What to Do When You Are Confused With Your Auto Insurance Policy


Many felt that their auto insurance policy is just too confusing. They felt frustrated and unable to make sound decisions regarding their policies, because they don’t understand it in the first place. However, such reasoning is not acceptable and grousing won’t help either. What you can do instead is to learn the basics about auto insurance policies in order to reduce your worries.

In the world of insurance, you will often hear the term coverage. But, do you know what coverage means? It means the protection and benefits you will receive as stipulated in the insurance contract. This will be provided by your insurance company in case of an accident within the scope of the said agreement. A typical coverage will protect you from injury, losses, and damages.

Accident, on the other hand, is the unforeseen mishap that could happen to you at any time. It refers to the circumstances beyond your control resulting to losses. Insurance rates are based on the likelihood of the policyholder to get involved in an accident. If the risks are high, so are the rates.

During an accident, the insurance company will incur an appraisal. An appraiser or claims adjuster will review all the circumstances surrounding the accident, and then estimates how much the cost of the repairs will be. If the car is beyond repair, the appraiser will determine the actual cash value (ACH) of the vehicle. By the way, ACH is the value of the vehicle during the time of the accident.

Besides the terms discussed above, you might want to orient yourself to the other terms found in your auto policy. For instance, the deck page is where the details about you, the coverage limits, etc. are itemized. In case of additional conditions, they will come in as endorsements or amendments.

The limit of liability is the amount that your insurer is legally obliged to pay for during an accident. The policyholder will shoulder any amount beyond this limit. At this point, you might encounter the term ‘peril,’ which means that the cause of the accident is due (and not limited) to explosions or slippery roads.

Aside from damages to property, bodily injuries could also be involved during the accident. Bodily injury refers to the injury suffered by you, your passengers or the third party. When you file an insurance claim, you become the claimant wherein you seek indemnification of the said losses.

Another term worth knowing is subrogation. This act refers to the attempt of your insurer to recover the losses from the at-fault party. Your insurer will pay for the damages as per contract agreement, but at the same time, will subrogate the responsible party to recover their losses.

An equally important term that you will encounter often is the word agent. An insurance agent is a person who works on behalf of the insurance company, knowledgeable in the field of insurance and will be able to explain or clarify any confusing insurance terms. This person can help you decide what particular coverage is needed, or at the very least, guide you in the confusing world of auto insurance.