Auto Insurance Coverage Definitions - Parts of an Auto Policy
Auto Coverage - Parts of an Auto Policy
- Part A - Liability Coverage
- Part B - Medical Payments Coverage
- Part C - Uninsured Motorist Coverage
- Part D - Coverage for Damage to Your Auto
- Part E and F - Other Provisions
Auto Coverage - Who is Covered
The personal automobile insurance policy covers the named insured , spouse, and relatives who reside with the named insured, providing all licensed drivers have been disclosed. The insurance policy may also cover other drivers who have permission to use the automobile. In other words, if an insured loans their vehicle, they are most likely loaning their insurance policy as well.
If the person using the automobile lives with the insured or has regular usage of the automobile, they must be added to the policy. Otherwise, the company may cancel the policy and refuse to pay a claim.
Some automobile insurance policies will not cover a person who is not listed on the policy. Read the policy carefully and/or ask the agent if a permissive user of the vehicle is covered.
Auto Coverage - Bodily Injury Liability
Bodily injury means physical harm, sickness, disease, or death resulting from any of these. Claims for bodily injury can be for damages such as medical bills, loss of income, and pain and suffering.
Auto Coverage - Property Damage Liability
Property Damage Liability (PD) pays for damages that an insured would be legally liable for resulting in the physical damage to, or destruction of, tangible property of another, including loss of use. The negligent act must be the result of an activity or operation of the insured covered by the policy . If the insured is sued, the insurance company will provide legal representation.
All policies issued with personal injury protection must also provide property damage liability for at least $10,000 limit per accident, or bodily injury and property damage liability with a combined single limit of $30,000 per accident.
Auto Coverage PIP - Benefits
Personal Injury Protection (PIP or No Fault) pays 80 percent of all necessary and reasonable medical expenses incurred as a result of a covered injury, regardless of who caused the accident.
PIP also pays 100 percent for necessary and reasonable replacement services that are required by an outside person due to the injured person being unable to perform such duties or services. Examples of, but not limited to, are: cleaning, cooking, and yard maintenance
PIP pays 60 percent of work loss and has a death benefit of $5,000. The mileage is usually paid at the standard rate allowed by the I.R.S.
All PIP benefits are subject to the deductible, if any, except the death benefit.
Auto Coverage - Medical Payments
Medical Payments coverage is for payment of reasonable expenses incurred for necessary medical and funeral services because of bodily injury caused by an auto accident and sustained by an insured . Generally, the expenses must be incurred within 3 years of the accident. However, the courts have required payment when a child is injured but it is medically determined that the treatment should be delayed, for example dental work or plastic surgery.
Auto Coverage - Uninsured/Underinsured Motorist
Uninsured/Underinsured Motorist (UM) Coverage pays for "accidental" bodily injury (BI), sickness, or disease, including death, when an insured sustains such injury as the result of an automobile accident and the legally obligated party does not have Bodily Injury Coverage, or does not have sufficient limits to satisfy the injury claim . This includes both economic (actual medical bills and other out of pocket expenses) as well as non-economic (pain and suffering) damages.
The limit of UM must be the same as the BI unless the insured signs a form to reduce or delete the coverage. The coverage must also be issued as ”stacked” unless a form electing non-stacked is signed by the insured.
Auto Coverage - Stacked Uninsured Motorist
Florida law requires that a company add together, or "stack" uninsured/ underinsured (UM) coverage for multiple vehicles, unless otherwise rejected in writing. For example, an insured has three vehicles, and each has a UM limit of 50/100 ($50,000 per person/$100,000 per accident). This means they have up to $150,000 per person/$300,000 per accident available for a claim.
Reference: Florida Statute 627.727
Auto Coverage - Non-Stacked vs. Stacked
The "non-stacked" form of uninsured/underinsured motorist (UM) coverage has an exclusion stating that the insured cannot collect UM while occupying a vehicle owned by the insured, but not insured for UM under the policy.
In the stacked form, there is no exclusion saying the insured cannot collect UM in a vehicle owned but not insured. In the stacked form, an insured could own 3 vehicles and insure only one of them for UM and still collect while in any of the vehicles.
PLEASE NOTE: There is no exclusion in either UM form dealing with a vehicle with less than 4 wheels.
Reference: Florida Statue 627.727(9)(d)
Auto Coverage - Collision
Collision coverage pays for repair or the actual cash value of the insured's vehicle if it collides with another vehicle, flips over, or crashes into an object (except animals), regardless of who causes the accident.
Auto Coverage - Stated Value
Instead of straight "actual cash value" coverage , there is an endorsement that allows for specific limits. This is also known as a "stated value" policy . These limits can apply to a policy including only Comprehensive Coverage or a policy that includes both Comprehensive and Collision Coverage . The most the company will pay in the event of a loss is still the actual cash value or the cost to repair, up to the "stated amount."
Collision
Comprehensive or Other Than Collision Coverage pays for damage to a vehicle from incidents other than a collision including: fire, theft, windstorm, vandalism or flood. It also covers damages caused by falling objects or from hitting an animal.
Auto Coverage - Windshield
An insured must have Comprehensive or Other Than Collision Coverage for a front windshield to be covered. If the automobile policy was issued in Florida, the law states: "If a policyholder has a deductible for this coverage, it will be waived in the event the front windshield is cracked or broken and needs replacing."
Reference: Florida Statute: 627.7288
Auto Coverage - Rental Reimbursement
Rental Reimbursement provides reimbursement for automobile rental up to a specified limit shown on the policy . It applies if the insured gets into an accident with their own automobile and can no longer drive it, and usually if the auto is stolen. Some insurance companies will have the insured rent/lease the replacement vehicle and then submit receipts for reimbursement.
Auto Coverage - Towing and Labor
Towing and Labor Coverage can be included under various forms of personal automobile insurance . It provides coverage for emergency road service (at the scene) and towing up to the limits shown on the policy . However, the insurance company may cancel the policy for too many towing claims even, if the insured reported no accidents.
An automobile policy will pay for towing a disaster damaged vehicle if the policy contains a towing and labor coverage provision. This type of coverage usually pays up to a specified dollar amount for the towing and labor charge.
Auto Coverage - Accidental Death & Dismemberment
Accidental Death and Dismemberment covers the insured for accidental death or dismemberment in an automobile accident, regardless of fault, up to the limits of the policy .
Auto Coverage - Business Use Of Personal Auto
Personal automobile policies do not normally provide coverage if the vehicle is used for business.
Auto Coverage - Trailers
In general, when “owned” trailers are attached to an insured vehicle, liability extends to the trailer. For an example, if the trailer comes loose from the vehicle and strikes another vehicle, liability should extend to the trailer from the covered auto. However, physical damage caused to the trailer is normally covered on a separate policy (for fire, theft, collision, etc.). Also, there are limitations of coverage for a trailer not owned by the insured. Since contracts vary by company, an insured should contact their agent to determine how their policy will apply to a particular situation.
Auto Coverage - Financial Responsibility Law/Bodily Injury Required
An operator of a motor vehicle involved in a crash or convicted of certain traffic offenses, shall respond for damages they cause and show proof of financial responsibility to respond to damages in future accidents.
The required limits are: Bodily Injury $10,000. each person, $20,000. each accident.. Property damage limit of $10,000. The insured may combine the two listed above to a single limit of $30,000 per occurrence. Verification of the required limits for bodily injury and property damage must be provided by submitting a SR-22 from their insurance carrier.
In some cases, Florida Law requires drivers to carry Bodily Injury liability insurance. This requirement applies to drivers convicted of certain traffic violations, such as driving under the influence of alcohol or drugs. It also applies to drivers who are involved in an accident but cannot pay for damages.
Drivers convicted of driving under the influence of alcohol or drugs must provide proof of insurance in the amount of $100,000 per person, $300,000 per accident for Bodily Injury liability, and $50,000 Property Damage liability. Verification of the higher limits for bodily injury and property damage must be provided by submitting a FR-44 from their insurance carrier.
For more information on the Financial Responsibility Law, contact the Bureau of Customer Services, Department of Highway Safety and Motor Vehicles.
Reference: Florida Statutes 324.021 - 324.022 & 324.023
Auto Coverage - Non-Resident
Florida Law requires that all drivers purchase automobile coverage if the driver is a non-resident and living in the state at least 90 days of the year. The 90 days need not occur consecutively.
Reference: Florida Statute 627.733
Auto Coverage - Force Placed
A lienholder may require the insured to maintain comprehensive and collision insurance on the automobile financed. This is usually a condition of the loan. When a vehicle lacks coverage, the lender may "force place" or "add" coverage to the loan.
A "forced place" insurance policy only covers the lienholder's interest in the automobile. If the insured has an "at-fault" accident and the only coverage on the vehicle is the forced placed insurance policy added to the loan, it will not pay for liability. The premium for a force placed policy is normally much higher than a regular policy.
The financial institution must notify the borrower within 30 days of the purchase that 1) They have purchased the coverage and 2) that the borrower may avoid additional premium charges by providing their own policy within 30 days of the notice, and that any unearned premium will be returned, plus interest.
Note: A complaint about a financial institution should be referred to the Office of Financial Regulation (OFR).
Reference: Florida Statute 655.946
Auto Coverage - Motorcycles
Some of the insurance coverages available for motorcycles are: Bodily Injury Liability , Property Damage Liability, Guest Passenger Liability, Uninsured/Underinsured Motorists (UM), Medical Payments, Comprehensive and Collision and Roadside Assistance. The most common coverage requested, but not available, is Personal Injury Protection (PIP). PIP is only required for self-propelled vehicles with four or more wheels that are registered and licensed in the state.
An individual older than the age of 21, must carry $10,000 in Medical coverage if riding or operating a motorcycle without a helmet. The law requires anyone under the age of 21 to wear a helmet while operating or riding a motorcycle.
Coverage for drivers or riders over the age of 21 can be provided by a Health Insurance policy or Medical Payments coverage on a motorcycle policy. Law enforcement officers can accept an insurance card or policy or declarations page from an HMO or another recognized health insurance provider.
In some cases Liability Coverage may also be required when a driver must prove financial responsibility due to violations or failure to pay for damages caused in an accident. This is regulated by the Department of Motor Vehicles
Auto Coverage - Motor Homes
The same coverage that is required for an automobile policy is required for a motor home - a minimum of $10,000 Personal Injury Protection (PIP) and $10,000 of Property Damage Liability (PDL). Due to the Financial Responsibility law, it is also desirable to include $10,000 bodily injury liability.
This requirement applies to self-propelled vehicles with four or more wheels that are registered and licensed in the state
Auto Coverage - GAP
If an automobile is totaled in an accident and it is financed, GAP Coverage pays the difference in the amount of the actual cash value settlement of the vehicle when it is a total loss and the loan balance. To purchase this coverage, contact an agent , lien holder, or auto dealer.
PLEASE NOTE: These contracts may or may not be true insurance policies.
Auto Coverage - Leased Vehicle
A leased vehicle must be insured for Bodily Injury Liability limits of $100,000/$300,000 and Property Damage limit of $50,000, or $500,000 combined.
Reference: Florida Statute: 324.021(9)(b)
Auto Coverage - Customized Equipment
Coverage for customized equipment is normally excluded by an automobile insurance policy , unless purchased through an additional coverage (endorsement ).
An endorsement is a specific amount of coverage separate from Comprehensive and Collision and subject to the same deductibles. However, any claim will still be settled on an actual cash value basis. The endorsement provides a buy-back only for what is basically excluded in the customizing equipment exclusion , not for property dealt with in other exclusions such as: special carpeting and insulation, furniture, bars, facilities for cooking and sleeping, height extending roofs, and custom murals, paintings, decals or graphics.
Auto Coverage - Electronic Equipment
Auto insurance policies exclude coverage for some electronic equipment and only covers others by endorsement . When in doubt, consult the agent who sold the policy.
Auto Claim - Other Drivers in Household
Any driver that resides in the home of the insured or has regular usage of the insureds vehicle, must be listed on the policy . If this information was not disclosed to the insurance company, they can deny a claim and cancel the policy for material misrepresentation.
If the driver is not living in the household and does not have regular usage of the vehicle and the insured provided permission to drive the vehicle, applicable coverage may apply.
Be certain to read your policy as some policies only cover listed operators.
Auto Coverage - Borrowed/Loaned Vehicle
Most personal automobile insurance policies will cover an insured who operates a vehicle not owned by them. However, the vehicle owner's insurance will be primary and the driver's insurance will be excess. For this reason, if an individual borrows a vehicle, they are generally borrowing its insurance policy as well.
Be sure to read the policy or check with the agent to determine if liability coverage will transfer to a non-owned vehicle. Some policies only cover the vehicle listed in the policy.