What Does Your Auto Insurance Actually Cover?
Auto insurance is one of the most consistent bills for the majority of Americans. People pay tens of thousands of dollars to auto insurers throughout their lifetimes, so we feel it is important to break down the basic coverages and their subsequent limits on your typical personal auto policy.
Let’s start with liability. There are two main structural options for bodily injury liability - split limit and combined single limit (CSL). Split limits tend to be more popular, with the familiar format of 100/300/50 providing 100k of coverage per person, 300k of coverage per accident, and 50k of property damage per accident. On the other hand, combined single limits tend to range from 100k of liability all the way to 1million with certain carriers. CSL is advantageous in that whatever your limit is, that bank of liability can be extended without limitation to individuals or property injured or damaged by you.
For example, if you hit a Lamborghini and cause 200k of damage, a CSL of 300k would afford the full 200k of damage to that vehicle, whereas split limits of 100/300/50 would see just 50k paid out in the same incident.
As a rule of thumb, it is inexpensive to raise your property damage liability limit in particular, so if you feel shortchanged by your current coverage, be sure to ask your agent about raising it!
Personal Injury Protection (PIP)
Next, we have our Personal Injury Protection (PIP) coverage. Florida is a no-fault state, meaning that regardless of who is at fault in an accident, each insured will call upon the PIP coverage on their policy to help pay for medical expenses and lost wages. PIP is required by law, with coverage typically maxing out at 10k. Medical expenses are paid up to 80% of this limit, with lost wages capping at 60%. There are several options to extend or broaden PIP, with popular options including raising those benefit percentages to 100% medical and 80% lost wages, respectively.
Uninsured Motorist (UM)
Uninsured Motorist (UM) coverage is another crucial part of any personal auto policy. This is coverage designed to pay out to you in the event you are injured by an uninsured or underinsured driver. For some perspective, around 25% of Florida drivers carry no auto insurance, with thousands more driving around with state minimum liability limits. You don’t want to be driving around here without UM - and yes, while your health insurance could pay on your behalf in an incident UM may have otherwise been available, health insurance can have limitations and exceedingly high deductibles and copays whereas UM does not.
Comprehensive and Collision
The last of the core coverages included on personal auto may be the most familiar sounding: comprehensive and collision. Comprehensive coverage is designed to pay claims stemming from incidents such as theft, vandalism, natural disaster, falling objects, and striking animals. Collision is mainly concerned with paying out claims involving accidents between vehicles, vehicle upset/overturn, and impact between a vehicle and a non-auto object such as a tree or lamppost. Before enacting these coverages an insured must pay their deductible, and what that is should depend upon the value of your vehicle, the frequency with which you drive it, and what you're comfortable paying. Be sure to check in with your agent if you are unsure of your deductible or if you’d like to change it.
These are the most basic and essential aspects of the personal auto policy. Understanding these fundamental coverages can go a long way in making you feel like a more assured driver, and working with an independent agent can ensure that your coverages are tailored to your needs for the right price.
As always, reach out to your agent if you have any questions about your coverages, or if you need an auto quote!