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Auto Insurance: Do You Understand Your Policy?

by Alicia Isero

Each day millions of Americans commute to work, chauffer the kids in a carpool, run errands, and deliver goods. Driving has become anessential part of nearly everyone's day. For some, cars and driving are pure pleasure. People collect cars and riding on the open road can be funand relaxing. Some parents even take their children on a drive to help withnaps. Face it, cars have also become a place of leisure with audio or video systems that rival home systems.

Unfortunately, auto collisions and crashes are an unfortunate part of life. The last thing you wantto worry about if you are involved in a car accident is, "Am I covered?" If you own a car, legally you must have car insurance.

Know Your Auto Insurance Policy Coverage

Do you know what is covered in your auto insurance policy? Hopefully, you have a good rapport withyour insurance agent and can ask any questions you might have. When you purchase your policy, you may also want to look carefully at the different features of the policies and think about how you can save money and still have sufficient coverage.

Your insurance policy details your coverage levels. In order to know what is covered, you should understand the various components of your policy such as:

  • Property coverage. Coverage for damage or theft to your car.
  • Liability coverage. Protection in case another party is injured or has property damage during an accident.
  • Medical coverage. A special feature that pays for your own injuries from an accident.
  • Collision coverage. Covers damages to your car that are the result of a collision with another car.
  • Comprehensive coverage. Payment for damages to your car from occurrences other than a traffic accident--hail, fire, vandalism.
  • Uninsured coverage. Your damage and injuries are paid if you are in an accident with an uninsured motorist.

Lower the Cost of Insurance Coverage

There are ways to decrease the cost of your insurance. For example, if you opt to have a higher deductible for your collision coverage, your payments will be less…but you will also have to come up with the higher deductible if you are in an accident. The cost of your premiums is directly the result of several components including how much you drive, the cost of your car, your age, and your driving record. If you drive less (use public transportation) your fees may also be cheaper.

It's important to have adequate coverage and fully understand your auto insurance policy so that you can enjoy your car and keep driving pleasurable.


Insurance Information Institute

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