We are beginning a weekly blog on frequently asked insurance related questions. These will focus on some of the most common questions people have about the insurance products we offer. We will begin by discussing the five frequently asked questions about auto insurance.
What is uninsured motorist coverage?
In Florida, Uninsured Motorist Coverage (UM) is an optional coverage you can purchase on your own auto insurance policy. UM is for you, and relatives who live with you, as well as the people who occupy your car at the moment of the accident. UM pays you for injuries caused by an auto accident where the at-fault driver is uninsured (has no insurance) or under-insured driver (does not have enough insurance). This applies to incidents where you or the person driving your car did not cause the auto accident. It is important to note that UM does not pay for your car. You would need to purchase collision coverage on your car to cover damages caused by an uninsured motorist.
What does uninsured motorist coverage pay for?
UM pays for: medical bills, loss of the future enjoyment of life, lost wages and disability, long term nursing care, wheelchairs and medical devices, pain & suffering, death, replacement services for activities you are no longer able to perform (for example: yard service, cleaning, etc.), and the cost to retrofit your home in order to accommodate the disabilities caused by the auto accident.
What is the difference between stacked and non-stacked uninsured motorist (UM) coverage?
There are two types of uninsured motorist coverage: Non-stacked and Stacked.
In Florida, non-stacked UM is cheaper than stacked UM, and covers you when occupying vehicles listed on that auto insurance policy. The non-stacked UM limit shown on the policy declarations is the maximum collectible. Let’s assume you have 3 cars insured on a policy and you have selected UM limits of up to $50,000 per person/ $100,000 maximum per accident. If you select non-stacked uninsured motorist coverage, the limits on the policy ($50,000 /$100,000) would be the most you could collect.
In Florida stacked UM is more expensive but it provides higher limits and is more comprehensive than non-stacked UM coverage. This type of policy covers if you occupy any of the vehicles listed on your insurance policy, and cars not listed on the policy (for example: if you are driving a roommate’s car, a rental car, or a company car). Stacked UM on your auto policy also covers you while riding a motorcycle. Non-stacked coverage does not cover you on motorcycle. The stacked UM limit shown on your policy is calculated based on the number of cars insured on your policy. For example, you would take the UM limit of $50,000/$100,000 and add it by the number of vehicles on the policy, say 3 cars. The payout for the policy would be $150,000 per person, and $300,000 per accident.
How much auto insurance coverage do I need?
Many people make the mistake of only covering the damages to their vehicles. Auto insurance can also cover you for being sued as a result of causing an accident, or for the injuries sustained during an auto accident. It will also pay the cost of defending you from a lawsuit (for example, legal fees). It is recommended that you purchase insurance with higher limits to protect your assets and income. In cases of high-income earners, or you have more than $250,000 in assets, you should look into an umbrella policy. An umbrella policy provides additional liability limits, which will help retore your financial state. Umbrella policies are very affordable. In Florida, an umbrella policy that will provide an additional $1 million of liability insurance costs between $350-$600 year.
I have an older vehicle; do I need higher insurance limits?
Another mistake people make is to purchase lower insurance limits because they have an older vehicle. This is problematic for a number of reasons. As your car gets older or you have finished paying it off, you may decide to go without coverage. That would seem like a budget friendly thing to do but it does not take into consideration injuries that may be sustained by you or your passengers in cases of an accident. Regarding injuries, you need liability insurance and uninsured motorist limits to protect your assets and lost wages due to an accident. This is true whether you drive a brand-new car or an old car. Accidents are never planned or expected! Regarding damage to the vehicle, you need Physical Damage coverage (Comprehensive/Collision Coverage) protects damages to your vehicle. Many insurance companies will stop offering coverage on your vehicle after it is 15years or older, so contact us in order to see if it is cost effective to carry this coverage.