Car Insurance, Insurance - Thursday, August 7, 2008 12:36 - 0 Comments

Understanding Your Car Insurance Policies

Car insurance coverage is mandated under the law in some states. It is a good idea to have an auto insurance policy in place anyways.  Understanding auto policies can be difficult, but are necessary to ensure adequate coverage and the best rate.  Auto insurance policies differ, which makes it important that you understand the coverage listed on an automobile insurance policy.

Collision coverage is the amount that you will receive for your car, less any deductible, in the case of an accident.  Ideally, collision coverage should only be for the amount your car is worth at the time.  Because cars tend to depreciate in value after a certain period of time, it is important that you are aware of your collision insurance coverage and that you are not paying for too much coverage.  Your premium should be reduced to account for the depreciating value in your automobile.

In addition to collision coverage, there is comprehensive coverage.  This pays for damages to your car in case of theft or some other mishap, such as a tree falling on your car.  You will have a deductible for both collision and comprehensive coverage that is usually the same amount.  The higher the deductible, the more money you can save on your premium.

Collision or comprehensive coverage may not be required in some states. Other states require drivers to have liability coverage.  Liability pays for any costs for self or others, including medical and vehicle damages in case of an accident. States that require liability coverage usually have a minimum coverage requirement.

Liability coverage includes bodily injury to any party involved in the accident.  Bodily injury usually has a limit of $100,000 with an aggregate of $300,000.  Each individual who is injured in an accident may receive up to $100,000 in damages, but less than $300,000 may be paid out on any claim. This amount can be increased or decreased and coverage will be calculated into the policy premium.

Liability coverage includes damage to vehicle and other property.  Homes, vehicles, personal items, and mailboxes are examples of personal property covered under a liability policy. Coverage for property damage is usually about $50,000, with an aggregate of $100,000.

Again, this amount is subject to your own discretion.  You must make sure that you have the proper amount of coverage required by law, if you live in a state where liability coverage is mandated.

It is a must that you understand your automobile insurance policy as this can help save money.  Savings come with larger deductibles and established levels of coverage. Be sure that you have an adequate amount of coverage by reviewing your insurance policy and reading it carefully. Make sure that you have enough coverage in case you are in an accident or in some other catastrophic event so you can avoid paying out-of-pocket.