Do I Have “Full Coverage”?

My Agent Said I Was “Fully Covered” For A Car Accident

“Full coverage” is not a real insurance term.  I suppose that you could purchase the maximum limits of every possible type of insurance for your car that is offered and that might be full, but no one ever does that and the cost wouldn’t make sense for what you get.

There are certain insurance coverages that you are required by Florida law to have on your care (that’s probably what your agent meant when they said you had “full coverage”) and then there are coverages that you should have but are optional (this is probably what you thought of when you heard “full coverage”).

So What Insurance Must I Have On My Auto Policy?

As crazy as it may sound, Florida law only requires you to have two coverages on your automobile policy for an accident.  Unless you have a self-insurance certificate (not a good idea unless you are a mega-corporation and you can’t buy regular insurance), then you are required to have:

  1. Personal-Injury-Protection (PIP or “no-fault”) of $10,000 per person (section 627.736, Fla. Stat.); and
  2. Property damage liability coverage of at least $10,000 (section 324.021, Fla. Stat.)

Some people refer to this as “minimum legal” coverage.  This type of policy provides nothing to someone who you might hit and kill leaving you exposed to a civil judgment.  It should be illegal to sell this type of policy but it is not.  A majority of other states have mandatory bodily injury liability coverage but, unfortunately, Florida is not one of those states.

What Insurance Coverages SHOULD I Have On My Auto Policy?

First and foremost, you should always purchase bodily injury liability coverage.  If you do not have bodily injury, then anyone who you injure or kill does not get any money from your insurance company and could sue you for a judgment that will follow you for the next 21 years.  You could also have your driver’s license suspended.

Besides, having bodily injury on your auto policy is just the right thing to do for your fellow man should you injure or kill someone.  After all, if someone else injures or kills one of your family members, wouldn’t you want them to have bodily injury on their policy (even though the law does not require it)?  I think you expect other people to have bodily injury on their auto policies and, therefore, you should have it on yours.

Second, you need uninsured motorist coverage (UM).  Forget about the distinction between uninsured and underinsured.  It all does the same thing.  UM coverage pays you when the person who caused the accident either does not have insurance or does not have enough insurance.

Just as discussed above, unless you trust your fellow man to buy enough insurance (which they’re not even required to buy under Florida law in the first place), then you need to have UM coverage on YOUR auto policy.  I have seen so many people who have $50,000 or $100,000 in bodily injury on their policy (to provide for their fellow man) but go on to reject UM coverage (leaving themselves hung out to dry).  Don’t let an insurance agent tell you that they can save you on your automobile policy by dropping UM coverage.  You can do better by finding a new insurance agent or a new insurance company before you reject UM coverage.

When it comes to UM coverage, it’s okay to be a little greedy.  After all, by purchasing UM coverage, you are protecting yourself and your family from financial hardship and disaster.  That’s just a smart thing to do.

There is one caveat to UM-unless you purchase stacking for multiple vehicles-you cannot buy more UM coverage than you have in bodily injury coverage.  I suppose that the reasoning behind this is if you are going to protect yourself, then you need to purchase the same for everyone else.

You Really Only Need 4 Coverages

All you really need on your policy are four coverages:

  1. PIP/no-fault (no deductible)
  2. Property Damage
  3. Bodily Injury
  4. Uninsured Motorist (UM)

Collision and Comprehensive

If you have a loan on your car, you will be required to carry collision and comprehensive.  However, be advised that these coverages really don’t protect you unless your car is paid off.  Instead, they protect the bank’s investment in the car in case it is involved in an accident, vandalized, or gets destroyed when a tree falls on it (the bank probably also made you purchase GAP or guaranteed asset protection to guard against depreciation).

If you own your car, chances are that by the time that your car is paid off, then these coverages probably aren’t worth keeping.  If you own your car and it is paid off, then you can make a financial decision to self-insure yourself against an accident where the other driver does not have property damage (remember, they can’t sell a policy in Florida without it) or if you are going to be so unlucky that a tree falls on it (it doesn’t happen enough to justify the premium).

With collision and comprehensive, the general rule is that you should buy it if you can’t afford to lose your car.  If you can stomach the loss of your car (even though you never not want to), then you are probably better off saving the premium and putting that money towards a new car when you are actually ready.  If you are going to save, this is where you can save.

Medical Payments and Extended PIP

Coverage for medical payments and extended PIP make sure that all of your medical bills are paid after an accident.  Quite frankly, these are just what I call “luxury” coverages that you really don’t need.  You are better off putting your money towards a better health insurance policy that covers you wherever you go and whatever you do rather than just in the car than making sure that 100% of your medical bills are covered in the not-so-frequent event of a car accident.  Remember that you have to re-pay medical payments coverage out of any settlement that you get unless your attorney can get it waived.

Rental Car Coverage

This is another “luxury” coverage.  You won’t be in an accident every year of your life (or at least you shouldn’t be).  While it might sound nice to have this coverage on your auto policy, you are probably better off saving your money and, if you need to, pay for a rental car if you are ever in an accident.

Rental coverage only kicks in if the other insurance company does not accept liability and provide you with a rental car to minimize your claim against their insured.  I view rental coverage as really just like pre-paying for a rental for whenever you get into an accident.  Therefore, it doesn’t make sense for someone who is trying to save money to buy this coverage in the first place.

Accident Forgiveness, New Car Depreciation, And Other “Gimmick” Coverages

In recent years, insurance companies have gotten more creative in the coverages that they offer in an effort to increase profit.  Depending on the company, you can now purchase “accident forgiveness,” “new car depreciation,” and even “pet coverage” on your automobile policy.  I consider all of these coverages as “gimmicks” that you really don’t need and really won’t provide you with meaningful coverage in the event of a loss.

In other words, you are better off putting the money that you pay for these coverages toward higher limits of the 4 coverages above that will make a difference if you ever need it.

Call Us To Review Your Policy For Free

If you have a question about your auto insurance policy, call us and we will review it for your for free.  We bring insurance claims for clients in Polk County including Lakeland, Winter Haven, Bartow, and Haines City, Florida.

January 06, 2017