While many of us are making worthwhile New Years' resolutions such as working out more, doing more charity work or keeping in better touch with friends and family members, all of us should take the time to conduct a comprehensive evaluation of our existing insurance coverage. Most times, we are bombarded with information at the time we purchase insurance and then don't give it another though until we need to make a claim, or worse, someone makes a claim against us. This blog entry is intended to provide an overview of the types of insurance one should have and the considerations which should serve as a guide as to how much to purchase.
I. Homeowners Insurance:
For the vast amount of homeowners who have a mortgage , the bank or mortgage company will require a measure of insurance to protect their financial interests in the property in order to extend the mortgage. In many locations in Florida, that coverage will certainly include flood insurance for homes in coastal areas. Given the yearly threat of hurricanes which can cause damage from water intrusion to those living away from the coast, you should seriously consider at least a measure of "flood" coverage. Homes can also be damaged by high winds. This coverage is most definitely separate and distinct from flood insurance and should also be considered. Horror stories abound from situations where damage may have been caused by one or both natural forces. Rest assured that the flood insurance carrier will attempt to place the cause of damage on wind, and the wind insurer will counter that the damage was flood related. Without both coverages, the homeowner faces the real possibility that his or her claim will be denied.
At the time homeowners insurance is purchased, people estimate the value of their homes and possessions and choose limits accordingly. Problem is, most peoples homes and possessions increase in value over time. Now is the time to reassess these values and adjust coverages accordingly.
Numerous parts of Florida are also susceptible to sinkholes, for which specific coverage should be included in the homeowners' policy. Given the amount of sinkhole litigation that has occurred in recent years, there has been an ongoing battle between the Florida Legislature and the construction and insurance industries to define the necessary requirements to prove a sinkhole loss and how benefits should be paid.
Homeowners insurance should also cover the negligent acts of those living in the residence, from breaking a window with an errant golf shot to a slip and fall resulting from a dangerous condition on the property.
II. Auto Insurance:
While I have addressed the issues presented by the different types of auto insurance coverage, it all bears repeating at this time of year. Too many times in the past I have had the unfortunate duty of informing a client that he or she was woefully uninsured at the time they or a loved one were injured in a crash. Usually it comes after I am told they believed they had "full coverage" on their vehicle. This term has no real legal significance and is most often used by insurance agents to describe the minimum coverage necessary to register a motor vehicle and operate it on the streets of Florida.
In fact, the minimum necessary insurance consists of Personal Injury Protection ("PIP") which will pay up to $10,000.00 in medical bills to the owner/ operator of the vehicle without regard to who is at fault in the accident. Under specific circumstances, PIP coverage may also pay for the injuries to relatives living with the owner and includes injuries sustained by pedestrians or those on bicycles who are deemed "covered persons" under to policy.
Florida vehicle owners must also carry $10,000.00 in liability coverage for damage to property. This includes the other vehicles involved in the crash, road signs, landscaping, buildings, etc. That's it. Liability coverage for personal injuries("BI" coverage) sustained by others involved in the crash is NOT mandatory. This is crazy and, while addressed during each session of the Florida Legislature, remains the law today. It is this situation which should cause every vehicle owner to check his or her policy immediately to determine whether they have Uninsured/ Underinsured Motorist ("UM") coverage.
Under Florida law, the insurance agent is required to inform their client about the purpose and need for this coverage. Only then can an insured elect to reject UM/ UIM coverage in writing. If elected, the UM/ UIM coverage limits are the same as the BI limits, although the owner can elect lower limits in writing.
How much coverage should you have? The Insurance Information Institute has recommended $100,000/ $300,000. In a perfect world, all drivers would carry this much coverage. In the real world, I can only advise you to purchase as much as you can afford. Remember, you just cant pick the driver who may crash into you ahead of time.
III. Life Insurance:
Have a spouse or dependents? You must, if at all able, secure life insurance which will replace the loss of income they will experience without you. There are a number of types of life insurance you should investigate with your agent. Term life is the cheapest ( especially when you are young and have no pre-existing conditions). Whole Life and Variable Life insurance have an investment component, have no set term and are usually more expensive.
IV. Umbrella Coverage:
This is excess coverage to all the other liability coverage and is usually called a "Personal Liability" policy. If you own a boat , jet ski, ATV, or otherwise have significant assets, you should consider this coverage. Surprisingly, while the limits are usually in excess of $1 million, the cost is more reasonable than you would expect and are based upon the fact that there is usually significant coverage that will need to be exhausted before the umbrella coverage becomes available.
At this time of year, we all should take time to reflect upon the year we are leaving behind - the mess that was 2020. We should also look forward to the new year and make sure we are properly protected from personal injury or damage to our property. Insurance is a product we purchase with the hope we will never need it. If only that were true. Should you have any general questions about you current and future insurance considerations, or have been injured and don't know where to look for compensation, please don't hesitate to call my office at 727-822-3700 for a no-cost consultation.
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