If you've never taken the time to look through your car insurance policy, we certainly don't blame you. The language in the policy can sometimes feel as though it was purposefully written to be confusing.
Here are some tips if you're trying to understand your car insurance on a deeper level. This way, you're less likely to be surprised down the line.
Major Types of Coverage
There are a few types of coverage you should know:
- Collision: This typically refers to coverage in the event you hit an object — such as a tree, home, or another car.
- Comprehensive: This will cover you from other types of loss — such as theft or weather damage.
- Liability: This policy will only cover the losses of another property owner. If you damage your car, you will not receive financial consideration for repairs.
Bodily Injury Under Your Policy
If you injure another party while on the road, bodily injury liability insurance is there to pay for more than just the medical bills. It can also cover lost wages in the event the injured party misses work, as well as claims for pain and suffering. This term refers to the emotional and mental stress that a person undergoes after being injured during a car accident.
Total Loss Maximums
When you sign up for a policy, you may hear numbers used to describe your policy. These figures refer to your total loss maximum. So if you hear 100/300/50, it's a reference that means you have $100,000 total coverage per person for bodily injury, $300,000 total for the entire accident and up to $50,000 for property damage. As you might imagine, serious accidents can exceed these limits, so it helps to keep this in the back of your mind.
If you're hit by someone who's either uninsured or underinsured, you can also purchase additional coverage just in case. Depending on the severity of the damage, you may need to make up a significant difference between how much a person can pay and how much you're owed. Different states have different minimum liability limits that may not begin to scratch the surface of the sustained damages.
This basic information is meant to give you a head start when it comes to understanding your auto insurance. Your policy will differ, depending on both your state and your personal preferences. It helps to ask questions to your carrier to determine specific points about your policy.
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