Understanding Your Auto Insurance Policy

Reading and understanding your Auto Insurance Policy can be difficult and frustrating. It’s not that difficult if you understand a few of the basic terms and concepts. Comprehensive, Collision, Bodily Injury Liability and Property Injury Liability are the key terms you need to understand.

Collision Coverage provides protection for repairs or replacements if your vehicle collides with another vehicle or property. The higher the deductible you choose, the lower your premiums will cost. If you're at fault , how much could you afford to pay out of pocket for repairs to your vehicle? $100? $500? $1,000? Just like health insurance, you'd have to pay the deductible first, then the insurance company would pay for the remaining charges for the repair.

Comprehensive Coverage pays for damage caused from falling objects, fire, certain natural disasters, vandalism and theft. Deductibles work the same way as with Collision Coverage. The higher your deductible, the lower your auto insurance premium.

In addition to knowing how much Collision and Comprehensive coverage you need, you'll want to know about liability coverage. For example, if you crash into another driver, your liability coverage will pay for damages you caused with your insured vehicle. You liability coverage will, or may, include property damage and bodily injury (people).

Don’t go without Bodily Injury Coverage. If you’re at fault in an accident and others you injured need to go to the hospital and/or lose wages from missing work, those costs would come out of your pocket if you’re not insured with Bodily Injury Coverage. Bodily Injury Coverage also helps you in the event the other party takes legal action against you. Many states require you to carry Bodily Injury Coverage.

Property Damage Coverage is the other type of liability insurance. You don’t want to be caught without property damage coverage if you need to pay for repairs to another vehicle, building or anything else you might hit. Property Damage Coverage also protects you in the event of a related lawsuit.

Every auto insurance policy has its limits and levels of coverage. It's important to understand the basics of the auto insurance protection you’re paying for and why it’s necessary. No one plans for an accident, so be prepared. Free Car Insurance Quotes