Things to Know About Car Insurance Polices

By Joey Hudson in Insurance on April 18th, 2008

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by Joey Hudson

Automobile 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 you will received for your car following an accident. The policy deductible will be removed before receiving it. Ideally, collision coverage equals the value of the car at the time the policy is in effect. The value of cars depreciate with age so collision insurance coverage should not exceed that value. This will ensure that policy is not costing more than the car is worth. Premiums reflect the depreciating value of the automobile annually.

Comprehensive coverage pays for damages to your car in case of theft, accident or natural disaster such as a tree falling on the car. There will be deductibles based on collision coverage and comprehensive coverage that are normally the same amount. The higher the deductible, the more money saved 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. The limit for bodily injury is around $100,000 with an aggregate of $300,000. Each individual injured in an accident may receive up to $100,000 in damages. A maximum limit of $300,000 is established any claim. These amounts may be increased or decreased as deemed by the policyholder and affects 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.

The amounts of coverage are subject to your own discretion. Just be sure to carry the proper amount of coverage required by law if you happen to live in a state where liability coverage is mandatory.

Understanding your automobile insurance policy can help save money. This may be accomplished with larger deductibles and established levels of coverage. To ensure an adequate amount of coverage, review your insurance policy and read it carefully. Make sure that you have enough coverage in case you are in an accident or in some other catastrophic event so that you do not have to pay personally.

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