Understand Your Policy

The better you understand your auto policy, the better informed you will be as a consumer when you get your automobile insured. Here is a guide to understanding your coverage.

1. Bodily injury liability. This coverage protects you in the event that you harm or kill someone with your vehicle. It will also pay for your legal defense if another party files a lawsuit against you and will cover any judgments against you up to your coverage maximums. Most states require certain levels of this coverage when you get your automobile insured.
2. Uninsured driver coverage. This will pay for the injuries caused by an uninsured or underinsured driver. In some states, this coverage will also pay for damages caused by an uninsured/underinsured driver.
3. Personal injury protection. If you don't have adequate health insurance coverage, you want to make sure you include this when you get your automobile insured. This coverage will pay for your and your passengers' injuries in the event of an accident.
4. Collision coverage. Collision coverage will pay to replace or repair your auto in the event of an accident. Usually, the coverage will pay to repair or replace up to the cash value of the vehicle. If you drive a car with little to no cash value, you might consider eliminating this coverage when you get your automobile insured.
5. Comprehensive coverage. This coverage pays for non-collision-related damages. For example, comprehensive coverage will pay if your car is damaged by fire or vandalism, stolen, or damaged by flood or animals, among other things. You can keep your premiums low when you get your automobile insured by setting your deductibles on this coverage as high as you can afford.
6. Property damage liability. This is another coverage that most states require when you get your automobile insured. This will pay for the damages your vehicle does to another's property in the event of an accident. It will also cover any legal judgments against you and pay for your legal defense in a property damage liability lawsuit.

Now that you understand your policy, if you want to know about how applying for auto insurance works, we have made a seperate page about how it works in greater detail.