Knowing how to read a car insurance policy is a useful skill. It can save you a ton of money in the long run or spare you from financial ruin in the event of an accident.
The declarations page and the policy form often induce boredom, not interest. You should fight the temptation to skim through the documents, as you may sign on the dotted line of something you do not understand.
Remember, auto insurance policies are unique because insurers pen them with distinct financial risks in mind. American insurance products are a prime example. Carsurance argues that policies in Florida and Wisconsin are usually worlds apart for they are catered to some of the riskiest and the least risky customers in the United States, respectively.
The only answer to how to find the best insurance policy lays in reading the details. Since it is hard to absorb every word car insurance papers contain, concentrate on the notable components below to judge policies properly.
These are the things your insurance company agrees to pay for when the terms of your policy are met and in exchange for the premium you agree to pay.
Liability is the basic auto insurance coverage, which pays the other party when you cause an accident. It covers the expenses germane to bodily injury and property damage. More often than not, it is the coverage required by the law.
Collision and comprehensive coverages protect you against any damages your vehicle may sustain. The former is intended for crash-related repairs while the latter is designed for usual perils such as acts of nature/God, theft, and vandalism.
The said three coverages are the most popular across the world. But it is possible to find more varieties (bundled with other financial products, even) that help bridge the insurance gaps pervasive in different countries.
These things are optional coverages for the specific needs of certain drivers. For instance, If you modified your vehicle mechanically, cosmetically, or both, you may require extra financial protection to cover the changes you made.
Moreover, additional policy features, such as roadside assistance and car rental coverage, may be available on tap, so you can have all the bells and whistles as you wish. The more frills you opt to have, the higher your premium rate will go.
Knowing what your car insurance policy does not cover is just as crucial as understanding what it does. The exclusions section of the agreement lists the perils that do not oblige your insurer to pay.
Normally, such exclusions are man-made catastrophes like war, business uses of the vehicle such as ride-sharing and package delivery, intentional acts of aggression towards another person, and repossession. Sometimes, a few vehicle models make the list. They can vary from jurisdiction to jurisdiction and/or insurance carrier to carrier.
Last but not least, these are the very terms you must meet in order to file a successful claim. You must abide by the explicit rules spelled out by your policy, or else your insurer may use your non-compliance to turn you down.
Many common causes of claim denial are controversial, but it can be hard to justify and defend late filing. Missing the window of opportunity to officially file a claim may lead to a definite rejection.
Some components of a car insurance policy are arguably more important than others, but each one certainly deserves your attention. Take your time to comprehend everything stated in every document to ultimately insure your vehicle with no regrets.