Understanding Your Automobile Insurance Policy

One of our readers wrote in expressing concern about trying to understand their automobile insurance coverage. This can be a very frustrating experience for a number of reasons. The typical insurance policy has pages and pages of exclusions and definitions and seems written in a language not designed for anyone to understand. Or, the insurance agent who sold you your insurance didn't have the time to explain everything to you. Sometimes, the insurance agent may actually offer you less coverage than you want or need in order to keep your premium low. There are also different types of insurance coverage – a lot of them are even written in code with abbreviations. Different states have different requirements. So, don't feel as if you are alone. This article will help you to understand the basics of auto insurance.

Personal Injury Protection

Personal Injury Protection insurance coverage is required in Florida and is thus the first insurance to help pay some of your medical bills from an accident. This insurance is designed to pay a percentage – not the complete amount - of medical bills, lost income from work, accidental death, funeral expenses, and survivor benefits. You may see Personal Injury Protection abbreviated as “PIP” on your insurance bill.

In Florida, this insurance coverage is also known as “no-fault” coverage. The reason that PIP coverage is called “no fault” coverage is that it covers a part of your medical and hospital bills regardless of who was at-fault in the accident. So, even if you were at-fault in the accident, your insurance company should pay for part of your medical bills. Alternatively, if you were not at-fault in the accident, you are still required to submit your bills to your PIP insurance company for payment.

Because PIP insurance is considered primary you must submit your medical bills to your insurance company first even if you did not cause the accident. This can sometimes be upsetting to people because they do not feel that their insurance company should have to pay when they are not at-fault for the accident. Even though this may seem unfair, PIP actually works to help you obtain medical care without fighting with the other driver's insurance company.

As a lawyer, I frequently get calls from accident victims who are having their bills paid by their PIP insurance but are being told that they must submit to a compulsory medical examination. This is a mandatory exam by a doctor chosen by and paid by your insurance company. Unfortunately, even though this is your insurance company – and you have paid them premiums – it seems as if you have to “prove” that you are hurt. Typically, the doctor finds that you do not need any care and you are then forced to file a lawsuit against your insurance company to get the benefits that you paid for. You may also hear about your treating doctor having to sue your insurance company because the insurance company did not pay the correct amount of the doctor's bill for your PIP care.

Before you can sue the at-fault driver for your unpaid bills and your injuries, Florida law requires that you finish your treatment with your doctor and have your bills paid though your PIP insurance. There are of course other “thresholds” which you must meet in order to be able to make a claim as well. Because of space limitations, you should ask your lawyer to explain this in more detail.

Medical Payments

Because PIP insurance only covers a percentage of the bills, you can protect yourself further by purchasing medical payment coverage. This coverage is in addition to your PIP coverage and pays for the balance of the unpaid bills up to the amount of your medical payment insurance policy limits. Medical payment insurance pays for the bills – like PIP insurance - regardless of who is at-fault for the accident.

Collision Coverage

Collision insurance covers damage to your automobile from a collision with another vehicle or object. This type of insurance is designed to pay for the repairs to your vehicle only; collision coverage will not pay for the damage to another person's car. Liability insurance, a different type of insurance, is required to pay for the damages to another's car or property. Because cars can be very expensive today – sometimes costing as much as a small house – make sure that you have enough insurance to pay for the repairs. Collision coverage will have a deductible.

When the costs to repair your car are more than the value of the car itself, the insurance company will call this a “total loss.” When someone refers to their car being “totaled” in an accident this is what they mean. It can be upsetting to have your car totaled when you have spent thousands of dollars on tires and a new transmission because the insurance company will not reimburse you for those extras. Under Florida law, the insurance company views these items as necessary to safely drive the care and will not reimburse you. Therefore those “extras” do not add to the value of the car when it is totaled. You therefore want to be careful when you decide to spend a lot of time or money “fixing up” an older model car as you may not recoup the investment.

Comprehensive Coverage

This insurance covers damage to your vehicle caused by damage other than a collision. Examples of comprehensive coverage include fire, theft, and vandalism. Comprehensive coverage will have a deductible which you can choose based on your budget.

Liability

This type of insurance is designed to pay for the bills for another person when you are at-fault for the accident. There are two types of liability insurance. One type of liability insurance is called “bodily injury” coverage and will pay for injuries to the other driver. Bodily injury insurance coverage pays for such things as the other driver's medical bills and lost salary. The second type of liability insurance is called “property damage” coverage and will pay for the property damage to their car when you are at-fault for the accident. Liability coverage for either bodily injury or property damage will pay for the other driver's injuries and damage but it will not pay for your injuries and damage.

Liability insurance for both the other driver's medical bills and car repairs will have a per person and a per accident limits depending on your premium. Because of the high cost of a lot of today's SUVs, you should consider higher liability insurance to help cover the cost of repairs.

Uninsured/Underinsured Motorists Coverage

This type of insurance is designed to help pay for your medical bills after your PIP insurance is exhausted. This type of insurance is composed of uninsured and underinsured coverage.

The first type of coverage is called “uninsured” and is for accidents when the other driver who caused the accident has no insurance. If the other driver didn't pay their insurance bill then they would be uninsured for this accident. Uninsured coverage applies to help cover your medical bills (up to your policy limits).

The second type of coverage is for an “underinsured” at-fault driver. The other driver is considered to be “underinsured” if they have a small policy and the bills for your injuries exceed their policy. Underinsured coverage applies to help cover your medical bills (up to your policy limits).

Both uninsured and underinsured coverage can be “stacked.” The term “stacked” is insurance short-hand which means that if you have two cars on your policy you can have twice the uninsured/underinsured coverage. Similarly, if you have three cars you could have triple the coverage. This is extremely important because uninsured/underinsured motorist insurance protects you.

Other Insurance

There are also other insurance extras, such as rental car reimbursement coverage and towing coverage. Be sure to check with your credit card company and your towing club to see if you already have this coverage. There is no need to pay for this type of coverage again if you already have it.

Protect Yourself

Be careful when you review your insurance policy – some insurance agents will offer you a higher deductible in order to keep your premium lower. The deductible is the amount of money you would have to pay out of your pocket before your insurance company would start to pay your bills. With a higher deductible, you may save money on your insurance bill, but you will have to pay out more money after you have an accident before you can receive help. Make sure that you can afford the deductible. Are you better off to pay a little bit more very month for your premium or can you save money for this type of emergency?

Be sure to keep yourself adequately insured. Having just the bare minimum amount of insurance may not be enough to protect your assets if you have a major incident. Insurance experts recommend that you thoroughly review your insurance policy regularly. I always recommend that clients ask for a copy of their entire automobile policy and read it to protect themselves. When meeting with your attorney to create or update your will, bring along a copy of your insurance policy to have your attorney review the “fine print.” Make sure that the information on your policy is accurate; your insurance company can deny your claim based upon any inaccurate information you supplied when you applied for insurance coverage even though you have paid premiums.

Shop Around

When you are shopping for your insurance, compare quotes from different companies. People will often be surprised that even though they have been with a company for many years that they can obtain a better rate elsewhere. Some insurance companies will provide discounts to seniors and those who don't drive their cars as much. Ask the insurance company if they provide a discount for multiple cars and/or insuring your home with them. Ask if the insurance company provides any discount for not having any accidents or tickets. Ask if the insurance company provides a discount for having a car with air bags, automatic seat belts, or anti-lock brakes.

Be careful when you talk with your insurance agent about the quote. When you ask for “full coverage” this may mean something different to your insurance agent than it does for you. Be sure to ask to exactly what is included and what deductible applies.

The above article is general in nature and should not be relied upon for specific legal advice. Every legal situation is different.