Do you know exactly what your auto insurance covers? Have you read all the fine print to investigate what circumstances might expose you to liability or personal expense? Having the proper amount of automobile insurance, besides being a legal requirement for all drivers, is a safety net that is absolutely critical for anyone who drives a car. Here we will take a look at the various features of auto insurance, including some items to look for in the small print.
Auto Insurance: Liability
Liability insurance is the part of your policy that is required by law. This type of insurance ensures that you can adequately pay for the damage to another vehicle and for any injuries sustained by the driver and/or passengers during an accident. While liability requirements vary from state to state, most experts recommend a policy which covers $50,000 for the first injury, $100,000 for additional injuries and $25,000 in property damage.
Nobody expects for an accident to happen, but having the proper amount of liability insurance can help you sleep a little easier at night knowing you are covered should the unfortunate occur.
Auto Insurance: Comprehensive/Collision
Often referred to as "comp and collision" this type of insurance is a safeguard should something happen to your own vehicle, either during an accident or some other damaging event. Policy limits differ depending on your insurance carrier and the type of policy you hold, so make sure you read all the fine print to see what’s included and what’s not.
Auto Insurance: Uninsured/Underinsured Motorist
While comp and collision will cover damages to your vehicle in the event of an accident, theft or even a hurricane, you may want to drop this coverage if the payments are worth more than your old clunker of a car. In this case, you will want to add uninsured/underinsured motorist to your policy to cover the damages to your vehicle in the event you are involved in an accident with a dead-beat driver without liability insurance.
Auto Insurance: Deductible
The deductible in your auto insurance policy is a fancy word that can best be defined as the amount you will have to pay before the insurance kicks in. Naturally, if you are willing to pay a higher deductible, say, $1,000 or $2,000; your insurance premiums will be lower. Again, take into consideration the net worth of your car before deciding on a deductible figure. It could save you hundreds, even thousands of dollars a year on premiums.
Auto Insurance: The Little Things to Look For
Take a good look at the list below and decide if these little insurance bonuses are items that are covered in your policy:
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Towing. If you’ve ever had to pay a towing charge, you know how expensive it can be, but not all insurance policies will pay the bill. Will yours?
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Rental Car Reimbursement. If your car is stolen or damaged you will no doubt need a rental car to get around. This is a little extra not automatically covered by many insurance policies and carriers.
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Personal Injury Protection. This type of protection can help pay for things like lost income, child care, etc. in the event of an injury.
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Sound System Coverage. For many people, their sound system is worth more than their car. This coverage will help reimburse you for a new system in the event of theft or damage.
This list of "extras and bonuses" is just a sample of the many hidden expenses you may incur if you fail to obtain the right policy for you. Before you commit to an insurance carrier and agree to the requisite premiums, take the time to ask questions and read your policy in full. Taking a little time now to ensure you are adequately covered can save you a whole lot of money and misery down the road.