Understand your auto insurance policy coverage.

When it comes to understanding our insurance policies a lot of us of us are left in the dark, your auto insurance policy is no exception, but we absolutely have to have it to drive on the roads.  With so many types of coverage in your auto insurance policy you need to understand each one so you can make an informed decision when purchasing your insurance.

Policies can be divided into six areas collision, comprehensive, medical, bodily injury liability, property damage and uninsured motorist, some of these are mandatory and you have to purchase, the others you will have to decide if you need.  Each type is explained below in laymen’s terms to help you decide which types of auto insurance policy coverage you need.

First you need to decide if you need collision insurance.  This part of your coverage will pay for repairs to your automobile if you are in an accident.  If you carry collision on your auto insurance policy your insurance will cover the cost of repairs to you automobile, BUT as with most areas of insurance you need to understand any exclusions when you take out your policy.  Read all exclusions.  Collision insurance pays for damages regardless who’s at fault.  This usually has a deductible, the higher the deductible the lower the cost.  If you put back what you have saved in a year to cover your higher deductible all savings after that are money in your pocket.

Comprehensive insurance is also a major decision.  This will cover most things that are not listed under your collision.  This will cover damages caused by fire, floods or something dropped on your car, vandalism or theft and also broken windows.  This type of insurance is usually cheap and is easily affordable.  If you automobile is old it may not be needed.

Medical coverage is usually required and an area that should also be given great consideration.  Medical coverage will help pay expenses for injuries for you and your passengers as the consequence of an auto accident.  This coverage will cover someone who borrows your car or if you are driving someone else’s car.  You should carry as high a coverage as you can reasonably afford in this area.  Most of us are aware of the rising cost of hospitalization.  Just a few days in the hospital or even 1 emergency room visit can run into the thousands.

Bodily injury liability will help protect your assets against litigation.  This means it will pay if you are sued if you injure someone in an accident, or if there was a death as the result of your accident.

Property damage liability is also a consideration.  This will cover damage to someone elses property when you are at fault.

The final area is uninsured motorist auto insurance policy coverage.  This part of your auto insurance policy will protect you if you are ever in an accident where the other driver is at fault but does not have insurance.  All though the other person may be legally responsible for the liability you may not be able to recover your claim.

See our complete list of auto insurance policy terms.

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