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How To Understand Your Auto Insurance
Reading auto insurance policies can
be like trying to decipher advanced calculus. It’s
really not that difficult if you understand a few basic
terms. Collision, Comprehensive, Bodily Injury Liability
and Property Injury Liability are main terms you need
to fully understand.
You’ll appreciate Collision Coverage in the event
you need repairs or replacements if your vehicle collides
with another vehicle or property. The higher the deductible
you elect, the lower your premiums will cost you. If
you’re at fault for something, well of course it
would still be an accident, as I doubt you’d plan
to run into that guard rail, but how much would you
be able to afford to pay out of pocket for repairs?
$250? $500? $1,000? Just like medical insurance, you’d
have to pay that deductible amount first and then the
insurance company would pay for the remaining charges
for the repair.
Another term to become intimately familiar
with is Comprehensive Coverage. This is the coverage
that pays for damage caused from falling objects, fire,
certain natural disasters, theft and vandalism. Deductibles
work the same way as with Collision; the more out of
pocket costs to you, the less your insurance premium.
In addition to knowing how much Collision
and Comprehensive coverage you have, you’ll want
to know about your liability coverage. Let’s say
you rear-end another driver. Or your foot slips off
the brake onto the gas pedal and you plow down a mailbox.
Your liability coverage will kick in and pay for the
damages that you caused with your insured vehicle. You
liability coverage will, or could, include bodily injury
(people) and property damage.
You don’t want to go without Bodily
Injury Coverage. If you were at fault in an accident
and others involved needed to go to the hospital and/or
lost wages from missing work, those costs would come
out of your pocket if you are not insured with Bodily
Injury Coverage. It doesn’t take a genius to know
how quickly those amounts can add up. This type of coverage
can also help you in the event the other party takes
legal action against you. Many states require you to
carry Bodily Injury Coverage.
The other part of liability includes
Property Damage coverage. Can you imagine how much it
might cost should you accidentally drive into the side
of someone’s home? You wouldn’t want to be
caught without property damage insurance should you
need to pay for repairs to another vehicle, building
or anything else you might hit. As with Bodily Injury
coverage, Property Damage coverage also helps protect
you in the event of a related lawsuit.
Every policy will have its limits and
various degrees of coverage. It’s important that
you understand the basics of what you are paying for
and why it is necessary. No one plans for an accident,
be prepared!
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