Three Often Overlooked (But Important) Aspects Of An Auto Insurance Policy

Posted on: 17 January 2016

Too often, consumers buy an auto insurance policy in a routine matter. The result is that a driver will be either underinsured or not have coverage at all in specific circumstances. The following are only three of the most important elements of a car insurance policy to keep in mind while you shop for coverage.

Insufficient coverage for liability

Liability and property damage are covered for maximum amounts. These represent the limits of the payouts from the insurance company for claims against you after an accident. Each state has legal specifications for minimum amounts. For those who have little or no assets, the minimum amount required by law may be enough, but if you have a net worth well beyond the minimum amounts, you need to consider buying greater liability coverage. A victim of a car crash can sue you for an amount beyond the limits in your insurance policy. People sometimes are lulled into a false sense of financial security with their insurance, but if the payout limits are low compared to what a personal injury attorney considers fair compensation for his or her client, they are likely to go after your assets.

Too high of a deductible

Although it is true that having a high deductible will bring down the cost of your policy, you must be able to pay this deductible when your car is repaired. If you are someone who has trouble saving money, you may find that after an accident or damage to your car from another source, you may not be able to pay for the repairs to the car. In addition, if you need the car for transportation to work, you could be crippled financially for many months. High deductibles can be advantageous, but make sure that you understand the trade-off. You will need to be financially capable of paying the deductible when the time comes to repair your vehicle.

Not adding a driver to your policy

There can be a lot of confusion in the area of coverage for various drivers of your car, especially a family car. Although there are exceptions, and you should always understand the specific rules for your insurance company, the general rule is that "insurance follows the car." If you loan your car to a friend to go to the store, because his car is in the shop, your insurance covers this situation. However, there is one big exception to this rule: people who live under the same roof. Anyone living with you and driving your car must be added to your policy. Older adults are usually aware of this when a child becomes old enough to drive, but it applies to every person living at the same residence regardless of their relationship to you.

For more information, consider contacting a professional like those at LA Insurance.  

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