New Homes Can Affect Your Car Insurance Coverage
Also, if you have purchased property or a home since you first purchased your car insurance policy, you may want to consider upping your Bodily Injury and Property Damage Liability coverage levels. If you own a home and make more than $75,000 a year, most insurance experts recommend that you have at least $100,000/$300,000 of Bodily Injury coverage and $100,000 total of Property Damage Liability coverage.
Remember to keep yourself adequately covered; while having the bare minimums required by your state may keep you in compliance with state laws, they may not be enough to protect your assets if you have a major incident. Insurance experts recommend that you review your insurance policy often and thoroughly.
Understand Your Car Insurance Coverage
While everyone that drives in this country has to have some form of car insurance by law, many do not understand the basics of their policies. While we don't all have to be car insurance experts, it is important to at least comprehend the major bricks that build our car insurance policies. There are five parts of a typical car insurance contract (the titles of these sections may differ slightly from insurer to insurer, but they all address the same points):
Car Insurance Policy Declarations
This part of your policy is unique to you; it contains the personal facts for drivers in your household such as name and address, make and model of your vehicle(s), vehicle identification number(s), policy number and policy duration. It also contains the basic type of coverage you purchased and your policy limits and deductibles. Tip: Make sure your information is accurate; your claim may be denied if you provide inaccurate information to your insurer.
Car Insurance Policy Coverage Parts/Insuring Agreement
This section outlines the coverage options and coverage limits that you purchased, such as liability, medical, collision and comprehensive. This section basically outlines what your insurance company promises to provide in return for your payment, based on the coverages and coverage limits you selected.
Car Insurance Policy Exclusions
Exclusions simply detail what is not covered by highlighting your policy's limitations. Combined with the section above, this ensures that you know exactly what will be covered when you make a claim. It also shows you some possible deficiencies that you might want to correct down the line.
Car Insurance Policy Conditions
This is where the legal responsibilities of both the insured and the insurer are listed, including premium payment obligations, steps to filing a claim, and procedures for resolving disagreements.
Car Insurance Policy Definitions
This section defines terms and outlines the rights of the policyholder and the insurance company. This section is often referred to as the "fine print."
Car Insurance Policy Collision Coverage
This covers loss to your own auto caused by its collision with another vehicle or object. If you cause an accident, collision coverage will pay to repair your vehicle, and is normally the most expensive part of a car insurance policy. You must choose a deductible, which is the amount you, the insured, must pay before the insurance company pays the remainder of each covered loss. The higher the deductible, the lower the premium costs.
However, keep in mind that this is the amount you must pay (generally to the repair shop) if your vehicle is damaged, so deciding on your deductible, which directly affects your premium, can be a bit of a balancing act.
Car Insurance Policy Comprehensive Coverage
Comprehensive coverage covers damage to your vehicle caused by an event other than a collision or overturn. Examples include fire, theft, vandalism, and falling objects. This also comes with a deductible you select, which is how much you will pay before the insurance company pays the remainder.
Car Insurance Policy Liability
The official definition of liability is: "That portion of the insurance contract which pays and renders service on behalf of an insured for a covered loss arising out of the insured's responsibility to others imposed by law or assumed by contract." In simpler terms, if you are at fault in an accident, liability insurance will pay to cover injuries and property damage costs caused to others in the accident (including your legal defense costs, if applicable).
Bodily injury coverage pays for things like medical costs and lost salary to others, while property damage pays for repairs to other people's property you damaged in the accident (other than your own car). Liability coverage (which is the state mandated part of your policy) is the basic building block of any auto policy, and minimum liability limits vary from state to state.
