How to Understand Your Auto Insurance Policy

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By clark711
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Understand Your Auto Insurance Policy

If you are anything like I was, you are probably paying hundreds of dollars a year for auto insurance, and you have no idea what you are covered for. Insurance agents can be very helpful, but remember, their paycheck is determined by how many people sign up for insurance and what type of policy they buy. What coverage do you really need? Well here are some helpful hints on common terms in the insurance world and what they mean.

Difficulty: Moderate

Instructions

Step 1

One of the first terms you need to consider is your deductible. Your deductible is basically the max amount of money you will have to pay out of pocket if you make a claim. For example, if you make a claim to repair body work on your car and your deductible is 200, then insurance will cover everything above the 200 dollars that it costs to repair your vehicle. You can save money on your insurance premium by raising your deductible, but remember, that is also raising what you will have to pay if you make a claim. Try and find the happy balance between an affordable premium and a deductible you can afford.
Step 2

The next step in understanding your coverage is to look at all your liability coverage, such as bodily harm or property damage liability. These values reflect how much money the insurance company is willing to pay if you are hurt, or damage property in your accident. This is one area where you might not want to be cheap as lawsuits can come out very quickly when you are in an accident, especially if you are at fault.
Step 3

Another important aspect of your auto insurance policy is uninsured motorist. If you are involved in an accident, whether it is yours or another driver’s fault, and that driver does not have insurance, you need this coverage. Without this, you may find yourself driving around a car with a large band-aid sticker on the rear bumper, or even worse!
Step 4

Finally, look to see what type of extra perks your policy may offer, like free road-side assistance, for example. Little perks like this can be a life saver and make your policy worth the money you are paying for it. If you feel like you may be getting cheated, do not be afraid to look around and get some other quotes. Auto insurance can be very expensive, and many companies are advertising some pretty good deals to attract new customers!

Comments

Magentaslb said

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on 11/2/2009 Really great info to have...5*s and rec

funmom970 said

on 8/3/2009 really great article!

jull14 said

on 7/12/2009 Excellent article and very helpful for many here at ehow. Thanks for sharing with us, keep up the good work. I really love your articles, they are very helpful and provide easy steps to follow.