The Curiosities of Car Insurance…
The GEICO Gecko, Mayhem at Allstate, Flo at Progressive, the Aflac Duck… the genius behind insurance marketing certainly has its effect: consumers spend more time picking which insurance company to sign up with, than what policy to sign up for.
Specifically, these marketing efforts focus on pushing the lowest rates for car insurance, and they’re coming at us from all angles: “We were the first to sell insurance online, and now we believe that mobile is a game changer. So, instead of just TV commercials, we started integrating her into video games like Sims Social; we created 7 smart phone apps; we produced an animated YouTube video, created by Beavis & Butthead animator J.J. Sedelmaier; and we got a lot more aggressive with social media, where we now have over 4 million fans on Facebook.” says Progressive’s CFO Jeff Charney in an interview with Forbes.
But what difference does it make to us? Don’t we get the same coverage offered regardless of whether we like the gecko or the duck better?
It can be confusing, and to make matters worse, there seems to be a lack of guidance as to what policy is right for you. Speaking as a consumer myself, the sign-up process has an effortless “Flo” to it, whether it’s assistance by a live agent or an online forum pushing you through to the next question. Do you decline uninsured motorist coverage, yes or no? Well, you think, what gives me the lowest rate?
Think again. Risks are taken every time you get behind the wheel, and obtaining the right coverage is a numbers game. Here is a “crash course” on the basics of car insurance in Florida:
Uninsured motorist coverage provides coverage for the victim of an auto accident if they are injured by an uninsured motorist. Essentially, your company simply steps in and acts like it is the liability insurance company of the person who negligently injured you. UM applies only to bodily injury and not property damage. You must obtain separate coverage for property damage. A $10,000/$20,000 UM policy means that the UM carrier will compensate injured persons up to $10,000 per person or $20,000 per accident for all injured parties involved. Florida has an extremely high rate of uninsured motorists, so it is NOT advised to decline UM insurance.
Personal injury protection (PIP) insurance covers you, your family members, and individuals in the event of crash with injuries. PIP coverage applies to all qualified individuals regardless of fault, otherwise known as Florida’s “no fault” insurance. Everyone’s auto insurance policy must contain a minimum coverage of $10,000.00 PIP. If you did not cause the accident, your premiums should not rise unless you have been in multiple accidents within a certain period of time.
Bodily injury liability (BIL) insurance is not required in Florida. This insurance covers liabilities you may have for causing an accident, such as someone else’s medical expenses and funeral costs. You will carry higher premiums if you elect BIL, but your personal liability in the event of an accident is protected up to the amount of your coverage.
Stacked uninsured motorist coverage means that you multiply the amount of UM coverage by the number of vehicles covered under your policy to determine the amount of coverage. Let’s say you have 2 cars in a single policy, each with $25,000.00/50,000.00 UM limits, and you decide to stack these coverages. Your coverage limits for each vehicle will be $50,000/$150,000 (2x the original policy amount) instead of your original $25,000/$50,000. Without stacking, your UM/UIM limits are capped at your liability limits. Stacking your UM coverage in an amount equal to your BIL coverage is always a good idea. This option is usually not much more in premium charges and can dramatically increase your coverage. Stacking also protects your relatives that live with you and you if you are on a motorcycle.
Our cars, houses, health and wealth are constantly changing. I’ve done some finger-wagging about this before: review all insurance policies, retirement accounts and estate planning documents annually! Car insurance policies may seem innocuous, but the wrong policy in a bad situation can put you and your family in dire straights. So go ahead, informed consumers, call the lizard and shake him down for the best policy… because now you know what you’re talking about.
Vanessa Braeley, Associate Attorney with NeJame Law, contributed to this article.