Understanding Exactly What Your Car Insurance Covers

 

Introduction

When you’re taking out a new auto insurance policy it is essential that you understand exactly what your car insurance covers, as it might not be exactly the same as your previous auto insurance policy (PDF link!). If you’re the sort of person that is prepared to accept and pay whatever your current auto insurance company offers you as a renewal quote, you should still make sure you’ve got a full understanding of exactly what your car insurance covers. The reason for this is that to keep the car insurance quote low they might have altered the policy, even if it they’ve only altered the amount of excess you have to pay.

What do I need to understand about my auto insurance policy?

There are three key things to understand about your car insurance policy which are; what levels of comprehensive, collision and liability cover do you have? The minimum requirement in law is that you must have liability cover; so there can be absolutely no question that you must at least have this level of cover. So you can rest assured that when you’re reading any car insurance quote this will be your minimum level of cover, you can then add other levels of car insurance cover to further minimize any personal liability in the event of needing to claim against your car insurance policy.

What do the levels of car insurance cover mean?

Understanding exactly what liability car insurance covers is quite straightforward; liability car insurance is the basic level of car insurance that you must have and, in the event of you having a claim made against you for a motoring related accident in your auto, it will pay for the other persons expenses in terms of their medical bills and damage to their auto and property. However, it does not cover your expenses at all! You could take out a separate personal medical insurance to cover yourself, but if your auto is damaged or wrecked in the accident - you won’t get any payment for it. So a key point to understand exactly what your car insurance covers here, with a liability car insurance policy, is that if you are responsible for an accident in your auto you will get no financial help to meet your personal expenses. By adding collision cover to your auto insurance policy you’ll get the added benefit of being able to claim for any expenses in getting your auto fixed - even if you’re involved in an accident that’s your own fault. In order to absolutely minimize the costs that you might incur if you’re involved in an accident in your car that’s your fault you need to understand that you also need comprehensive car insurance. Adding comprehensive cover will allow you to claim for any repairs to your auto if your auto is damaged in any way other than in a collision. For example if it’s vandalized or is fire damaged etc. In the USA collision and comprehensive car insurance are not compulsory, but are always advisable if you can afford them. The simple fact that you need to understand with maximizing your level of car insurance is that if you are involved in an auto accident that’s your fault - you could be in for some big bills. The persons car or property that you’ve damaged as a result of an accident, or indeed their medical bills, will be covered by your ‘legal minimum’ auto liability insurance. However, you will be responsible for personally paying to repair any damage to your auto, or even worse replacing it if it’s wrecked. Just replacing a fender can cost several hundred dollars, even if there’s no other damage and usually, when two or more autos collide - it’s more than just a fender that gets damaged. So you have to understand here that spending a few extra dollars on your auto insurance to get collision and comprehensive cover - could save you several thousands of dollars if you cause an auto wreck.