“Full” Insurance Coverage — An Urban Myth

If you have ever been in an accident and thought, “no worries, I’ve got full coverage”, think again.  Many drivers in Florida are under the mistaken impression they are fully covered for every contingency under their automobile insurance policy when nothing could be further from the truth.  This misunderstanding is caused in large part by the way automobile insurance policies are packaged and sold in Florida.  This article will attempt to clarify this misunderstanding and provide some helpful advice about coverage drivers should consider.

Under Florida law, vehicle owners are only required to carry two types of automobile insurance coverage in order to legally operate a vehicle in the state:  property damage and personal injury protection a/k/a PIP.  Specifically, the state requires a minimum of $10,000.00 in property damage coverage and $10,000.00 in PIP coverage.

Property damage coverage protects the owner/operator of a motor vehicle for property damage he or she may cause in a collision.  If you cause damage to another vehicle, the insurance carrier will pay on your behalf an amount up to $10,000.00 in damages to the other vehicle.  This is important liability coverage every driver should have and, although mandated by the state $10,000.00 these days won’t go far to protect you considering that the cost of new vehicles typically exceeds $20,000.00.  If you cause an accident which results in the total loss of a new vehicle, you may have to pay damages beyond the minimum state required $10,000.00 in property damage liability limits.

PIP coverage provides $10,000.00 in benefits to cover medical expenses or lost wages you may suffer because of a collision, regardless of who caused the accident.  This coverage is subject to certain limitations and deductibles, but generally, PIP coverage will pay 80% of medical bills incurred and 60% of lost wages.  Importantly, PIP does not cover personally injury damages you may cause to others.  Those damages are typically covered by bodily injury coverage, which is not mandated by the state and must be purchased separately.  If you cause an accident that injures the occupants of another vehicle, or a pedestrian or cyclist, and you only carry the mandated minimum state required coverage, then you will be personally responsible for those personal injury damages unless you also purchased bodily injury coverage to protect you.

Unfortunately, many insurance carriers and agents characterize the minimum state required coverage of property damage and PIP as “full coverage”.  If may be “full coverage” where the state requirements are concerned, but not “full coverage” for every possible contingency.

Unfortunately, in my experience, most carriers and agents don’t take the time to explain to their customers the additional coverage available to them.  And the reason they don’t may be simple.  Most people are shopping for the cheapest premium and don’t understand that, by doing so, they forego purchasing many important, much needed coverage.

I can’t tell you how many times I’ve met with clients who found themselves in the unfortunate position of having to defend a claim or been unable to make repairs to damage on their own vehicle, because they did not appreciate what type of coverage they had.  Most of these encounters ended with advice to meet with their agent to discuss and clarify what coverage are available and necessary.

Individuals should carry bodily injury and collision coverage, at a minimum, besides the state required minimums of property damage and PIP.  Collision coverage will pay for damage to your own vehicle when damaged in a collision regardless of who caused it. Bodily injury coverage will protect you if you injure someone else in an automobile accident, including passengers in your own vehicle.  How much coverage you carry depends upon many factors, most importantly the amount of assets you want to protect.    The most important benefit to bodily injury coverage, however, is that it will provide you with a defense of any personal injury claim against you, i.e., the insurance company will pay for a lawyer to defend you if a lawsuit is brought against you.

Because there are many uninsured or underinsured drivers in Florida, including those carrying the minimum required state coverage, there is another important coverage all drivers should consider:  uninsured motorist coverage.  This coverage protects you if you are injured by a driver who is uninsured or underinsured.  So, if you have been injured in a motor vehicle collision due to the fault of another, UM coverage kicks in if the negligent driver did not have insurance coverage or did not have sufficient coverage to cover the full extent of your injuries.  In Florida, a driver carrying the minimum required coverage is essentially an uninsured driver because he or she is not required to carry bodily injury coverage.  But even if that driver carried a policy of $10,000.00 in bodily injury coverage and you experience a trip to the emergency room, your PIP coverage and the other driver’s $10,000.00 in bodily injury coverage could quickly be exhausted by the hospital bill alone, unless you carry health insurance coverage outside of any automobile medical coverage.  It behooves every driver to seriously consider carrying the most Uninsured/Underinsured Motorist coverage he or she can afford.

In conclusion, “full coverage” is a misnomer.  To be fully covered, one must understand the different types of automobile insurance coverage available and try to understand and maximize available coverage to suit one’s needs.  If you’re insurance agent or carrier leads you to believe you have “full coverage” ask them to explain what that means.  The chances are there will be gaps in your coverage and you may find out that you are exposed to potential liabilities and short falls when it comes to your insurance.