Reader’s Question – UMSaturday, March 5th, 2016
Blog reader question
I have medicare as my primary and united Health as my secondary. I am presently covered for bodily injury @$250,000/$500,000. My property damage liability is $50,000 and medical payments are $10,000. My comprehensive is $200 ded and collision is $500 deductible. Is it necessary for me to continue to keep my uninsured Motorist Insurance which is $250,000/500,000 ?
Our Answer – From Christopher Kazor, CIC and Charles L. Robson, CIC
Our agency philosophy is to retain as much property risk as you can (select high deductibles) and purchase as much liability as you can afford. I commend you for having high Liability, but I hope you have an umbrella. Your Bodily Injury (BI) is fine but I would see if your agent can provide $250,000 or at least $100,000 for Property damage. If you have an Umbrella then you will be fine with the $50,000 as the umbrella will pick up your next dollar. As for your question on Uninsured (and Under Insured) Motorist Coverage (UM) that is a bit more complicated.
First we must explain what this extremely important coverage does. UM will pay for “compensatory” damages (that is both economic and non economic damages ) that is inflected on you by an at fault driver who has no insurance or insurance limits lower than your compensatory damages. The coverage in standard ISO policy forms as primary in an owned auto – excess in any auto. It is important to cover you and your loved ones for at least what you cover the other person. But, here are some considerations. Your personal insurance coverage, medical as well as Long Term Care. Next consideration, who rides with you, friends other than resident relatives, family. Those who ride with you do they have their own coverage.
Two things to remember, 1. UM will pay for both economic and non economic damages such as pain suffering, embarrassment from scaring, dis-figuration and loss of consortium. In most state UM disputed are settled by arbitration not a jury. Arbitration generally removes a lot of emotion from an award. In 1988 we had an insured who was 78 years old and retired. He was in a NOT AT FAULT accident. Fortunately he sustained a three inch permanent scar that ran from behind his left ear to under his chin. The arbitrator rules based on his age the scar was not significate and nothing was awarded. So with this information you should be able to ascertain what will be best for you to do. One last note, you should always carry “some” UM for those who may be riding with youPosted in Uncategorized | Comments Off on Reader’s Question – UM
Do I have Higher State Limits in another State?Monday, June 18th, 2012
If I have auto insurance in Florida and If I am involved in a car accident in another
state with higher minimum liability amounts, is there an “Out of State
Insurance” provision that would raise my limits to the state’s minimum
liability amounts that the accident happened in?
Unfortunately what is believed by most as the State minimum,
PIP and $10,000 or property liability DOES NOT meet the Florida Financial responsibility
Chapter 324, §324.011 F.S., Purpose of the Law, states: It is the intent of
this unit to recognize the existing privilege to own or operate a motor vehicle
on the public streets and highways of this state when such vehicles are used
with due consideration for others and their property, and to promote safety and provide financial security
requirements for such owners or operators whose responsibility is to recompense
others for injury to person or property caused by the operation of a motor
vehicle. Therefore, it is required herein that the operator of a motor vehicle
involved in an accident or convicted of certain traffic offenses meeting the
operative provisions of §324.051(2) shall respond for such damages and show
proof of financial ability to respond for damages in future accidents as a
requisite to his or her future exercise of such privileges.
Operation of the law is triggered
by an accident which involves: bodily injury; or property damage when a vehicle
is rendered inoperative; or certain serious traffic violations, such as driving
under the influence and committing a felony with a motor vehicle. If, at the
time of the occurrence, there is auto liability insurance in effect with limits
of not less than 10/20/10, the law’s requirements are satisfied.
Alternate ways that satisfy the law include being a qualified self-insurer or
posting a bond or cash that guarantees responsibility for the 10/20/10 limits.
The law continues :
The Personal Auto Policy, as well as other standard policies provides that limits
afforded will meet the minimum requirements of law in other states. Thus, for
example, a Florida insured with limits of 10/20/10
may be in a state that requires 25/50/10; the policy will be interpreted as
affording such limits under those conditions wherein it is required of the
According to our interpretation of this law if AND ONLY IF, you
carry 10/20/10 to meet the Florida Financial Responsibility
law then AND ONLY THEN CAN YOUR Florida policy be liberalized to meet
the Financial Responsibility law of another state.
If you carry PIP and PD or $10,000 ONLY then NO, you are out of luck!
As always – This opinion is based on a FLORIDA “Standard ” auto policy. A review of your complete policy is always necessary. Council with your own agent or attorney for more details for a specific claim or situation on your policy
Christopher Kazor, CIC
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Mercury Insurance Named One of ‘America’s Most Trustworthy Companies’ by ForbesThursday, April 5th, 2012
Great News For Mercury Insurance — Let us Quote you with them —
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Why Can’t I Have What I want?Friday, October 28th, 2011
Why Can’t I Have What I want?
Even with no hurricanes this year the Homeowners insurance markets in Florida have tightened yet again. Insureds and consumer groups are yelling fowl and accusing even Citizens Property Insurance Company of making too much money. Have you seen their financial statements?
With the markets getting tight and other losses (other than windstorm) such a “Sinkhole” draining the coffers of the insurance companies the Insureds frustration build, almost, rage.
My personal homeowners coverage “doubled.” I almost threw up when I received the renewal. We are collectively between the proverbial rock and the hard place. Daily our agents are doing our best to explain the reasoning and rationale of the price increases and companies dropping insureds.
The number one question that we get is, “Why can’t I just have enough homeowners to cover my mortgage.” The insureds of the state of Florida are looking for “Burger King ®” insurance and unfortunately it does not exist.
Our agents pride ourselves on doing our best to explain insurance. In 1997 I wrote the book “Demystifying Insurance. The Family Insurance Guide into the new millennium.”
I took on this very issue and so we will revisit it yet again, why can’t I have the insurance I want. First everyone get your policy!
Both commercial property insurance policies and personal lines policies have a coinsurance provision. The Homeowners Policy has a section, usually section 3 under conditions, for those of you who have your policy in hand, called “Loss Settlement”. To copy from the ISO version, Insurance Service Office, the most used form:
Buildings under Coverage A or B at replacement cost without deduction for depreciation, subject to the following: (1) If, at the time of loss, the amount of insurance in this policy on the damaged
building is 80% or more of the full replacement cost of the building immediately before the loss, we will pay the cost to repair or replace, after application of deductible and without deduction for depreciation, but not more than the least of the following amounts:
(a) The limit of liability under this policy that applies to the building;
(b) The replacement cost of that part of the building damaged for like construction
and use on the same premises; or
(c) The necessary amount to repair or replace the damaged building.
(2) If, at the time of loss, the amount of insurance in this policy on the damaged
building is less than 80% of the full replacement cost of the building
immediately before the loss, we will pay the greater of the following amounts, but
not more than the limit of liability under this policy that applies to the building:
(a) The actual cash value of that part of the building damaged; or
(b)That proportion of the cost to repair or replace, after application of deductible
and without deduction for depreciation, that part of the building damaged, which the total amount of insurance in this policy on the damaged building bears to 80% of the replacement cost
of the building.
Yes, I know your eyes have just glazed over. In this version there are two possible outcomes.
Outcome 1 (using 80%)
You have $100,000 Coverage. The value of the dwelling “AT LOSS” is $120,000. You have a small kitchen fire, the adjuster estimates
$10,000, Actual Cash Value (The cost to repair less depreciation) OR
$21,000, Replacement Cost
The verbiage is saying $120,000 X .8 = $96,000 defines your Threshold. Since you have MORE than $100,000 in force the company will pay the $21,000 (less any deductibles) for your loss.
You have $60,000 Coverage Just to cover your mortgage. The value of the dwelling “AT LOSS” is $120,000. You have a small kitchen fire, the adjuster estimates
$10,000, Actual Cash Value (The cost to repair less depreciation) OR
$21,000, Replacement Cost
The verbiage is saying $120,000 X .8 = $96,000 defines your Threshold. Since you have LESS than $100,000 in force the company will pay the $10,000 (less any deductibles) for your loss. You are not happy.
The second part of the verbiage is “Coinsurance” it says this
Take the amount of coverage you have $60,000 divide it by the Value at loss $120,000 Multiply that fraction by your loss that will equal your recovery.
$60,000/$120,000 = ½ X 10,000 (ACV) = $5,000 ; still happy?
Fortunately, the company will pay the GREATER of the amount.
Those of you who own commercial property there is no first option – you will be paid on the second more severe “Coinsurance” calculation.
Commercial or Residential your mortgage company will certainly not be happy. Now read your mortgage, have fun doing that, you thought the insurance policy was bad. They insist you have or at replacement.
NexisLexis on 06/22/2010 Published its Annual Guide To State Litigation Climates Shows Most Litigious States are according to Foundation for Fair Civil Justice FFCJ the top 10 most litigious states are New Jersey, New York, Florida, Illinois, Pennsylvania, Missouri, Montana, Michigan, Connecticut and California. Florida is number three.
Knowing this, along with knowing that not only can the insured sue the company and the insurance agent. All admitted companies doing business in Florida insist that your policy is written to replacement value.
If you are able to pay off your mortgage then you may “Self Insure.” But it is the philosophy of NuSurance to retain property risk but purchase as much liability as you can afford. Bottom line always have liability on your policy.
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