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Insurance: Because accidents will happen

By SHARON HODGES and BARRY FRIEDMAN

© St. Petersburg Times, published October 12, 2000


Welcome to the St. Petersburg Times' Newspaper in Education page! This year's series is about something we all love and wish we had more of: money. Throughout the school year in this space you will find fun and informational stories about how to earn, keep and save money. Developed by the Florida Council on Economic Education, the series will explore such topics as personal finance, business etiquette and ethics, making decisions, managing your time and money and more, all geared toward you, not just your parents! We hope you enjoy this economic adventure.

Finance Chapter 6

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[Times art: Teresanne Cossetta]
Amber dreaded calling her mom. The police officer was just about finished writing the report, so the time had come to make the call. It had been a pretty uneventful night, actually. She and some friends had ordered pizza and rented a movie at Tom's house. Uneventful until the drive home, that is.

That's when the driver in front of her slammed on the brakes and Amber rammed the rear of that car hard. The other driver was feeling dizzy, so an ambulance was called to the scene of the accident. What were they going to do? It was her family's only car, and her mom needed it for work on Monday. Plus, the accident was her fault, and she had no idea how they could pay for the repairs or hospital bills. She was going to be in so much trouble. The police officer tried to calm her down, pointing out that her car was insured. Amber wasn't sure how that would help.

In the state of Florida, car owners are required to have automobile insurance for any car they own that is registered in the state.

Television advertisements for inexpensive insurance policies make it seem easy to take the first cheap policy you find.

Many people don't realize until it's too late that buying an automobile insurance policy without enough information can be much more costly than the possibility of paying too much for a policy. People who are found to be at fault in a serious automobile accident have lost their homes, their bank accounts and their investments because their automobile insurance policy did not cover the damages they were responsible for.

Before you purchase insurance, consider that in addition to small fender benders that cause only cosmetic damage to vehicles, people suffer disabling injuries or even die as a result of automobile accidents every day. The real risk in driving a car is not the possibility of damage to the car, but the danger to human life. Before you buy insurance, it is helpful to find out:

• How to tell what kind of insurance you need and how much.

• How to shop for a good deal on insurance.

• What you should do if you're in an accident.

So many varieties

Money Stuff: Get it! Spend it! Keep It!

Introduction and previous chapters

Before you purchase automobile insurance, you should consider the following kinds of insurance coverage:

• Collision -- pays for physical damage to a car as a result of an accident

• Bodily injury liability -- pays for damage and legal costs if you are at fault in an accident that results in injury or death

• Uninsured motorist protection -- covers you when an uninsured motorist is at fault

• Property damage liability -- covers damage if you are at fault in an accident that damages someone else's property

• Medical payments -- pays medical costs resulting from an accident

• Comprehensive physical damage -- covers damage to your car resulting from vandalism, fire or theft

You can also purchase insurance to cover emergency road services such as towing and car rental during the time your car is being repaired as a result of damage incurred in an accident.


How much coverage do you need?

When buying automobile insurance, it is important to know whether it is the car or the driver that is insured. Usually, automobile insurance is tied to the car and not the driver. This means that your automobile insurance will cover someone who drives your car with your permission. If that driver is found to be at fault in an accident while driving your car, then his or her insurance will only be asked to pay if you don't have insurance or do not have enough insurance to cover the damages.

Compare the cost of several different amounts of automobile insurance. Don't think you need much liability insurance? Imagine the total property damage if you're in an accident (even a fender bender) with a Rolls-Royce -- or even a BMW or Infiniti. It is wise to compare costs and buy the higher coverage if you can afford it.

Sometimes the language of insurance is confusing. For example, someone might tell you he has "100/300 bodily injury liability coverage." Bodily injury covers the cost of bodily harm when an accident is your fault or the fault of someone driving your car with your permission. Usually, bodily injury liability is split between what it will pay for injuries per person and the maximum it will pay per accident. If someone says they have "100/300" coverage, that means their policy will pay for injuries up to a cost of $100,000 per person and up to $300,000 per accident.

Similarly, property damage liability covers damage to another person's property (a car, for instance) that results from an automobile accident. If people say they have a "100/300/100" policy, that means their policy will pay for injuries up to a cost of $100,000 per person and up to $300,000 per accident and for property damage up to $100,000 per accident.

Florida's no-fault auto insurance

The state of Florida requires privately owned motor vehicles that are licensed and registered in Florida to have a kind of no-fault insurance coverage called Personal Injury Protection. PIP is an insurance protection that pays you and occupants of your vehicle for any kind of personal injury caused by a driver who does not have insurance. This means you have protection even if you are not at fault in the accident and even if the other person does not have insurance.

Keep your cool!

People can be emotional after an automobile accident. Staying calm will help you handle things better. If the unthinkable happens to you, remember these steps:

• Make sure everyone is safe and get first aid for anyone who is injured.

• Call the police.

• Do not volunteer information about the accident to anyone except the police and your insurance company.

• Ask police for a copy of the accident report.

• Write down the following:

  • Day and time of the accident
  • Street/highway/intersection
  • License plate number of other cars involved
  • Name of police officer or sheriff's deputy
  • Was anyone ticketed? Who?
  • Names, addresses and phones of other drivers
  • Insurance carriers of other drivers
  • Names and addresses of anyone who is injured
  • Year, make, model of other vehicles
  • Names and addresses of passengers in other vehicles
  • Names and addresses of witnesses to the accident

Florida's DUI law

Florida has one of the toughest alcohol/controlled substance laws relating to driving in the United States. Driving under the influence includes alcoholic beverages, model glue and other controlled substances. DUI may be proved by impairment of normal faculties or by a blood alcohol content above the level at which the law presumes impairment (.08 percent or higher).

First-time offenders convicted of DUI can be assured of losing their driver's license for at least six months, paying a $250 fine, performing 50 hours of community service and mandatory attendance at a substance abuse school. In Florida, it is unlawful for someone under the age of 21 to drive or be in control of a motor vehicle with a blood or breath alcohol level of .02 percent or higher.

If you have been drinking or using drugs, do not drive, no matter whether you feel okay and in control, because of these reasons: Your reaction time will be slowed. Your judgment will be affected, causing you to think you're driving well when you are not. It is harder for you to concentrate and judge distances. Your vision may be affected.

Unforgettable experience

Amber's accident experience is something she won't forget any time soon, but it turned out better than she had expected. Amber had never really thought about what it meant to have auto insurance. It was just an expense her mom paid every month, and coming up with insurance money was sometimes tough in a single-parent household. In fact, Amber once had a big fight with her mom about wanting to buy something when the auto insurance payment was due.

Now Amber was really glad her mom was so careful about insurance. It turned out that their insurance policy paid for repairs on their family's car and the other driver's, too. It also provided a rental car for her mom while their car was being repaired. It even paid for the other driver to have a medical exam after the accident.

Her mom wasn't happy about the accident, but thanks to good planning, it wasn't the disaster Amber had feared after all.

* * *

Sharon Hodges and Barry Friedman are authors of Financial Freedom, a booklet on personal finance available free through the Florida Council on Economic Education.

About the Florida Council on Economic Education

Money Stuff was developed by the Florida Council on Economic Education and project director Fonda Anderson. The council is a statewide non-profit organization founded in 1975 to educate K-12 teachers and students about the free enterprise system and to instill in them an appreciation for a market economy. For more information on the Council's programs for teachers and students, please call (813) 289-8489.

About Newspaper in Education

The St. Petersburg Times devotes news space to NIE features throughout the year, including this classroom series. The Times' NIE department works with local businesses and individuals to enrich the classroom experience by providing newspapers, supplemental guides and educational services to schools in the Tampa Bay area. To find out how you can become involved in NIE, please call (727) 893-8969 or (800) 333-7505, ext. 8969.

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