How Car Insurance Works

What Is Auto-Insurance?

Generally, auto-insurance is designed to protect two separate potential damages:

(i) Damages to the body (also referred to as  a “Personal Injury”) and;

(ii) Damages to property.


Each state has the ability to create their own rules regarding insurance regulations and requirements. Driving without insurance in Florida is illegal, and a driver may have his or her license suspended if caught driving without at least the minimum required insurance.


Florida Auto-Insurance Requirements

Although all Florida drivers are required to have auto-insurance, drivers are only required to carry $10,000 worth of Personal Injury Protection (PIP) and $10,000 worth of Property Damage Liability (PDL).


Florida Statute §627.736 covers benefits and exclusions of the Personal Injury Protection (PIP) state requirement. Here is a breakdown of which car insurance coverage is mandatory and not mandatory.


  • $10,000 — Personal Injury Protection (PIP)
  • $10,000 — Property Damage Liability (PDL)

Not Mandatory

  • Bodily Injury Coverage (BI)
  • Uninsured Motorist Coverage (UM)
  • Comprehensive — Damages not related to an accident, such as vandalism and the like
  • Collision — Accident-related damage to your car
  • Towing & Labor
  • Rental Car Coverage

Personal Injury Protection (PIP)
PIP insurance is required in no-fault insurance states and is offered in many others (but not all). In the “fault” states where this coverage is offered, it is still a no-fault coverage, which means that it pays you and your passengers regardless of who caused the accident. PIP pays 80% of the medical bills, mileage, and prescriptions, up to the policy limit, for you and any of your passengers. It also pays 60% of lost wages for time missed from work with a doctor’s note. Each person is entitled to recover up to the policy limit for each accident. In addition, PIP provides 100% reimbursement for the reasonable cost of replacement services, such as laundry, house cleaning, lawn care, and driving that the client is not able to do as a result of the injuries sustained in the accident with a note from the medical provider. Rules vary from state-to-state on the question of whether you have to repay your insurance company (called subrogation) for the PIP benefits that it paid if you recover damages from the driver who caused your accident. At Fine, Farkash & Parlapiano, if our client has a permanency in any injuries sustained by the accident, our goal is to obtain the unpaid percentage from the at-fault or UM carrier along with pain and suffering.
Medical Payments (Med-Pay)
Medical payments coverage is also a form of no-fault car insurance coverage. It pays you, and your passengers 20% of the reasonable amount of the medical bill up to the policy limit, for medical expenses incurred as a result of an accident. Med Pay will also pay after the $10,000 PIP is exhausted up to the Med Pay limit. Whether this car insurance coverage is primary (pays first) or secondary (pays after some other coverage is exhausted), whether your insurance company gets paid back if you recover from another driver (called subrogation), exactly who is covered and under what circumstances are all questions that vary from state-to-state and from insurance company to insurance company. You should get answers to these questions before you buy a policy.
Bodily Injury Liability (BIL)
Bodily Injury Liability coverage pays for serious and permanent injury or death to others when you cause a crash involving your automobile. Your insurance company will pay for injuries up to the limits of your policy. In particular, your company pays for injuries caused by your or members of your family who live with you, even if they were driving someone else’s vehicle. It may also cover others who drive your automobile with your permission. Unlike most other U.S. states, Florida does not require drivers to have bodily injury liability (BIL) benefits.
Liability insurance, which is required in virtually all states, pays other people for injuries and property damage which you have caused. Often, this car insurance coverage is listed on your policy’s ‘Declarations Page’ something like this: “100/300/50.” If there are 3 numbers, the first number represents the maximum payout per person for injuries that you cause, the second number is the maximum payout per occurrence (accident) and the last number is the maximum that your insurance company can be required to pay for property damage that you cause.
So, if you have 100/300/50 coverage and you cause an accident that injures 5 people, none of the five can be paid more than $100,000 and the total pay-outs for all 5 cannot exceed $300,000. Some insurance companies offer a single limit liability car insurance coverage. This means that the insurance company cannot be required to pay more than the limit per occurrence, but there are no per person limits. If you are obligated to pay more than the limit of your liability car insurance coverage, you are personally responsible for the amount that is not covered by insurance.
Uninsured Motorist (UM)
UM insurance pays you if you are injured in a car accident caused by a driver who did not have (liability) car insurance coverage. Even though liability insurance is required virtually everywhere, you’d be amazed how many uninsured motorists are driving on our highways. UM coverage also applies if you are injured by a hit-and-run driver. Basically, UM coverage pays you the amount the other driver would have paid you had she been insured, up to your policy limit. In essence, your insurance company acts like it insured the other driver. It defends against the claim as it would any other claim (and cuts you no slack even though you are its customer) and it pays whatever you are determined to be owed. UM coverage is usually expressed with a per person/per occurrence limit, such as 100/300, but some insurance companies offer a single limit policy. A single limit is the maximum amount that your insurance company can be required to pay, but there are no per person limits. Learn more about uninsured motorist coverage.
Underinsured Motorist (UIM)
UIM coverage pays you if you are injured in a car accident caused by a driver who does not have enough (liability) car insurance coverage to pay you fully for your injuries. Your UIM coverage pays the difference between the full amount that you are entitled to recover and the policy limit that you collected from the other driver. If you recover under your UM coverage, you may be able to also collect under your UIM coverage, too. This is called “stacking,” and it is allowed in some states but not in others. In case you’re wondering, the uninsured or underinsured motorist is not off the hook when your insurance company pays you. Your insurance company can go after that at-fault driver to recover the amount that it paid you.


Property Damage Liability (PDL)
Property Damage Liability coverage pay for damages you or members of your family cause (and are liable for) to other people’s property in a crash involving a motor vehicle.

Collision coverage pays you for vehicle damage resulting from a collision. For example, if your car is damaged in a one car accident, or in an accident you caused, collision car insurance coverage is what you use to have your vehicle repaired. If your car is damaged in a car accident that was caused by another driver, you have a choice: you can use your collision car insurance coverage to have your car repaired, or you can make a claim against the other driver’s property damage liability coverage.
Collision coverage always has an amount, called the deductible, which is deducted from what you are entitled to recover. Collision car insurance coverage usually pays up to a maximum of the actual cash value (ACV) of your vehicle although some insurance companies offer a replacement cash value (RCV) coverage. RCV pays up to the cost of a comparable replacement vehicle, but that coverage costs more than ACV insurance.
Comprehensive coverage pays you for loss or damage to your vehicle resulting from something other than a collision, such as fire, theft, vandalism, flood or glass breakage. Comprehensive car insurance coverage always has a deductible amount. Comprehensive coverage usually pays up to a maximum of the actual cash value (ACV) of your car although some insurance companies offer a replacement cash value (RCV) coverage. RCV pays up to the cost of a comparable replacement vehicle, but that coverage costs more than ACV insurance. For a higher premium, most insurance companies offer comprehensive coverage with zero deductible on Safety Glass Breakage (windshields).
Towing insurance covers you for towing costs. Your policy will reimburse you, or may make a direct payment, for the cost of towing your vehicle from the place where it broke down to the nearest appropriate service facility. Most policies have a maximum amount that they will pay for towing claims. Most insurance companies will only offer Towing and Rental Reimbursement Coverage if you have Collision and Comprehensive coverages with that same company.
Rental Reimbursement
If your vehicle is disabled because of a loss that is covered under your Collision or Comprehensive coverages, Rental Reimbursement coverage will reimburse you for the cost of renting a temporary substitute vehicle while your insured vehicle is out of service. Most Rental Reimbursement coverages have a maximum amount that will be paid per day and a maximum amount that will be paid per occurrence, and these limits vary from company-to-company. If you exceed the limits, you pay.

How Does Auto-Insurance Work In Florida?

Auto-Insurance in Florida depends on several factors including the type of accident (trucking, vicarious liability, single vehicle, and many others), what kinds of damages are involved (Person or Property), and who is at fault.

Damage To The Body–Personal Injury

Florida is a “No-Fault” car insurance state. What does this mean? Simply put, when you are involved in a motor vehicle accident, you turn first to your own car insurance policy to receive coverage for your injuries and lost income regardless of who is at-fault.

When Can You Step Out Of No-Fault?

If the injuries you suffered as a result of an accident are permanent, you can pursue a claim against the at-fault driver directly.

Damage To Property-Property Damage

Determining who is at fault for the damage will determine which coverage is applied. For vehicle damage, you can pursue a claim under the at-fault driver’s Personal Damage Liability policy.

Under Florida Statute Title 8, Ch. 95, Sec. 95.11, you may file a liability claim against the at-fault driver in civil court up to four years following your accident date.

Here is a breakdown of where no-fault applies and where it does not apply.