How to Review an Auto Insurance Policy

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By cajunc
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Car insurance is required in most states

Automobile insurance for your truck, car or SUV is a requirement in most states. Many purchasers have no idea what they are purchasing, but it is important to understand the basics of a car insurance policy.

You can figure this out, with the breakdown below.

Difficulty: Moderate

Instructions

Things You'll Need:

reading skills

Step 1

Understand the terms. LIABILITY insurance is coverage in case you cause an accident. It does not cover you. It covers the other driver and his vehicle. This is the insurance that is usually required by state law. New Hampshire and Wisconsin do not require auto insurance at this time. LIABILITY coverage is divided into Property Damage and Bodily Injury. PROPERTY DAMAGE LIABILITY covers anything your car harms. BODILY INJURY LIABILITY covers injuries to a person caused by your car. There may also be PERSONAL INJURY PROTECTION and additional BODILY INJURY COVERAGE that will protect you.

COMPREHENSIVE and COLLISION coverage are insurance on YOUR vehicle. Comprehensive is coverage for incidents to your vehicle--fire, theft, trees falling, glass breakage. Collision coverage is in case you are in an accident, and it covers your car.

UNINSURED MOTORIST coverage covers YOUR medical bills in case of hit-and-run or someone with no insurance injures you. Some states require that this also include under-insured motorists, or those whose insurance is not enough to cover your injuries.
Step 2

Know what you need. Each state usually has a minimum for liability coverage (except for New Hampshire and Wisconsin again) and of course you want to have the minimum. You should have more than the minimum if you have assets. Another advantage to having high liability limits is to be able to increase your uninsured motorist coverage (protection for yourself). Most policies will not allow coverage for uninsured motorists to exceed liability limits.
Step 3

Save money on auto insurance. Ask for discounts and ask the agent to calculate different deductibles and different coverages. You may get a discount for additional vehicles, good driving record, age discounts, home and auto discounts for having both with the same agent, and driver's education courses. Anti-theft devices on the vehicle, and even your location can affect the cost of an auto insurance policy.

Use a comparison website to compare prices at different insurance companies. You may also want to contact your State Insurance Commissioner or similar office to see if there are ratings for the companies you are interested in. Many states have websites set up with ratings for insurers, and you can check to see how good they are to pay, how promptly they pay a claim, and how they rank in customer satisfaction.