When I am speaking with clients about their auto insurance policy, most people tell me they have “full coverage”. What is “full coverage”? As an insurance agent I have to assume this means the client’s auto policy provides all of the available coverage options offered with the maximum obtainable limits. Typically I discover this is not an accurate assumption of what the client is trying to convey. Some people use the term “full coverage” as a way of explaining they possess the minimum coverage required in Florida. Yet others have a different thinking of what “full coverage” means to them. The truth is there is no true meaning of “full coverage” for an auto policy.

Your auto Insurance policy, also referred to as a personal auto policy (PAP), is complicated in that it offers both financial protection and financial compensation to not only you but potentially to others as well. The PAP policy is designed to be an indemnification policy which means, “To make whole”. The theory here is for example; when your automobile is damaged in an accident, the insurance company will pay to repair it exactly to the condition it was before the accident happened.

The State of Florida has established the provisions required for the privilege to own and operate a motor vehicle on public streets and highways of Florida. These provisions (F.S. 324.011) are explained and defined under the Motor Vehicle Financial Responsibility statute. Essentially this statute describes and defines the responsibilities of the motor vehicle owner with the consideration of others and their property, to promote safety and provide the financial requirements for motor vehicle owners or operators whose responsibility it is to compensate others for injuries or damaged property caused by the operation of a motor vehicle.

There are some coverage on an auto policy which are statutorily required and others that are optional. The State of Florida describes the minimal amount of insurance required to respond to the damages for liability on account of crashes arising out of the use of a motor vehicle. This is called “Proof of Financial Responsibility” (F.S. 324.021). Proof of financial responsibility is met when the owner or operator of a motor vehicle is able to provide proof of insurance where:

• At a minimum the policy provides $10,000 because of bodily injury or death of one person in any one crash.
• At a minimum the policy provides $20,000 because of bodily injury or death to two or more persons in any one crash.
• At a minimum the policy provides $10,000 because of damage or destruction to property of others in any one crash.

Lastly, the State of Florida statutorily requires the coverage of personal injury protection (PIP) as described under the Florida Motor Vehicle No-Fault Law (F.S. 627.730-627.7405). This compulsory coverage of your auto policy is specific to injuries as a result of a motor vehicle crash. This coverage is not the same as the coverage mentioned above where those deal with “third party” liabilities. Personal Injury protection (PIP) is a “first party” benefit meaning this coverage applies to the named insured, a listed driver on the policy or any other person as defined as an Insured under the policy. PIP is primary against all other forms of medical insurance coverage with the exception of workers compensation. The limits of this coverage are usually $10,000 per accident.

So what does all of this really mean? It means if you own a car and it is registered in Florida you must have an auto insurance policy with at least the minimum coverage of $10,000 for bodily injury to any one person in a crash, $20,000 as the total amount payable for bodily injury where there are multiple injuries in any one crash, $10,000 as the total amount available to compensate for damage to the property of others and PIP. If you carry these limits you are in compliance with the State of Florida.

Below are the general coverage and the descriptions of each coverage available in an auto policy. The coverage provided in your personal auto policy (PAP) will be outlined on the declarations page of the policy which identifies the named insured, the mailing address, the policy period, the list of coverage applicable to the policy with the limits and the premiums.

• Bodily Injury (compulsory) – Required per Florida Statute with minimum limits of $10,000/$20,000. This coverage will pay on behalf of the insured where they become legally liable to others for bodily injuries. The limits for Bodily Injury (BI) can be increased where multiple options are typically available.
• Property Damage (compulsory) – Required per Florida Statute with minimum limits of $10,000. This coverage will pay on behalf of the insured where they become legally liable to others for property damages. The limits for Property Damage can be increased where multiple options are typically available.
• Personal Injury Protection (compulsory) – Required per Florida statute payable up to maximum limits of $10,000 per occurrence. This coverage will pay for specific injuries to the insured as a result of a motor vehicle crash.
• Medical Payments – This coverage is optional. It will pay for expenses incurred for necessary medical services to persons injured by an accident. This benefit is available to those who meet the definition of an insured but also may provide coverage to other persons while occupying “your covered auto”. This coverage is not to be confused with PIP. The limits of Medical Payment coverage vary from company to company.
• Uninsured Motorist Coverage – This coverage is optional. While Bodily Injury coverage protects an insured against the legal liability claims of others, Uninsured Motorist (UM) coverage will pay compensatory damages for bodily injuries under your own policy which would have been recovered from the liability insurance of another. This is applicable when the third party liability coverage limits are lower than the damages of the insured or the third party is uninsured. The Limits of UM can be increased where multiple options are typically available but cannot exceed the limits chosen for Bodily Injury.

Damage To Your Auto– This coverage is optional unless required by a lien holder. Sometimes called “physical damage coverage”, this coverage will pay for damages to “your covered auto” due to a direct or accidental loss. It does not pay for maintenance or mechanical failure. If physical damage coverage has been added to your policy, a deductible will be applied. The deductible is the amount you will be required to pay before the insurance company pays. Physical damage coverage has two parts; Collision and Other Than Collision also called Comprehensive.

Collision – Collision means an upset or impact with another object.

Comprehensive – Comprehensive covers other aspects of damage to “your covered auto” where a collision did not occur. For example: fire, theft, vandalism, hail, falling objects or contact with a bird or animal.

As you can see, there is a lot going on with the personal auto policy. Part of the policy is required to comply with State statutes and other parts will follow the policy language as determined by the insurance carrier. Due to the complexities and the importance of the personal auto policy I will be writing individual blogs posts for each coverage concept to better explain the coverage, how they work and why they should be important to you.