Auto Insurance Coverage Definitions

Choice Insurance wants to make sure our clients thoroughly understand the policy they are purchasing; therefore, we have listed and defined the different auto insurance coverages offered in the State of Florida. Please read carefully and give us a call immediately if you have any questions.

The information and definitions provided below are simplified summaries and may not be applicable in all states. All coverages are subject to the terms, conditions and exclusions in your auto policy. In the event of any discrepancies between these definitions and the provisions in your policy, the terms of your auto policy will control and prevail. Hence, it is imperative that you always read your policy entirely and carefully.

Limits of Liability

The amount specified in your auto policy up to which the insurance company will pay for any bodily injury (BI) or property damage (PD) you may cause in an at fault accident. This coverage is subject to the terms, limits, and conditions of your policy contract.

Bodily Injury (BI)

An injury sustained by a person in an auto accident.

Property Damage (PD)

Damage to someone else’s property caused in an auto accident.

Example
Florida uses split limits of liability ranging from minimal limits of 10,000/20,000/10,000 to maximum limits of 250,000/500,000/100,000. With the minimal limits, the insurance company will pay up to 10,000 for bodily injury per person in the car you hit, up to a total of 20,000 for bodily injury for the entire vehicle, and up to 10,000 for property damage caused by you in an at fault accident. As you increase your limits of liability, the same example applies.

Note
If you cause more bodily injury or property damage than afforded by your auto policy, you are still liable for those excess damages. Your premium increases with higher limits of liability.

Personal Injury Protection (PIP/No-Fault)

May pay for your medical treatment, lost work wages, or other accident-related expenses regardless of who caused the accident. PIP may pay up to 80% of your medical bills, 60% of your lost wages, and 5,000 for death benefits up to a total of 10,000. This coverage is subject to the terms, limits, and conditions of your policy contract.

Extended PIP

Increases basic PIP up to 100% of medical bills and 80% of lost wages. The death benefit stays the same.

Example
If you are involved in accident, you and your passengers could be entitled to PIP regardless of who’s at fault, that’s why Florida is called a no-fault state.

Note
Since Florida mandates PIP coverage, you may legally reject the bodily injury portion of the limits of liability. However, if you cause bodily injury in an at fault accident, the State of Florida will require that you carry SR-22 insurance for three consecutive years. SR-22 insurance requires you carry bodily injury and a filling fee. Furthermore, some insurance companies will not provide auto insurance to you if you have had a recent PIP claim due to the fraud associated with PIP in Florida.

Uninsured Motorist

Pays for your bodily injury caused by an uninsured motorist up to the limits you have selected on behalf of an uninsured motorist. This coverage is subject to the terms, limits, and conditions of your policy contract.

Example
Someone without insurance hits your vehicle and you suffer bodily injury. Your insurance company will pay your medical bills.

Note
Uninsured motorist does not cover property damage caused by an uninsured motorist in the State of Florida.

Collision

Covers your vehicle for physical damage when your car collides with something and it's your fault, or when hit by an uninsured motorist. This coverage is subject to the terms, limits, and conditions of your policy contract.

Example
Colliding with another vehicle or structure is the most common collision claim.

Note
Physical damage to your vehicle is subject to your collision deductible.

Comprehensive (Other than Collision)

Covers your vehicle for physical damage other than collision such as fire, flood, hail, theft, and vandalism to name a few. This coverage is subject to the terms, limits, and conditions of your policy contract.

Example
A cracked or broken windshield is the most common comprehensive claim in Florida.

Note
Physical damage to your vehicle is subject to your comprehensive deductible except for windshield damage. Your deductible does not apply to windshield damage; therefore, you will get a free windshield as long as you have comprehensive coverage.

Rental Reimbursement

Reimburses your expense up to the limits selected on your auto policy when renting a vehicle while your car is being repaired after an accident.

Example
Your insurance company will pay for your rental car so you can get to school, work, or wherever while your vehicle is being fixed.

Note
Rental reimbursement will not be afforded because of mechanical issues with your vehicle. Furthermore, when renting a car, most personal auto policies transfer to the rented vehicle. Hence, there is no need to purchase extra insurance from the rental car company unless your personal policy does not have sufficient coverage.

Roadside Assistance

Provides free 24/7 roadside assistance for your vehicle such as flat tire service, gas delivery, jump start, lock out service, and towing.

Example
Let’s say you lock your keys in your car, your insurance company would dispatch someone to pop your lock for free.

Note
Not all insurance companies offer this coverage.

Towing

Reimburses your expense up to the limits selected on your auto policy when towing is needed to transport your disabled vehicle.

Example
Your vehicle breaks down while driving to work and is disabled. You would need to call a tow truck, pay, and submit receipt to the insurance company for reimbursement.

Note
The insurance company will reimburse you up to the towing coverage limit on your auto policy, but not above that limit.

Medical Payments

Pays your medical expenses incurred in an automobile accident. This coverage is subject to the terms, limits, and conditions of your policy contract.

Example
After an accident, med pay would reimburse medical expenses.

Note
Somewhat of a redundant coverage considering PIP. However, the negative effects of filing a PIP claim are not associated with a med pay claim.

Deductible

A deductible is the financial risk you assume for particular coverages such as collision and comprehensive.

Example
Your vehicle has 2,000 in physical damage after you collide with a tree backing out of your driveway and your deductible is 500; therefore, your insurance company will give you 1,500 to fix your vehicle.

Note
Higher deductibles increase the monetary risk you assume thereby lowering your premium. Lowering your deductibles has the adverse effect on your premium.

Auto Insurance Terms

Below are some common insurance terms and their definitions.

Actual Cash Value

The fair market value of property, or replacement cost less depreciation

Agent

An individual who represents and sells insurance for one or many insurance companies.

At-Fault

The party that is legally liable for the damages in an accident.

Binder

A temporary agreement declaring that the policy or any change to the policy is in effect.

Claim

Any request or demand for payment under the terms of the insurance policy.

Claimant

Individual or entity presenting a claim.

Coverage

Protection and benefits provided in an insurance contract.

Defensive Driver Discount

Discount given to certain drivers, usually over age 50, who have voluntarily taken a defensive driving course may.

Depreciation

The decrease in value of any property due to wear and tear.

Discount

A reduction in your premium if you or your car meet certain conditions that are likely to reduce the insurer's losses or expenses.

Electronic Funds Transfer (EFT)

EFT is an electronic payment method that allows you to pay your premiums with automatic deductions from a checking, savings, or credit card account.

Endorsement

Any change made to an existing auto policy that alters the current policy.

Estimate

An assessment of the cost to repair your damaged vehicle or property.

Exclusion

A restriction in your insurance policy that limits and may exclude coverage for certain perils, persons, property, or locations.

Expiration Date

The date which is found on your insurance declarations page indicates when your policy coverage expires.

FR-44 Insurance

Insurance required by the State of Florida for someone who has been convicted of a DUI.

It mandates that you must carry limits of liability of 100,000/300,000/50,000 for three consecutive years.

Good Student Discount

A discount for full-time students who maintain a grade average of "B" or better.

Hazard

Anything that increases the chance of an accident occurring.

Indemnification

The act of compensating an insured for a loss with the intent to restore them to the approximate financial position prior to the loss.

Inspection

Verification of a vehicle's physical condition

Insurable Interest

Exists when an individual suffers an economic loss due to damage to property or bodily injury, and therefore is eligible for compensation according to the terms, limits, and conditions of your policy contract.

Insured

A person or organization covered by an insurance policy.

Insurer

An organization that provides insurance.

Liability

Any legally enforceable obligation for the injury or damage suffered by another person.

Lienholder

A person or organization with a financial interest in your car up to the amount of money they lent you or still owed on the vehicle.

Misrepresentation

Making written or verbal statements that are false.

Motor Vehicle Report (MVR)

A report listing accidents and violations on your driving record.

Multi-Car Discount

A discount available on auto policies insuring more than one vehicle.

Named Insured

The person or entity listed on the policy declarations page.

Non-Renewal

Occurs when an insurer decides not to renew your policy upon renewal.

Peril

Any danger or hazard that can cause a loss.

Policy

A contract between you, the insured, and the insurance company, the insurer.

Premium

The price of the insurance policy.

Quote

A statement of the premium presented before purchasing an insurance policy.

Rate

Essentially a synonym for premium.

Renewal Date

The date that your insurance policy expires, or the date that your policy will continue if you choose to renew.

SR-22 Insurance

Insurance required by the State of Florida if you cause an accident without bodily injury coverage on your policy or if you have excessive points on your license due to tickets. It requires that you have limits of liability of 10,000/20,000/10,000 for three consecutive years.

Subrogation

The process of recovering payment for your losses, whatever they may be, from the liable party.

Third Party

Person or entity not party to an agreement but with an interest in the agreement.

Vehicle Identification Number (VIN)

A unique 17-digit number assigned to every manufactured vehicle used for identification purposes which is visible on the dashboard and other parts of the vehicle.