Understanding Your Auto Policy
If you are not educated on the ins and outs of the insurance industry, the
entire process of purchasing insurance can be confusing and intimidating.
Follow along was we explain the basics of your Auto Insurance Policy.
Bodily Injury to Others
This coverage applies to injuries the driver or policyholder, causes to
someone else. If you became involved in a serious accident, this will
protect you in case of a lawsuit. It is a very good idea to buy more than
the state required amount to protect your assets.
Personal Injury Protection
The purpose of this coverage is to pay for any medical treatment the driver
or passenger(s) in the policyholder’s car may need. This coverage will pay
for medical payments and lost wages.
Damage to Someone Else’s Property
In the event that you harm someone else’s property during an accident, this
coverage will pay for that damage. This includes destruction to another car
as well as to buildings, fences, or other structures your car may have hit.
Collision
This coverage pays for damage to your car caused by a collision with another
car, object or the result of flipping over. It also covers damage caused by
potholes. This type of coverage is generally sold with a deductible, the
higher your deductible, the lower the premium.
Comprehensive
This covers loss due to theft or damage caused by something other than an
accident with another car. Some of the possibilities are: fire, falling
objects, flood, earthquake, vandalism, etc.
Uninsured and Underinsured Motorist Coverage
This covers you if hit by an uninsured or hit-and-run driver. The uninsured
motorist coverage applies when an at-fault driver has insufficient insurance
to pay for your total loss. This also covers you if you are hit as a
pedestrian.
The Importance of Auto Insurance
There are some people who, in an effort to
save money, will try to get away with as little Auto Insurance as possible.
Remember that insurance was created to protect your assets and trying to get
by with less coverage than you need, could be a mistake.
Almost every state requires you to have liability insurance on your car and
every state has a financial responsibility law. This law means that even if
your state does not require liability insurance, you still need to have
ample assets to cover a claim in the event you were to cause an accident. If
you don’t have adequate assets, then you are required by law, to purchase
the minimum amount of insurance that your state requires.
If you finance your car, your lender will most likely require both
comprehensive and collision insurance on your car for the life of the loan.
What does it mean when you see the limits listed as 25/50/25? It means
coverage of up to $50,000 for all persons injured in an accident, subject to
a limit of $25,000 for one individual and $25,000 for property damage.
The most important thing to remember when buying Auto Insurance is to make
sure you have enough coverage to protect your assets or you could lose!
