Unless you’ve been living under a rock, you’ve seen a commercial (or, more likely, 3,000) for car insurance.
Auto insurance ads might be an okay way to entertain yourself during a break from the Superbowl, but they won’t help you understand anything about your insurance policies. In this video, I’ll go over 5 car insurance facts you actually need to know.
And if you’re hard of hearing (or just left your headphones in your gym bag), don’t worry. We’ve included a full transcription below.
The 5 Things You Need to Know About Car Insurance
Hey everybody. Today we’re gonna talk a little bit about automobile insurance.
Yeah, car insurance.
You’ve probably seen a commercial or two on TV about it. And frankly, they’re probably telling you everything that’s wrong, you don’t need to know, you don’t want to know, and you shouldn’t think is how it works.
So let’s kinda demystify things a little bit.
1. What Coverage Do You Need?
Here in Florida, the State of Florida says that you need Personal Injury Protection (which is our “No Fault” system) and Property Damage. That’s it. You have those two things and you are legal on Florida roads.
The problem is, that covers you, regardless of fault in an accident, for a maximum of $10,000 in coverage. And, quite frankly, an ambulance ride and a couple of X-rays often cost more than that nowadays.
The Property Damage limit that the State says you need is $10,000. Well, $10,000 is hardly even a used car anymore, let alone a new car. So you’re really not protecting yourself and—nine times out of ten—you’re not getting the best price when that’s the coverage that you select.
So what do you need?
That depends on you. Are you someone that’s just starting out (at the beginning of a career, maybe you live in an apartment and drive a used car)? Or are you someone who’s been in business for 30 or 40 years, has a house, a family, several vehicles, maybe some teenagers who are driving, and you have some more assets to protect.
That’s what’s going to govern what coverage you need.
And it could range anywhere (at least here at Harry Levine Insurance) from $25,000 per person / $50,000 per incident / bodily injury liability (coupled with a series of other coverages) to up to $500,000 per incident coverage plus a liability umbrella to extend that and properly protect your assets.
And everybody knows now, from driving down I4 or turning on the radio or TV, there’s usually an ad telling you who to call after you call the first responders (spoiler alert: it’s an attorney) who wants to take 33% of any recovery that’s made on your behalf.
Just remember, you’re not entitled to anything after an accident unless you’re truly injured. And the number one cause of rising costs with auto insurance is the culture we’ve developed that basically says, “Get in an accident, get some money.”
So please get that idea out of your head! Because all it’s doing is making your auto insurance cost more.
In short, what do you need? It depends on you. But that doesn’t necessarily mean it depends on your opinion. It depends on the assets you need to protect and how you need to financially position yourself for success.
2. What Are the Deductible Options?
Typically, for other than collision, which most people call “comprehensive,”deductibles range from $0 (or Actual Cash Value) up to about $2500. The most common deductibles we see for both of those are either $500 or $1,000.
Let me not forget to say that, very often, if your vehicle is leased, there are different minimums. But we’ll get to that in a later video.
3. What Are All the Eligible Discounts?
That, folks, is an impossible question to answer!
It varies by carrier, but some common ones are Good Student Discount; Driver Training Discount (which means taking an approved safety course); sometimes things like AAA Membership, AARP Membership, or even belonging to your college or university’s alumni association can earn you a discount on your auto insurance.
I know it sounds crazy, but there are affinity programs where they’re able to offer a small discount in return for you doing business with a certain company and being part of a certain group (that like alumni association).
4. What Are the Minimums For Coverage?
We already talked about that for Florida, with it being our “No Fault” coverage (Personal Injury Protection, or PIP) and Property Damage.
Again, stay away from those minimums! They do not protect you and they do not protect other drivers on the road. In fact, if you do some research, you’ll often find that buying more insurance than the state minimum costs less!
This is one occasion where “less is more” doesn’t hold true.
It’s about being actuarily responsible, and actuaries are those scary people who hide in dark rooms. (If we had more basements in Florida, that’s where you’d find them. Maybe they’re hanging out in sinkholes. Who knows?)
But what they’ve decided is that people who are more willing to protect their assets and buy more insurance should be rewarded with better rates because they’re less risky.
That’s not my opinion, but it’s something that the industry’s found to be true over millions and millions of data points (that is, “people”) over a very, very long time.
5. How Uninsured Drivers Affect Your Insurance
Those uninsured drivers are affecting your insurance by forcing you to have a true need to buy Uninsured Motorist coverage.
It’s believed that, in South Florida, about 1 in 3 drivers have no insurance. Up here in Orlando, it used to be estimated that it was about 1 in 5, but I think that number’s been pushed—the last I’ve read—to about 1 in 4.
So that means you have a 25% chance in any given accident of the other party involved having no insurance.
Yeah, it’s against the law. And they’ll probably wind up with a suspended license (if they don’t have one already). But the license suspension isn’t stopping people from simply ignoring their need for insurance.
So you need to protect yourself with a very important coverage called Uninsured Motorist (UM) coverage.
It doesn’t cover your car, but it covers you and the people in that car and it doesn’t just cover for injuries you receive in that accident.
It also covers things like loss of services, inability to perform tasks that you used to be able to do…. We call it “the gory stuff.” It even provides a death benefit as well if—God forbid—someone winds up deceased as a result of a car accident.
It’s an incredibly important coverage, especially with the rate of uninsured motorists in our local environment.
Personally, I’ve got $500,000 of Uninsured Motorist coverage and then a million-dollar umbrella that includes it, too. I just find it too important to protect my daughter in the event that the worst-case scenario occurs to me or my wife.
So there you have it. A little bit about auto insurance explained. And I’m sure we’ll come back and get way into the weeds on specifics, video by video.
Which is why you should subscribe right now, if you haven’t already.
See you all soon. Take care.