Auto insurance is required by 48 out of the 50 United States and is highly recommended by all. For everyone, auto insurance can protect individual assets and assist in the case of an unforeseen event or accident. Unfortunately, because auto insurance is required and boring, many people enter into insurance agreements without understanding the intricacies of their policy.
Most drivers live under the impression that as long as they have some auto coverage, they will be fine. However, they could not be more wrong. The details of an auto insurance policy make a difference and understanding them could prevent someone from losing a lifetime of investments and work.
So, before you shop for a new insurance policy, brush up on these terms to make sure that you are protecting yourself and your assets.
Most people view the word liability as a type of auto insurance, when in fact it is a type of coverage that is included with nearly every policy. Liability coverage is to an auto insurance policy as bread is to a sandwich. Liability is the base of an insurance policy and protects your assets in the case of an accident.
If you are at fault in an accident, your liability coverage will pay out to help the other person with the repairs/replacement of their vehicle and any medical costs that they may incur. If the costs of their damage are higher than your limits of liability, they can go after your assets. Therefore, the more assets you have, the higher you want your limits to be.
Comprehensive Auto insurance is a coverage that many people opt for in their policy because it helps to repair or replace their car in the case of an unforeseen event or accident. However, comprehensive coverage only covers certain types of events and is often referred to as “Act of God Insurance”.
If you have comprehensive coverage on your auto insurance policy, it will help to repair or replace your vehicle in the case of fire, theft, vandalism, weather damage (hail), or coming into contact with an animal.
Collision coverage is the coverage of an auto insurance policy that will repair or replace your vehicle in the case of an accident. Nearly any type of accident that occurs while your car is moving is considered a collision. Collisions can occur between multiple vehicles or as a single car.
If you have a lean or lease on your vehicle, it is highly likely that your bank or loan company require collision coverage. Furthermore, if you have a car that still has a high retail value or you are not in the financial position to purchase a new vehicle, you may want to consider having collision coverage seriously.
If there is one thing that you need to understand about your auto insurance policy, it is that it does not automatically include coverage for YOUR injuries within the limits of liability. If you are at fault for an accident and you do not carry medical payments coverage on your policy, you will not receive any assistance with your medical bills from your auto insurance company.
Many people view medical payments insurance as assistance in paying their medical insurance deductible and not incurring any out-of-pocket expenses from an at-fault auto accident. If you do not carry medical insurance, medical payments coverage is even more important for you to include in your auto policy.
Although there are many other terms to consider in your auto insurance, understanding these four will help you in building a policy that is best for you and your family. Remember, carrying insurance is vital to your wellbeing and the wellbeing of those you love.
The Importance of Insurance
As you may know, if you are involved in an automobile accident case, there are many situations where the driver of the other vehicle had no automobile insurance or had automobile insurance in the least amount that can be carried. It is, therefore, necessary to know whether or not you have a policy of automobile liability insurance and whether you have purchased uninsured motorist coverage on that policy. For more information about uninsured motorist coverage see our prior blog here.
Feel free to contact us to speak with a member of our legal team, schedule a consultation or simply ask questions about how we can help.