Understanding Your Car Insurance Policy
Every car insurance policy has five different parts. The Declaration section contains personal facts about the driver’s name, address, make/model of vehicles, vehicle ID numbers, policy number, policy duration, policy limits and deductibles.
The Coverage section outlines how much liability, bodily injury, collision and comprehensive coverage chosen. The Exclusions section outlines what is not insured when a claim is made. The Conditions section talks about the premium payment obligations, the steps to file a claim and how drivers resolve legal disputes between driver and insurance company. The Definitions section is the “fine print” outlining the legal rights of the policyholder.
Understanding Basic Car Insurance Policy Coverage
Liability car insurance coverage and liability limits is the building blocks of the car insurance policy and minimum requirements are set by state law. These numbers vary from state to state, but paranoid drivers can always choose more. Liability Coverage will pay for damage to other vehicles and motorists should the policyholder cause an accident. The Bodily Injury Coverage will pay for medical bills and lost salary for others injured in the crash. Property damage covers houses, structures and vehicles owned by others that may have been damaged by the policyholder in the accident.
Nearly every car insurance policy requires drivers to get Collision Coverage, which will pay for damage to the policyholder’s vehicle in the event of an accident. The deductible the policyholder chooses is the dollar amount that he or she will pay before the insurance company kicks in to pay the remainder of the loss. The higher the deductible, the lower the premium will be. However, people who do not have a lot of assets will probably want to choose a lower deductible, even though the monthly rates will be higher. In some cases, drivers can waive collision coverage because they have enough assets to pay for all damage to personal property themselves or their cars are so old they would just scrap them and buy new ones in the event of a crash.
Comprehensive Coverage is another popular, yet elective, coverage. This car insurance coverage pays for damage to the policyholder’s vehicle caused by an event other than a collision — such as a fire, theft, vandalism, hail storms, or falling tree limbs. Like other types of car insurance policy coverage, Comprehensive also comes with a deductible selected by the policyholder.
Car Insurance Policy Extras
Policyholders may also select car insurance coverage for medical or personal injury protection. This type of coverage pays for medical and funeral expenses incurred by the policyholder and passengers in an accident, regardless of whose fault it is. Medical coverage will also cover the policyholder if he or she is operating someone else’s vehicle or struck by another motorist while walking. Personal Injury Protection includes medical expenses, loss of income for work, survivor benefits, essential services and accidental death costs. No-Fault Insurance lets policyholders collect from their own insurance company for medical expenses, regardless of who caused the accident, although people may still sue the guilty party if damages are high. There are also extras for roadside assistance and rental cars (following an accident) should the policyholder choose them. This should have given you a better understanding of your car insurance policy.