To Keep or Not to Keep Auto Insurance? That is the Question.

 By Diane Tait

We live in a complicated world filled with all kinds of technological marvels.  Today’s vehicles are not so much cars as computers with four tires and an engine.  When I bought a new car a couple years ago, it took me almost a month to figure out how to use it, since many functions that were previously analog had suddenly gone digital.  It got to the point where I started calling my vehicle the Carship, since it seemed to me to be part car and part Starship Enterprise.  While learning how to use voice actuated and touchscreen controls on modern vehicles can be confusing for some, so too is trying to decide how much auto insurance to carry.  To simplify matters, I thought I’d take the time to walk you through the ins and outs.

Should you keep the minimum coverage required of the state? –  All residents of the Sunshine State must carry a minimum of $10,000 in personal injury protection (PIP) and a minimum of $10,000 in property damage coverage, even for vehicles that are not being driven or are inoperable.  Sounds simple, right? But what do the minimums get you?  Not much, since the $10,000 in property damage may or may not be able to cover the full cost of damage done by you to another vehicle should you be involved in an accident.  What’s even worse is that PIP only pays up to 80% of the first $10,000 in immediate medical coverage if you’re injured in an auto accident, regardless of who caused the crash.  Who gets to pay the other 20%?  You do. 

When it comes to PIP coverage, the two most misunderstood terms are “immediate” and “up to $10,000”.  The way the Florida PIP law is currently worded, “immediate” means you have up to 14-days from the accident to seek medical coverage to be qualified for PIP coverage.  Wait even one extra day and coverage will be denied.  The “up to $10,000” part of the coverage allows the insured to receive no less than $2,500 and no more than $10,000 in treatment for an emergency medical condition, provided that the diagnosis is made within the 14-day window.  That means if your medical costs exceed the $10,000 limit, you will have no recourse unless you have additional insurance to offset these costs.  The only other alternative is to use your existing medical insurance or to bring suit against the other party involved in the accident to try to recover the costs.  Suing the at-fault driver could take months or years to resolve.

How can you enhance your PIP coverage in Florida? – Since $10,000 doesn’t buy much medical coverage these days, there is an elective provision called MedPay that can be used to increase the amount of medical coverage on your auto policy.  Optional Medical Payment Coverage can be purchased in increments of $5,000 (Up to a $10,000 maximum) to offset medical costs associated with an auto accident.  This means that for a few dollars more per month, 100% of your medical bills would be covered up to the specified limit in the event you or any passengers were injured in an accident.  MedPay coverage even applies if you’re injured as someone else’s passenger, if you’re using public transportation, or if you’re struck by a vehicle while walking or cycling. What’s even better is that MedPay has no deductible or co-pay associated with it since it’s considered supplemental insurance.  

Is $10,000 in personal injury protection enough? – That’s for you to decide.  But for most motorists, it can prove inadequate.  One way to remedy this situation is to opt for additional coverage.  Additional bodily injury coverage is available from $15,000 to $500,000 or more. The best way to determine how much coverage you need would be to talk to your insurance agent.

Should you keep Uninsured Motorist Coverage? – One way that some drivers try to reduce the cost of their auto policy is to drop uninsured motorist coverage.  This could prove to be a big mistake if they’re ever injured in an accident and the at-fault driver is either uninsured or underinsured.  Uninsured and Underinsured Motorist Coverage can help you pay medical bills that exceed PIP benefits if the at-fault driver's coverage falls short.  

Should you keep or drop collision & comprehensive coverage? – In the past, it wasn’t unusual for car owners to drop collision and comprehensive coverage on vehicles that were paid off and had high mileage, especially if they were carrying high deductibles.  But nowadays, you’re fixing a computer instead of a car.  Depending on the make and model of the vehicle you own, replacing parts damaged in an accident or through an act of God can cost thousands of dollars.  Once again, the decision to drop either collision and/or comprehensive coverage on alder vehicles is something you should discuss with your insurance agent.

How much liability insurance should you keep? – When a customer asks how much automotive liability insurance they should carry, I say, “That depends.  How much are you worth?”  While the amount of liability insurance you carry on your auto policy is up to you, having too little opens you up to litigation should you cause an accident. Where PIP, MedPay and Bodily Injury Protection pays for medical coverage and Collision & Comprehensive Coverage pays for damage to your vehicle, Liability Coverage pays for any damage you cause to people and their things. Unlike PIP coverage which is considered no-fault, damage to vehicles and property is the responsibility of the at-fault driver.  In Florida, the minimum property damage liability insurance required is $10,000.  Should you opt for the minimum, you’re effectively stating that you are willing to be responsible to cover damages caused by you in the event of a crash that exceed $10,000.  Since the average cost of a new car in the US as of February 2020 is $37,876,  and the price of a used car is $20,200, you can see how $10,000 in liability coverage could be a bit less than optimal.  That’s because it doesn’t include damage done to things such as poles, fences, buildings and other property that can be involved in an auto accident.

Bodily Injury Liability Coverage – While it sounds a lot like personal injury protection, bodily injury liability coverage covers much more than the medical bills of anyone you happen to harm in an accident.  It pays your legal fees should you find yourself in court due to an accident. It also covers wages lost because of an accident where you’re deemed at-fault and it even pays for such things as funeral expenses for any fatalities caused by you in an accident, not to mention damages for pain and suffering.

Diane Tait owns and operates A&B Insurance.  To find out more about how you can save money on insurance, go to her site or fill out the form at right.