Understanding Your Auto
by Tom McKnight
Reading auto insurance policies can be like trying to decipher advanced
calculus. It's really not that difficult if you understand a few basic terms.
Collision, Comprehensive, Bodily Injury Liability and Property Injury Liability
are the main terms you need to fully understand.
You'll appreciate Collision Coverage in the event you need repairs or
replacements if your vehicle collides with another vehicle or property. The
higher the deductible you elect, the lower your premiums will cost you. If
you're at fault for something, well of course it would still be an accident, as
I doubt you'd plan to run into that guard rail, but how much would you be able
to afford to pay out of pocket for repairs? $250? $500? $1,000? Just like
medical insurance, you'd have to pay that deductible amount first and then the
insurance company would pay for the remaining charges for the repair.
Another term to become intimately familiar with is Comprehensive
Coverage. This is the coverage that pays for damage caused from falling objects,
fire, certain natural disasters, theft and vandalism. Deductibles work the same
way as with Collision; the more out of pocket costs to you, the less your
In addition to knowing how much Collision and Comprehensive coverage you
have, you'll want to know about your liability coverage. Let's say you rear-end
another driver. Or your foot slips off the brake onto the gas pedal and you plow
down a mailbox. Your liability coverage will kick in and pay for the damages
that you caused with your insured vehicle. You liability coverage will, or
could, include bodily injury (people) and property damage.
You don't want to go without Bodily Injury Coverage. If you were at fault
in an accident and others involved needed to go to the hospital and/or lost
wages from missing work, those costs would come out of your pocket if you are
not insured with Bodily Injury Coverage. It doesn't take a genius to know how
quickly those amounts can add up. This type of coverage can also help you in the
event the other party takes legal action against you. Many states require you to
carry Bodily Injury Coverage.
The other part of liability includes Property Damage coverage. Can you
imagine how much it might cost should you accidentally drive into the side of
someone's home? You wouldn't want to be caught without property damage insurance
should you need to pay for repairs to another vehicle, building or anything else
you might hit. As with Bodily Injury coverage, Property Damage coverage also
helps protect you in the event of a related lawsuit.
Every policy will have its limits and various degrees of coverage. It's
important that you understand the basics of what you are paying for and why it
is necessary. No one plans for an accident, be prepared!
by Tom McKnight