Car Insurance 101: Choosing the Right Level of Coverage

Car Insurance 101: Choosing the Right Level of Coverage

car-accident-13915-mAs a personal injury attorney, I can tell you that car insurance is one of the most important investments that you will make in your life. Each year, there are more than 10 million accidents on American roadways. That means, on average, one in every 20 people will be involved in an accident this year. Without car insurance, you are left in serious financial risk.

It is important to understand that not all policies are equal and that the price paid for the needed coverage will depend on a great number of factors. For instance, a person that has been involved in a major accident or who has received a speeding ticket can pay as much as three times more per year for car insurance than a driver who has not suffered either. Location also plays a big part in the price tag. Inner city drivers will often pay up to five times more for car insurance than those living in rural areas.

Because it is expensive, but very necessary, it is essential that you pay close attention to the amount of coverage that you are purchase. In Florida, there are two types of insurance coverage relating to vehicles. The first is called Property Damage Coverage. There are three types: Property Damage Liability (also known as P.D. or PDL), Collision, and Comprehensive.

PDL pays if your car damages another car or another’s property, such as a home or other structure located on their property. Florida law requires you to be covered for at least $10,000 for PDF and $10,000 for PIP (or “No Fault” coverage – see below). This PDF coverage, however, does not include any damage done to your personal vehicle.

Collision pays for damages to your car or for a vehicle replacement if so warranted. Fault is not considered a factor when you are covered by this insurance. An individual is not required to obtain this coverage, although if your vehicle is bank-financed, your lender may require you do so. You’ll want to purchase an amount that will reimburse you for the actual cash value of your vehicle.

Comprehensive coverage is utilized to repair or replace your vehicle if something other than a car accident occurs to damage your vehicle, such as vandalism, theft, hail, or fire damage.

The second type of coverage is called Injury Liability/Wage Coverage. These include Personal Injury Protection (also known as PIP or “No Fault”), Medical Payments (also known as “Med Pay”), Bodily Injury (referred to as BI), and Uninsured Motorist Coverage (referred to as UM or UIM).

Remember, an ambulance ride in St. Petersburg can often cost an average of $1,000 per person. If there are five people injured and in need of ambulatory services, you can see how quickly the medical bills can mount. A minimum liability car insurance policy does not provide a great deal of security. This is especially true should the accident result in a great deal of vehicle damage. If your mistake on the road totals another driver’s brand new vehicle and the liability policy is only minimal for vehicle repairs, you are going to find yourself paying more money, straight from your pocket.

Most drivers in Saint Petersburg will opt for more involved policies. Though it will push up the monthly payment for car insurance, it reduces the financial risk assumed whenever a person takes to the road. There are six primary forms of coverage, including Bodily Injury Liability, Property Damage Liability, Collision, Comprehensive, Medical Payment, and Uninsured Motorist Insurance, as well as secondary options available. Each of these can play a distinct role after a St. Petersburg accident. While I won’t go into what each does right now, it is important to recognize the terms before buying your next policy.

It is also important to have a clear picture of how much coverage you need to protect your financial status. If your insurance does not cover the costs of the accident, you could be forced to pay out of pocket. That could mean mortgaging your home, losing your vehicle, being forced to sell stock or cash-out retirement accounts. Protect these investments with proper auto insurance.

As a general rule, it is wise to have liability insurance that will provide up to $300,000 for total medical expenses, per accident, and $50,000 for vehicle repair coverage. For more information, contact an insurance agent. Decisions made during the buying process can save you a lot of money, stress, and time later.