Decode Your Auto Insurance Policy and Save Money.
As with all types of insurance, car insurance is something that, if you drive a car, we all need but hope we never have to use. Having a good car insurance policy can save you a lot of money in the event of an accident, but in order to get the most benefit out of your policy if you file a claim, you need to understand what things are covered under your policy and which things aren’t, and how much coverage you are entitled to.
Understanding Coverage Types
A standard auto insurance policy is made up of several different coverage types. Bodily Injury Liability protects you from liability costs in the event that your car injures or kills someone, including legal costs. Property Damage Liability does the same thing, but covers the costs of property damage caused by your vehicle. Both types of liability coverage are mandatory in every state in the US except three because they protect others from damage that your car causes. Medical Payments or Personal Injury Protection will pay if you or passengers in your car are injured in an accident. Uninsured Motorist Protection will cover you and passengers of your vehicle if you are injured by an uninsured driver or in a hit and run accident. This coverage is usually optional, but it is worth noting that in some states as many as 30% of drivers do not have insurance, which means if they injure you, they have no liability coverage to pay for the costs of your injuries or property damage. Collision Coverage covers damage to your vehicle up to its book value after paying a deductible. This coverage is not required by law but may be required by your lender if you are financing your car. Lastly, Comprehensive Coverage covers physical damage that is not the result of an auto accident, such as damage from natural disasters, theft or vandalism. This type of coverage also has a deductible.
What are Car Insurance Deductibles?
Like deductibles for other types of insurance, the deductibles in your car insurance policy are the amount of money you must pay out of pocket before the insurance will pay out any benefit for your claim. In the case of auto insurance, there are usually two separate deductibles: one for Comprehensive Coverage, and one for Collision Coverage. You can save money on your monthly insurance premiums by choosing a higher deductible, but if you need to file a claim you will have to pay more out of pocket before your insurance will cover any costs.
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