Hello, there! This is George Azide, founder of The Agent’s Office. If you’ve ever been puzzled by the ins and outs of your car insurance policy, you’ve come to the right place. In this article, we will dissect your car insurance policy, exploring what your coverages mean, what you’re paying for, and what you’re covered for. So, whether insurance lingo sounds like a foreign language to you or you just want to have a deeper understanding of your policy, keep reading! Or if you’re more of a visual person, watch the YouTube Video below!
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Key Components of Car Insurance
There are three main parts of car insurance: Liability coverage, Comprehensive and Collision coverages, and Uninsured / Underinsured Motorist coverage.
Liability Coverage: This is mandated by law in most states. It is designed to meet the expenses you owe to other people if you’re at fault in an accident. For instance, if you accidentally damage a vehicle or injure a person, your Liability coverage takes charge and pays for the damages or injuries your vehicle caused – up to your liability limits. However, many people end up choosing the state minimum Liability coverage in order to save money and they end up with inadequate coverage as it often doesn’t cover the average medical bill in case of car accidents. Here’s something to ponder:
Do you want to pay the bare minimum for the insurance, risking the possibility of incurring more out-of-pocket expenses in case of an accident?
To avoid such a scenario, a good rule of thumb is to choose Liability coverage that covers the average medical bill in your state for a car accident—maybe, even double that in case there is a passenger involved.
Comprehensive and Collision Coverages: This part of your insurance policy covers your vehicle, protecting you in case it gets damaged in an accident, or by natural disasters.
Comprehensive coverage pays for damages caused by events beyond our control, such as hail, fire, theft, and more. On the other hand, Collision coverage helps repair or replace your vehicle if you were at fault in an accident.Both Comprehensive and Collision coverage come with deductibles. The deductible is the amount you pay before the insurance company kicks in.
Uninsured and Underinsured Motorist Coverage:This part of your coverage safeguards you in case you get hit by someone who doesn’t have insurance or whose insurance limit doesn’t cover all the damages.Believe me, you don’t want to find yourself in a situation wondering:
What happens when someone with a state minimum liability coverage hits my vehicle, which cost more than their coverage limit?
Ideally, your Uninsured and Underinsured Motorist coverage should take care of these additional costs, and the insurance company should take the headache of recovering their money.
ALSO READ: What Does Full Coverage Insurance Really Mean?
Additional Coverages
Apart from the aforementioned coverages, car insurance also comprises of Rental Car Coverage and Roadside Assistance.
Rental Car Coverage: If your vehicle gets damaged and needs repair, the insurance company will allocate a certain amount daily for renting a vehicle in the meantime.
Roadside Assistance: This is a lifesaver during emergencies, such as a flat tire, a breakdown, or if you forget your keys inside the vehicle. It just costs pennies but can save you a ton of hassle.
Wrapping Up
So there you have it—an overview of your car insurance basics.
I hope this post clarified all your doubts. If you still have questions, leave a comment below and I would be glad to respond.
Remember, good insurance coverage is the one where there’s less than a 10% chance of you having to pay anything out of pocket. Do not cut corners and leave yourself unprotected in a bid to save a few bucks.
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