Insurance is one of those items that you need to have but you hope you never need to use. That is especially true with auto insurance. One minor fender bender can end up putting a major dent in your savings. That is why you want to make sure you’re covered. When was the last time you conducted an auto insurance policy review? It’s a good idea to compare prices and coverage. If you’re going to do a review, then you should be familiar with the vocabulary. Here are five insurance terms you need to know:
1. Collision coverage
Collision coverage pays for the damage to your vehicle whether you caused the accident or someone else did. The amount of collision coverage you need should be equal to the value of the car. That is what collision coverage is vital if you’re financing your ride. On the other hand, if you were buying a used car for a few thousand and it would cost more than that to make a repair, then it might be better to “junk” the car and start over.
2. Comprehensive coverage
This is the kind of coverage that can pay for repairs that aren’t the result of an accident. A lot can happen to a car when it is parked such as having a tree fall on it or getting pelted by hail. If the car is stolen or damaged in a flood, then a comprehensive coverage policy will be a big benefit. Again, this is worth the investment for a new car or one that is being financed.
A deductible is what you pay for repairs before the insurance company pays. That might seem like it defeats the purpose of having insurance but it is a way to adjust your premiums. The higher your deductible, the lower your monthly payments. If you have $1,000, then it is a good idea to set up a savings account for that amount. Just park it over there and use it when needed.
4. Full Coverage
Full coverage usually refers to a policy that covers every “angle.” That means it takes care of liability coverage, collision coverage, comprehensive coverage and coverage for uninsured motorists. It can also include roadside assistance and rental car. Yes, every angle!
5. Declarations Page
After getting your auto insurance policy review, the declarations page will be your summary to let you know what is coverage and for how much. If you have more than one car on your policy, then the declaration page will come in handy.
Are you ready for your review now?