The Importance of Reading and Understanding Your Insurance Policy


Admittedly, many of us are guilty of not paying attention to the important details discussed in our auto insurance coverage. We figured this out a long time ago, from all of the letters received and comments read we realized that majority of the policyholders do not even care to read this very important document. It is our intention, to remind our dear readers to read their policy thoroughly and contact their insurer if something is not clear to them.

Your insurance policy document will tell you what is covered and what is not. However, not all policyholders understand this part. The painful truth comes out as soon as they file a claim, and that a particular scenario is not covered by their existing policy.

There are various types of insurance coverage under general car insurance. What is required by your state is known as the basic liability policy. This policy takes care of the medical bills and property damages during an accident were you are the driver at fault. Keep in mind that basic liability policy will not cover any personal expenses from injuries to repair costs. On the other hand, if you had an accident with another vehicle, their insurance coverage will take care of all your expenses. However, if the other party does not have the coverage, your only recourse is to file a charge to recover all your expenses. Unfortunately, if the other party has no assets, you may be stuck for a while with nothing. This is the reason why it is important to check that your existing policy also takes care of uninsured motorist protection. This type of protection will cover all your expenses and losses if this scenario should happen.

However, if the accident is a single car accident, say you hit a lamppost or a safety railing this coverage is almost useless. This will also not apply to vandalism or theft. If you need to be protected by such circumstances, you need to purchase an additional rider policy if you see that it is necessary. The state’s minimum liability policy is also limited to the amount stated in the policy itself, which is most of the time, extremely low. If you have questions about this type of coverage, be sure to ask your insurance agent before it is too late.

There is yet another type of policy known as comprehensive car insurance, which covers everything regardless of who is responsible to the accident. Unlike the minimum liability coverage, comprehensive policy will cover you from theft, vandalism, the “acts of God” accidents, and so on. Again, you need to ask your insurance agent if house fires are covered as well, which under normal circumstances, are taken care by your homeowner’s insurance.

For people who loaned the car or made some other type of loan to purchase it, comprehensive policy is usually required by the lender. However, keep in mind that as soon as you drive the car outside the dealer’s lot, it will approximately lose 10% of its current value. This is the reason why apart from comprehensive insurance, GAP insurance is highly encouraged as well.

If you want to save money, do not buy insurance that you do not need. Which means you can drop comprehensive or collision insurance if your vehicle is already 5 to 6 years old Just remember that once the value of your car is less than 10 times the amount you pay for your monthly premium, the right time has come to drop your comprehensive insurance coverage. You can also try to increase your deductible, which is the amount you pay from your own pocket during an accident, to reduce the premium rates a little more.