The Importance of Automobile Insurance

When you ask somebody if they have insurance, they usually say “yes, I have full coverage”, but do they really know what that means?  Certainly, when they buy an insurance policy, they have PIP and they have their bodily injury limits for an accident with another person.  Customarily these are written with a single figure and a multiple figure such as $10,000/$20,000 or $10,000/$25,000 insurance policy.

They also go into a larger number of $100,000/$300,000 on up.  What that does is that the insurance is for $100,000 per person with a limit of $300,000. In other words, if there is an accident with multiple parties where the exposures on them are over $100,000, there may be a gap in that insurance.

Anything over that $300,000 would be the responsibility of the insured. This is more likely to occur on the smaller policy limits such as the $10,000/$25,000 or the $20,000/$50,000.  Therefore, people should really look at what their policy limits are. The next step in this would be to check PIP. The policies will have PIP and many of these are written with a $2,000 deductible, but one can check with their insurance agent to see if they can get a PIP policy without a deductible and possibly extend over the $10,000 limit.

Collision Coverage

Collision coverage pays for anything that may damage the car, not caused by a vehicular accident,  vandalism, theft, trees falling, etc.  That would be especially important here in Florida where we have hurricanes.  It’s rather unfortunate to have someone make a claim because a tree fell on the car and it be denied because they didn’t have appropriate comprehensive.  Collision, of course, is an accident that happens to your car.  Both comprehensive and collision can be written with a deductible.  Usually, they are.

Gap Insurance

Most insurance coverage which is lacking is gap insurance.  Gap insurance pays for the difference between the vehicle’s value and what may be owed on it.  For example, the purchase of a used car has a Kelly Blue Book value of $25,000 and the financing of the car is in excess of that.  If the car is totaled, then the Kelly Blue Book value comes into place and the amount of deficiency between the financed amount and the actual value of the car comes into play, which leaves the insured responsible to pay off his note.

Uninsured motorist coverage is not required but should be done here in Florida.  There are many who do not have bodily injury coverage.  The minimum requires only collision and PIP.  It does not require BI.  UM is not that costly and should be addressed with the agent.  This is at the point where you could say that you have UM coverage, regular coverage, comp and collision, as well as PIP, and then one might add gap insurance, if necessary, then might say he’s got full coverage.