Auto insurance 101 - top 3 keys to your auto policy

Auto Insurance 101- Top 3 Keys You Need To Know
 
I have found that when I ask potential new clients about their existing auto policy, the average insured person doesn’t have an inkling or clue to what is in his/her policy.  Which ultimately means they don’t know what they are paying for, nor how much protection they truly have.  Therefore, let’s do a quick rundown of the top 3 components of your auto policy you need to know.  They are as follows:

1. Limits – Most auto policies are written on a split limit basis (such as $25/50/10).  The split limit basis provides a maximum in any one accident for injury to any one person, and provides a maximum for all persons injured in any one accident and provides a maximum for all property damaged in any one accident.  For example: The insured carries the above split limit of coverage.  She has an at-fault accident and two people are severely injured.  One sustains injuries of $50,000 and one has $25,000 in injuries.  The policy can only pay the per person limit of $25,000 for each or a total of $50,000.  The remaining $25,000 in injuries cannot be paid because of the $50,000 per accident limitation.  Which means in this case you as the insured have to come up with the remaining $25,000 owed (ouch!!). The $10,000 limit is for damage to property of others including loss of use.  Note:  I usually recommend a 100/300/100 for my clients.  Maybe the cost is a little more in premium total; however, the peace of mind of having more protection is worth the price.
2. Collision/Comprehensive (Deductibles) – This section focuses on the coverage of damage to your automobile.  It provides coverage for accidental direct damage to a covered auto and non-owned autos, including their equipment caused by: 1) Collision – The technical definition is defined as the upset or rollover of a covered auto or its impact with “another” vehicle or object. 2) Comprehensive – provides coverage for the vehicle from losses other than collision which includes: theft, windstorm, breakage of glass, contact with bird or animal, fire, water or flood, malicious mischief or vandalism.  Note: This section impacts your premium – the lower the deductible, the higher the premium cost.  The insurer has to weigh its risks.  Odds are the higher the deductible the more likely you won’t make trivial claims; therefore, less costs to the insurer and less premium for you.
3. Uninsured Motorist – This section is also shown on a split basis.  This coverage pays the insured and occupants of the insured auto against bodily injury claims which they are legally entitled to recover resulting from an auto accident with: other drivers who have no auto liability insurance; the insured is carrying less than the financial responsibility amount of their home state; hit and run drivers; drivers whose insurer denies coverage or becomes insolvent.  Again, focus on peace of mine here. The higher the limits; the more protection. 

Understanding these three core pieces of your policy will help put you in the driver’s seat (no pun intended) of being able to have an articulate conversation with an auto insurance agent.  Education is the true key to controlling the reigns of your personal expenses and protecting the assets that are important to you.

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