Carolyn - Gainesville, FL
A: We would add "Extended Non Owned Auto" to YOUR auto policy -
Chris Kazor -
NuSurance
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( 2.9 / 36 )Does my pip cover my treatment for an accident that happened in someone else's vehicle while we were driving in another state?
Thomas F - Melbourne FL
Thomas – the answer is NO! – "Out of State, Out of YOUR Car, you are out of Luck".
In other words If you were in YOUR "Owned" Florida registered auto and you were out of state then you and "Resident Relatives" will have PIP coverage.
If a Florida Auto is out of state, and that owner has, an optional coverage called Medical payments, the medical payments will be given to EVERY passenger. In addition if you are the one in the out of state auto and you purchased Medical Payments coverage we usually recommend either $2,000 or $5,000 then you would have that coverage in addition you the owners medical.
Christopher Kazor, CIC
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( 3.3 / 41 )If my minor child was hurt in a car accident in someone else's car, why does my insurance have to pay for medical bills?
If my minor child was hurt in a car accident in someone else's car, why does my insurance have to pay for medical bills? She is not a licensed driver and does not own a vehicle. Asked By janemc
Excellent question and one that is taken for granted. –
In 1971 Florida was a “Tort State” That is everyone in the state had to carry 15/30/15 that is liability limits of $15,000 Bodily Injury per person you injure if you are at fault - $30,000 maximum if all injured in that accident and $15,000 for Property damage. Then, the one who was at fault in the accident paid fo ALL the injuries!
October, of 1971 The State Legislator enacted The Florida “No Fault” Law which declared that everyone in the state would be responsible for their injuries in a defined motor vehicle…. REGARDLESS OF WHO IS AT FAULT. Hence the term PIP can be used synonymously with No Fault. In essence those who own a car in the state of Florida and comply with the laws have a “Bag Of Money” with them at ALL times while in the state of Florida. In addition all resident relatives and those the “Named Insured” is responsible i.e. minor children also carry the bag on money.
Anyone who is jogging – taking a walk or even sitting in their home relaxing – If a car comes crashing through the wall and hits a person in the sofa strangely enough , that person’s ( the person who is in the sofa relaxing) PIP will be the first coverage to respond up to $10,000.
Several years ago one of my clients children was in a school bus during an accident , her minor injuries were paid through her Fathers insurance under PIP and my client asked me the same question. Why?
The answer is simply that is the law in Florida.
You can ALWAYS sue in tort for any monies OVER the $10,000 but for the first $10,000 you or your PIP is responsible.
If you do not own a car and are riding in someone else’s auto then you will be given a Bag Of Money of $10,000 by the owner of that auto's PIP. However you must show to that insurance carrier that you did not have to comply with the PIP law.
If you should have complied and did not it is very likely YOU will be responsible for your own injuries up to the $10,000 even if YOU WERE NOT AT FAULT.
I understand that that does not seem correct but that is the Florida Law
Christopher P.Kazor CIC, Lutc,f
Principal Agent
NuSurance Corp
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( 2.9 / 323 )Strangely enough one of the most flood prone cities in the US has become Las Vegas, yep Las Vegas, right in the middle of the desert. So if folks in the middle of the desert are prone to flood why aren’t you?
Granted you are spending too much on insurance now why do I need it? It seems that when there is a flood it is usually catastrophic. That is the reason that flood insurance is part of FEMA, the federal government is actually the insurance company.
Many different companies offer flood under “their name” however once you get thought the front page (The declarations or DEC page) of the policy you will see the actual policy is that of the federal government the companies which you purchased the policy from is the administrators and handle issuing the policy and helping with claims but the bottom line the actual funds are coming from the tax payers.
In order for a community to be able to have flood insurance the community must apply to the federal government and become an “eligible” community. Once eligible a flood map is developed and areas are broken into Zones. The most flood prone areas are Zones “A un-numbered” – “A” numbered and “V” zones. “V” zones are the most flood prone since the “V” stand for Velocity that is wind driven water at a high wind velocity, coastal areas.
Anyone in one of these areas who takes out a mortgage backed by the federal bank must purchase flood insurance. The question comes when your property is in an “X” zone (formerly B or C zones). These areas have a probability of 1 in 100 to get flooded. Are you willing to toss the dice?
You shouldn’t. Flood insurance in these areas are considered “Preferred Policies” and anyone in these zones should be take advantage of the cheaper rates. Why take a chance? Even if you are in a V or A zone and you Flood Insurance seems outrageous there are a few things you can do.
First consider a very high deductible like we said usually when you have a flood the damage can be very much be catastrophic and your high deductible will seem like a “drop in the bucket” . Also consider self insuring your personal property and only insuring the dwelling itself.
Bottom line get a quote and council with your agent on tailoring the best coverage for your situation
Christopher Kazor, CIC
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( 3 / 317 )PIP Confusion
The drivers of the state of Florida right now are so confused and rightfully so. There has been a bitter fight insurance company and insurance company vs. insurance company and medical professionals vs. medical professionals and Lawyers vs. Lawyer and insurance company… and verses and verses. All this, while the poor driving public of Florida is caught in the middle and is helpless and most clueless of what is happening.
To start lets find out just what the heck is PIP.
The Basics
First states are generally broken up into two categories, Tort States and PIP States. If you live in a Tort state things are a bit less complicated and easier to understand. In a nutshell if you are in a car accident and you are “At Fault” then you are responsible for the injuries of others. You will be sued for all, injuries to the other drivers, passengers and any property damage that you caused.
In a tort state it is absolutely necessary that you have liability insurance to pay for such damages and most states have a requirement of minimum liability such as 25/50/25. To translate that is $25,000 for Bodily Injury you do to one person in and accident, $50,000 Total per accident for Bodily Injury and $25,000 for Property Damage.
PIP States, out of fifty states at one time there was 38 states that were PIP States, today there are 12 er no, 11 er no effective January 1, when Florida “re-becomes” a PIP State 12 again.
What is PIP
Frankly, PIP is a lot more complicated than a tort. Why? First each state employs a different degree of PIP. In order to explain PIP we need to explain “PURE PIP”, which no state employs.
In a “Pure PIP” environment in any accident each person would take care of ALL their own injuries and a law suit against the other party would be prohibited by law. Hence, PIP is also known as “No Fault”. Theoretically each person would buy their own policy to pay for their injuries instead of suing the AT FAULT person. Hmmm, no lawsuits, you can imagine how attorneys would feel about that. That is just one drawback; the second is how much coverage each person should have under a “PURE PIP” environment. Because of this the remaining handful of PIP states have varying degrees of PIP.
Florida PIP
In 1971 Florida legislators passed the PIP law and no longer was it mandatory to secure liability insurance but at that time only one coverage was necessary to register your vehicle. PIP.
The Florida version of PIP every citizen of the state of Florida would buy this coverage and have a “bag of money” of $10,000 to take care of themselves for injuries resulting from “any” auto accident. Your coverage will pay no matter who was at fault.
The problems with this law were immediate. First it contradicted the Florida responsibility law which in short states that when a driver is involved in an accident that involves bodily injury or property damages to an extent that an auto is disabled you must prove you have liability limits of 10/20/10 or $30,000 of combined liability.
The second problem was the law did not address any “Property Damage” done by the at fault driver. That was remedied a few years after with the addition of $10,000 of mandatory property damage liability being added to the requirements to register your car.
Another problem was that of “Tort Immunity” or “Tort Exemption”. The problem, no one really understood it.
Tort What?
“Tort Immunity” also known as “Tort Exemption” is what PIP is all about. If you recall under “PURE PIP” you may not sue the at fault party, that is Tort Immunity. As we also mentioned each state has varying degrees of PIP and also varying degrees of “Tort Immunity” In order vary the tort immunity each state must define the limit of the immunity. States have either a Financial “Threshold” or Verbal “Threshold”. For example a person may not sue the other at fault person until their medical bills exceed $50,000, this would be a example of a Financial or Dollar Threshold.
Florida has a “Verbal Threshold” although each person is responsible for the first $10,000 of their own injuries regardless who is at fault, you can sue the “At Fault” driver for any economic damages you incur over the first $10,000 but, you will NOT be able to sue for any “non economic” injuries (such as Pain and Suffering) unless you “pierce” a threshold and this is Florida’s extent of “Tort Immunity”
What were the problems with PIP?
The spirit of PIP was quite noble, instead of suing everyone for small accidents the PIP coverage would cover “most” medical expenses, loss of work and even some household chores you were not able to do because of the accident. Thus there would be a reduction in lawsuits.
Well, although noble the law almost immediately added an new level of litigation and/or negotiation, that is determining whether a threshold had been crossed. The Florida verbal thresholds are : 1. Loss of a bodily function 2. Permanent injury 3. “Significant” scaring and 4. Death.
Death is the easiest threshold to determine, if a person is still breathing then obviously the threshold has not been crossed and the person can not sue for “non economic” injuries such as pain and suffering. But the other thresholds such as: Significant scaring may be harder to interpret. So much having fewer lawsuits.
I want you to think of the last time you were driving and drove by an auto accident. How many folks did you see in each car or van? At least 2, 6, 10 ? What ever the number multiply that number by $10,000.
The problem became “Fraud”. No matter how little the injury unethical medical practitioners bilked the companies. Artificially increased bills paid by insurance were ultimately passed on to us, insureds.
Florida’s Flip Flop
On October 1, 2007 Florida’s long suffering PIP law was laid to rest with many insurance companies bidding it a happy farewell only to be resurrected a few days latter at the behest of Florida’s governor.
Currently, as of today October 14, 2007 there is no PIP law in effect , no $10,000 bag of money to cover your medical expenses, no tort immunity actually not much of any kind of mandatory coverage until January 1, 2008 when PIP will be reinstated.
Many companies had scrambled to add a “Non Statutory” PIP to give everyone $10,000 benefits and we recommend at least that with at least $2,000 of Medical Payments and uninsured motorist.
Now would be a good time to contact your agent and review your coverages.
Christopher P. Kazor, CIC Lutcf is president of Nusurance Insurance agency http://www.nusurance.com He has been active in the insurance industry since 1978 and has been licensed as an insurance agent, adjuster, and insurance instructor. For more information call Christopher Kazor at 813 514 6982.
Nusurance Corp
813 514 6982
9280 Bay Plaza Blvd. Suite 706
Tampa, FL 33619
www.nusurance.com
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( 3 / 240 )My neighbor and I have insurance with a very large company, one of your competitors; they recently canceled us and put us with a new company. My neighbor and I have the same house, same floor plan everything but he is paying a lot less. He let me look at his policy and the limits are the same, what could it be?
Sam S, Lady Lakes
Sam, there are a number of factors that could impact the rate, liabilities limits, security discounts, but if all is equal a lot of agents will not endorse your personal property with replacement cost. This endorsement can be as much as a $500 difference.
The replacement cost endorsement is very important, with you literately getting new for old. If you purchased a Big Screen TV 5 years ago for $4,000 and it was hit by lightening today WITHOUT that endorsement you would get about $800, the “Actual Cash Value”, which is the cost to repair or replace today, LESS an allowance for depreciation. With the endorsement you will get a BRAND NEW TV. Yes, it is worth it, but we do have many clients who do choose to not to select the coverage. As long as you understand this and select not to purchase the replacement cost on your personal property it may be worth it as long as you do not have a loss.
Nusurance
To ask a question :
http://www.nusurance.com/ask_a_question.php
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( 3.1 / 29 )Question – do insurance companies really check my credit before I get an auto quote?
Yes, most companies do check your credit. The company will order what is called a “soft hit”. We have been told by our companies that a soft hit will not count as a credit inquiry. The agent DOES NOT see your credit report, the company evaluates the report and then scores it. That score is entered into a very complicated equation and from that a premium is generated.
CK
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( 3 / 189 )Florida Insurance Market - A Must Read For Anyone In Florida
By Christopher Kazor
The State of Florida’s Smoke and Mirrors. Got to love the Florida Governor, he is trying the impossible; that is make every homeowner happy with what they are paying for their insurance premium. “The Gov” and his merry band of legislators concocted a plan that was nothing more than a pacifier to the citizens of Florida. It is a dangerous plan a house of cards that literally will be destroyed by the winds. In this plan instead of encouraging companies to write insurance using actuarially “sound” rates and build large reserves, the citizens will pay for losses by being charged “Assessments”.
The citizenry of Florida have been fed this load of crap because it makes them feel good. No one has really explained what an assessment really is and will happen if the Governor’s “BET” goes bad and we have more than one cataclysmic hurricane.
If this were to happen “EVERY” property policyholder (renter, homeowner or commercial policy holder ) will have to pay a huge assessment, which will be added on to next years premium. In other words if this was to occur you would not get your insurance for the next year until you paid THAT YEAR’S premium PLUS assessment.
HOW MUCH?
How bad? The assessment will be based on the amount of money that will be paid out from the hurricanes. One study conducted by Towers Perrin estimates the assessment to pay off bonds to bail out the state could range from $1,700 to $14,000 per policy. Floridians in return get an average saving of $265 on their 2007 property insurance rates, again only a feel good post election pacifier.
THE EVIL INSURANCE EMPIRE
The press and hapless radio talk show hosts who have no clue on what the industry is all about have demonized the insurance companies. The industry has suddenly been characterized as racketeers and thugs. Agents have become uncaring moneygrubbers who are making excess profits on the backs of the citizenry.
Since my experience in the industry is now spanning 4 decades as I remember this rhetoric is nothing new. In the late 70’s and through out the 1980’s the regulators were beating their drums and legislating limit on how much money a carrier could make and had even mandated a repayment of premium that was “over charged”.
It seems that companies were fortifying their reserve requirement and investing profits in such evil endeavors such as building, office complexes, hospitals, to build the value of there entity. In addition many of theses stock and mutual companies were “giving” back in the forms of dividends. I even remember hearing the same talk show hosts complain about the insurance rates then. Yea we are old.
HISTORY – AUGUST 24, 1992
At this time I was working for a property/casualty company who had a net value of $6,000,000,000. It was a very calm hurricane season and yes, Florida insurance companies were defending their rates that, incidentally, at that time were among the lowest in the United States. We got word that “Andrew” was coming. “Andrew” starts with an “A” our first storm of the season in August? The rest as they say was history. I was extremely proud of the company I worked for, they fulfilled their promise and paid out well over $4,000,000,000 rumor was the company was selling building to pay claims. And why were they able to do that because they were allowed to charge an actuarially “sound” rate and fulfilled their promise. For those who don’t remember here is a short excerpt from Wikipedia:
Andrew produced a 17 ft (5.2 m) storm surge near the landfall point in Florida.
Andrew was responsible for 23 deaths in the United States and three more in the Bahamas. The hurricane caused $26.5 billion (1992 USD) in damage in the United States, of which $1 billion occurred in Louisiana and the rest in south Florida. Unlike most hurricanes, the vast majority of the damage in Florida was due to the winds. The agricultural loss in Florida was $1.04 billion alone. Damage in the Bahamas was estimated at $250 million.[15][9]
In Dade County 90% of homes had major roof damage. 117,000 were destroyed or had major damage.
THE FUTURE
In a word “Bleak”. The Governor of Florida has taken an enormous bet, one I hope he wins but also believe it is doubtful he will. His plan is nothing more that a casino bet. The real solution would be painful now but in the long run would prevent devastating financial consequences for the state of Florida. Invite all qualified insurers into the state and charge without regulation the premium that reflects a rate that is actuarially “sound” based on losses of the last 30 years. At first the rates will be astronomically high and folks would have to get use to high deductibles but in a few years Adam Smith’s “invisible hand” will move the rates to a true level and companies on a collective bases take the risk not the citizens of Florida. But before I leave I leave you with another note from Wikipedia, the cost in 2005 dollars hurricane losses.
Rank Hurricane Season Cost (2005 USD)
1 Katrina 2005 $81.2 billion
2 Andrew 1992 $44.9 billion
3 Wilma 2005 $20.6 billion
4 Charley 2004 $15.4 billion
5 Ivan 2004 $14.6 billion
Citizens of the State of Florida Welcome to the insurance industry.
NEXT ARTICLE FROM KAZOR - Insurance is socialist
Christopher P. Kazor is president of Nusurance Insurance agency http://www.nusurance.com He has been active in the insurance industry since 1978 and has been licensed as an insurance agent, adjuster, and insurance instructor. For more information call Christopher Kazor at 813 514 6982.
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( 3.2 / 20 )Buckle your seat belts folks the Florida Real Estate market is about to take another hit. Many of my colleagues are and as expected eternally optimistic about the Florida Market but as a consultant we must be more objective.
We base our theory on the following premise; property values all depend on “Rents”. Whether we are talking about commercial or residential property the true value of property goes back to RENT. How much on an open and free market will the property bring in rent.
All appraisers are mandated to use three methods in establishing a value of Real Estate, The Comparison sales method, The Depreciation approach and finally income capitalization approach. After doing all three methods the appraisers must “reconcile” the three calculations to establish the value.
Most all of us know the Comparison method, this is what a real estate professional will do to establish a listing value for your property. So if my neighbor’s house, which is identical to mine, sold for $250,000 then mine MUST be worth at least that.
Well, maybe!
Private home sales are driven by a lot more than just price, emotion, the neighborhood, the amenities offered by the area, location to malls, transportation just to name a few but, how much can any home command for rent really is the true test.
What if you get transferred and cannot find a buyer how much can you get in rent?
Rent will drive value. Using the “Income Capitalization” method of appraisal the value is based on the following
How much can the property bring in rents (PGI= Potential Gross Income) Say If you had to rent your home it would bring $1,500 per month Subtract any vacancy or collection losses. Ok so you had a good year the property rented immediately and none of your tenants checks bounced now you have an EGI (effect Gross Income) of $18,000 per year. But you need to subtract your taxes, insurance and other operating expenses Note your mortgage payment is not a factor in this calculation your result is your NOI , Net operating income Ok lets say your taxes are $2,500 and your insurance is $1,200 with a few other miscellaneous expense of $500, your NOI now is $13,800.
Take this number and divide it by the current cap rate. The current capitalization rate is established by evaluating other investments, currently it is about 8%. Take your NOI and divide it by the Cap Rate. 13800/. 08 = $172,500
The value of the property based on Income Cap is $172,500. The problem you paid $250,000. OK in order to cover your mortgage you only need about $1,000 a month you may be able to survive.
Value Drivers
The two factors that drive value are NOI, Net operating income and interest rates. First let’s look at interest. Interest rates run converse to value. Using the NOI of the above let’s see what happens if interest rates climb to 10.5%. 13800/. 105 = $131,428. The property has not changed, the neighborhood has not changed only interest rate and we see a drop in $41,000 + of value.
The next factor is yet more devastating since the impact is noticeable to the owner immediately that is the loss in NOI. Again let’s look at the property value a home now held for rent. You paid $250,000 what is now the value? The neighborhood is great and you have found a person to take a 3 year “Gross lease” at $2,000 per month, assuming the above no collection losses our EGI is $24,000 per year. Now lets take a look at our operating expense. Ok $3,000 for taxes (opps you lost your homestead exemption you had when you were living there) and $1,200 for insurance + $500 for miscellaneous :
PGI $24,000
No Collection losses
EGI $24,000
Less:
Tax 3,000
Insurance 1,500
Misc 500
NOI $19,000 / Cap rate 8%
19000/.08 = $237,500
But you say, “Hey I don’t care, because I was able to put down 10% it looks like I am ahead of the game because my mortgage is only $ 1,496.93 a Month. (30 Years for an Interest Rate of 7.000 % on a Loan Amount of $ 225,000.00) “ With $5000 in other expenses you are at $1913.59 per month and YOU ARE in the black about $86 per month and with your depreciation of about $4,900 per year all is well.
All is well but it is Florida and you receive a noticed from your insurance carrier you are being cancelled your new insurance now is $6,000 per year and the taxes have risen to $3,800 and where are you now?
Mortgage $1,496.93
Insurance 500.00
Taxes 316.00
Misc. 50.00
Out going $2,362.00
In the red $362 per month or $4344 per year
With your depreciation you are just about even.
But your property value?
Insurance now drives values.
Like it or not the insurance Market in Florida has a devastating effect on the value of property? Except for depreciation there is no real reason to make an investment leap in The Florida property market.
I wish I could say relief is in sight but I can’t. The biggest property insurer, “Citizens Property Insurance”, operated by the state of Florida is about $2,700,000,000 (that is 2.7 BILLION) in the red right now. In this light I can only see increases in insurance rates.
What to do?
We are all impacted some of us more than others. The above illustration is not a made up case rather a real example of a property in my neighborhood that I was interested in but was purchased, fortunately for me, by someone else.
Remember this too shall pass and we will have a robust real estate market again but in the mean time
Investors :
· Invest in vacation properties. – although the increase of $300 per month may preclude someone from renting a property in a long term lease, increases in taxes and insurance can be included in weekly vacation rates. A vacationer will just pay an extra $80 per week and not think much of it.
· Lock in mortgage rates – those of you riding the adjustable rate, stop now.
· If possible buy down your mortgage – give yourself a buffer
· If you have significant equity in the property try to get a credit line against it. _ Don’t use it just hold it for an emergency.
· Do not insure personal property at all. This does not work for Condo rentals since the Loss of RENTS, which you dearly need, is tied to your contents. If this is the case DO NOT take replacement cost valuation this will save you a few dollars.
· Max out your property deductibles – a 10% wind deductible may sound like a lot but will save you money . Remember uncovered casualty losses can be deductible.
· Look at lesser forms, folks I can not believe I am suggesting this but Instead of the best landlord policy (known as the DP3) look at the DP2. If the property is newer 1 – 7 years look at the DP 1 (actual cash value adjustments)
· If you are going to acquire property in Florida , go north and center state – buy where that is no one now, trust us you will not be lonely for long.
Real Estate Professionals :
· Don’t despair – Learn who to sell Foreclosed property
· Learn to sell investment properties
· Turn your focus north and center
· Market Vacation properties
I wish I could close with a definite time things would turn around but I will say Florida is Florida and it is desirable our market will turn around.
Christopher Kazor, CIC, is the founder of Florida home insurance and Florida car insurance agency, Nusurance Corp. Christopher Kazor has been in the insurance and real estate business for over 30 years and was recently featured in Independent Agent Magazine. To learn more visit http://www.nusurance.com.
By: Christopher Kazor
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( 2.9 / 198 )
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