"Understanding 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 the 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!
P.S.
If you've enjoyed this article, please be sure to forward it to
a friend.