (real property, like multiple homes or liquid assets like cash), you should buy as much BI coverage as you can afford. Florida juries get real mad, for example, if you kill a cute kid. It’s a fact.
You or someone driving your car damages several expensive cars. You may think $100,000 can replace most cars, and you are correct, but what about more than one? I’ve seen South Florida crashes or huge crashes on interstates in which the property damage was simply mind-boggling. Crashes often involve several cars, and most cars today are worth over $25,000 new. If you destroy a luxury car, then you may be liable for over $100,000 in property damage. If you destroy more than one, then be prepared for some serious “sticker shock.” Even repairs to relatively common import cars like a BMW–especially those import cars with aluminum bodies–can be extraordinarily expensive.
Someone without any insurance severely injuries you. Reports vary, but statistics show that most people driving in Florida are woefully under-insured. A significant amount of them have absolutely no insurance. That’s scary. You should definitely have collision coverage unless you can afford to buy a new car with cash and your car is very old. You should also buy as much uninsured motorist coverage as possible. If you don’t have health care insurance, then you should buy as much extended PIP and med pay coverage as you can afford, too. Operations are very expensive: I had to have two very costly operations when a negligent driver rear-ended me in 2007. Luckily, I had purchased a lot of uninsured motorist coverage and had health care insurance.
In Florida, where sink-holes, tornadoes, and hurricanes are the norm, you should buy comprehensive coverage too! I’ve seen cars struck by lightning, cars catch on fire and burn nearby cars to the ground, and cars strike large farm animals and become total losses. I once had a customer when I was an insurance adjuster run over a squirrel and her car sustained several thousand dollars worth of radiator and fiberglass damage (that must have been a HUGE squirrel).
In closing, you can never have “full coverage” (simply because it does not exist), and if you look at your automobile insurance policy right now, you have probably failed to purchase many of the types of coverage I have discussed or did so at very low limits. The best you can do is envision the probable worst case scenario and buy as much coverage as you can afford to protect yourself in the event that worst case scenario occurs.
This is by no means all there is to know about insurance coverage and how it works. I literally spent years learning about the way insurance works and the laws governing it, and while that law changes in little ways almost monthly, I do know one thing that will never change:
You don’t have full coverage.
The hiring of a lawyer is an important decision that should not be based solely upon advertising. Before you decide, ask the firm to send you free written information about the lawyer’s qualifications and experience.
