Florida Law and Debtors Rights or “I’m uninsured, what’s protected” ?

April 23, 2011

In a previous post, I outlined the types of available automobile insurance and stressed the necessity of obtaining as much coverage as financially possible to insure that medical expenses and lost wages can be recovered in the event of injury as a result of an accident.

As a corollary to that advice, it is just as critical to carry as much liability coverage for damage to others should injury result from one’s own negligence or that of a permissive driver operating a borrowed motor vehicle.

Unfortunately, as a result of the financial inability to purchase sufficient coverage, (or just plain bad advice of an insurance agent), I have had to counsel frantic clients who are suddenly faced with a liability claim and discover that they have little or no insurance to protect their assets. Under these circumstances the primary question is. “what’s safe and what’s in jeopardy of being taken”?

Under Florida law there are protections granted to certain property and assets against seizure from third parties who have obtained a judgment as a result of a lawsuit. The largest, and in most instances the most important, is the protection granted to a person’s residence. If the home is owned by the person against whom a judgment is obtained, that residence is exempt from the claims of all creditors except for a bank or finance company which may hold a mortgage on the property.

This “Homestead Exemption” is guaranteed by the Florida Constitution, and was in large part the motivation behind O.J. Simpson’s curious relocation to Florida following the multimillion dollar judgment assessed against him as a result of the civil trial based upon his murder charges.As of this date, there is no limit to the value of the homestead property which can be protected, but do not be surprised if in the future a “cap” is placed upon the protected amount.

The Florida Constitution also provides protection for personal property up to $1,000.00. This can include cash, investments or any other personal property which is owned by an individual. Property jointly owned by a married couple is protected if the judgment is entered against only one spouse.

Similarly, any motor vehicle owned by the debtor is protected up to $1,000.00 ( obviously not including a bank or finance company which extended a loan to purchase the vehicle).

While a creditor may attempt to seize (or “garnish”) wages, a debtor’s income is not subject to garnishment unless it exceeds $500.00 per week. Social Security, Disability, Unemployment Compensation, Worker’s Compensation and retirement benefits are also exempt from the claims of creditors.

Obviously the rationale of these exemptions are to prevent the debtor having limited means from being rendered penniless. The moral of the story remains the same – while Florida law does protect individuals from the poorhouse, the assets which are protected can provide only a n extremely basic existence. In order to properly protect those assets which provide a meaningful lifestyle, please be sure to maintain insurance coverage equal to the value of those assets.

Should you have any questions regarding the types of coverage you should seek from a reputable insurance provider, please contact me at the Heyman Law Firm at 727-822-3700 or through this website.