How To Read Your Insurance Policy
If you’re like most drivers, you don’t think much about your insurance policy or learn how to read your insurance policy until after you’ve been in an accident. Then, it’s a scramble to find out if your particular situation is fully covered. The aftermath of an accident is no time to be getting acquainted with your auto insurance policy. It’s important to know the details of your policy before anything happens.
A good auto insurance broker can help you decipher the fine print in your auto policy. However, there are a few things you need to know when learning how to read your insurance policy:
The deductible is the amount of money you’ll have to pay before the insurance company starts to pay a claim. For instance, if you have a $1,000 deductible and the damage to your car will cost $1,600 to repair, the insurance company will only send you a check for $600. (In general, the higher the deductible, the lower the monthly premiums.) Some types of auto coverage, such as most uninsured motorist policies, are not subject to a deductible.
Your liability limits are the maximum amount the insurance company is required to pay should you cause damage to another person’s property. Most states set required minimum limits of liability coverage. North Carolina requires that licensed drivers carry a minimum level of liability insurance of $30,000/$60,000, but you can purchase higher limits.. These limits are usually stated as “Per Person/Per Accident” amount and are found on the Declarations page of the policy. For example, if you have $30,000/$60,000 coverage, the company will pay a maximum of $30,000 to each person who sustained damage in your accident, up to a maximum of $60,000 for the accident. Keep in mind that most required minimum coverage amounts may not be enough to cover your liability for a major accident, and you may be left personally responsible for the difference. You should talk to your agent about how to best protect yourself.
Collision vs. Comprehensive Coverage
These two terms can be confusing for those outside the insurance industry. Generally, collision coverage covers physical damage to your vehicle caused by an impact with another vehicle. Comprehensive covers losses due to fire, theft, falling objects, contact with an animal, breakage of glass, etc. Both are important coverage that you should discuss with your agent.
This coverage, often referred to as MedPay, pays for reasonable and necessary medical expenses you incurred as a result of a wreck. This is optional coverage that is generally very valuable and relatively inexpensive. Additionally MedPay covers not only the policyholder but also any other person occupying your vehicle.
Rental Car Reimbursement
Another key portion of your insurance policy is rental car reimbursement. Most companies offer this as a low-cost add-on to a standard policy. It gives you 30, 60 or 90-days use of a rental car while your personal vehicle is being repaired after an accident.
Uninsured/Underinsured Motorists Coverage
This coverage, referred to as UM or UIM is critically important to making sure you are protected in the event someone else hits you. Uninsured Motorist Coverage (UM) covers you when the at-fault driver doesn’t have an active insurance policy. Even if the at-fault driver had a policy covering the vehicle, but the policy lapsed due to non-payment, that means the carrier who issued the policy will not pay for your damages. Underinsured Motorist Coverage (UIM) covers you when the at-fault driver has a policy but your damages exceed their coverage. For instance, if your injuries in a wreck require an extended hospital stay, your bill may be over $75,000. If the person that hit you only carries minimum limits of $30,000, you’ll be responsible for the amount over the $30,000. If you carry $100,000 in UIM then you’re protected.
Understanding insurance policies can be confusing, especially after an accident. If you’ve sustained injuries in a traffic accident and need to know your options, we’re here to help. Contact the Deuterman Law Group today for a free consultation.