Determining what exactly is covered in your auto insurance coverage may not be easy though it is very important. This is why it essential that you engage with your insurer to understand the ins and out of the coverage fine print. Although insurance is aimed at serving you against damages you cause to yourself and other motorists including bodily injuries and damages on vehicles, there may be some loopholes in what is covered and when. And as Bill Willson, the associate vice president of education and research for the Independent Insurance Agents & Brokers of America said, “Insurance is not a commodity”.
Willson noted that buying insurance is like purchasing a bicycle because you have to evaluate its features including the reputation of a company and its reliability and then match the bicycle for how you intend to use it. This means that you not only need to compare auto insurance quotes but also the details of the policy before you sign the agreement.
It is better to know what exactly is covered in an insurance policy than to wait and find out when things have gone haywire. There are a number of aspects which could indicate that your coverage is far less than what you might think and they include step down provisions, how underinsured coverage works and exclusions for doing business.
Step down provisions for car liability coverage could lower the policy coverage. Some insurance companies will lower the liability policy coverage limits to adhere to the minimum insurance requirements if you allow another driver to use your own car. If you have liability limits of 80/250/40 meaning $80,000 for bodily injury liability for a single person, $250,000 for entire injuries and 40,000 for damages on property through an accident, and your friend uses the car and causes an accident, these limits could go down significantly.
If you have a relative visiting you and he or she will use your car, you need to call your insurance company and get clarifications on this issue. Under-insured motorist coverage applies when the driver at-fault has insufficient liability coverage to pay for medical expenses when you suffer injuries from an accident.
Although this may seem simple, it is quite a complicated aspect. This is because the amount paid from the at-fault motorist coverage is deducted from what you can actually claim against your own underinsured motorist coverage. If you incur a medical bill of $40,000 and the at-fault motorist has $20,000 in bodily injury coverage and you have $20,000 in underinsured coverage, the payment from the underinsured motorist would be deducted based on what you can claim on your $20,000 of the underinsured coverage.
This means that your underinsured motorist insurance would settle nothing and you would be $20,000 short of the $40,000 that you need for the payment of the medical bill. In essence, for the underinsured coverage to do anything good for you, you need to have your own underinsured coverage that is higher than that of the at-fault motorist. These are some of the issues that you need to discuss with your insurer before you buy coverage.
The following article was provided by the editorial team from InsuranceRQ and leading portal for consumers to compare and research auto insurance online, with custom rates quotes by state, consumers can search and compare local brokers in markets like georgia, ohio, utah and oregon to find the best rates coverages for their area.