Insurance Policies 101: Automotive Insurance

South Florida is quickly becoming infamous for its heavy traffic and high rate of motor vehicle accidents. Drivers in the Miami tend to be fast-paced, career driven men and women who want to get where they’re going––and they want to get there fast. It’s because of this lifestyle, and the lack of attention paid to the rules of the road, that auto insurance rates have skyrocketed over the last several years. Like several other states that cater to a faster-paced lifestyle and traffic at nearly all hours of the day (Los Angeles and New York City, for example), Miami has some of the highest automotive insurance premiums in the country.

When it comes to demystifying car insurance, we often endure singing, dancing spokespeople (or lizards) on television commercials that tell us we can “Save 15% or More on Car Insurance!” while not truly understanding what that policy actually entails. Does that lower priced policy cover everything a driver needs in the event of an accident? The truth is, insurance companies hope that they can distract you from what’s not covered with flashy commercials and attractive actors. It’s important to understand the reality of the auto insurance policy you select, no matter how entertaining the commercials.

Although insurance policies vary from state-to-state, they all have at least one thing in common: licensed drivers are required by law to carry automotive insurance. What’s more, it’s a good idea for drivers to carry uninsured motorist coverage, although that’s not required by law in every state. As part of our “Insurance 101” series of articles, we’ll break down what drivers most need to know when selecting an auto insurance policy, and what coverage best protects them in the event of a motor vehicle accident.

What’s in a policy?

The first thing we want to look at is what actually goes into an auto insurance policy. It’s important to understand what you’re getting––and what you’re not––before you sign on the dotted line. The last thing a driver wants is to end up with a policy that doesn’t fully cover them in the event of an accident. Medical bills, emotional anguish, and lost wages are enough to deal with after a motor vehicle accident, a driver’s car insurance coverage shouldn’t be added to that list.

Never ignore the fine print

Selecting an auto insurance policy is complicated and stressful. What do you need? What can you do without? The answer, thankfully, is an easy one to answer: you don’t want to leave anything out. Part of being a safe driver is making sure yourself and your loved ones who drive with you (or who are driving your vehicle) are as protected as possible in the event of unforeseen circumstances such as an accident or a hit-and-run.

BUT what goes into a good auto insurance policy?

On the Shaked Law Blog, we offer you the facts and nothing else. No animated lizards here. So what do you need to protect yourself fully in the event of an accident or hit-and-run? Let’s take a closer look at what the insurance companies aren’t telling you in all that song and dance:

Bodily Injury Liability: This type of insurance coverage is exactly what it sounds like: insurance coverage that protects you in the event you sustain a bodily injury in an automobile accident, or you injure someone else while behind the wheel. Depending on your policy, family members can be listed and covered as well, should you grant them permission to drive your vehicle. This type of insurance coverage is exceptionally important for parents of new drivers. Parents who allow their son or daughter to drive their car are putting themselves at-risk should they elect not to have this coverage.

Property Damage Liability: This coverage specifically handles payment in the event that the driver damages another person’s property (namely their vehicle) while behind the wheel. In addition to that, it can protect the driver from paying out of pocket for damaging other non-vehicular property as such: phone lines, fences, and windows.

Personal Injury Protection (PIP): In most states, auto insurance legislation requires the driver to obtain medical coverage that will pay the expenses of injuries to a driver and their passengers (in the policyholder’s vehicle). Occasionally, Personal Injury Protection covers certain medical expenses and lost wages. Check with your insurer to retain the most up to date information on the coverage available in your state.

Collision Coverage: In the event that your car is totaled in a collision, this coverage is designed to protect you financially from the burden of having to replace your car out of pocket. This coverage can also protect you should your vehicle flip. Collision Coverage policies also protect against potholes and other unforeseen roadwork that could damage a vehicle due to no fault of the driver.

Uninsured Motorist Coverage: This coverage is of utmost importance because it protects the driver from another’s negligence. Should the driver who caused your accident or hit-and-run have not chosen to carry an insurance policy, this coverage will protect you from having to pay for their carelessness. Occasionally, accidents happen, and you don’t want to pay the price for someone who chose to drive in a negligent manner and put other drivers at-risk with their actions. This is the type of policy one should always have but hope they don’t need to use.

Underinsured Motorist Coverage: When an at-fault driver doesn’t have the kind of coverage needed to pay for totaling your car, this is the coverage you want to have on hand. Additionally, this coverage can protect you in the event you’re hit by a negligent driver while walking.

Comprehensive Coverage: Probably the most important coverage a driver can select to protect themselves. This policy type can reimburse you for theft (of the vehicle or items in the vehicle). This policy also protects the driver from having to pay out of pocket for damage caused by anything other than an accident with another vehicle, such as: fire, floods, hail damage, falling objects, and objects that come into contact with the car and cause damage (such as a golf ball). There are certain states that do not require drivers to carry this type of coverage, however, if you lease your car or are making loan payments, your lender or the dealership may require it anyway.

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