Auto insurance is a necessary expense for anyone who owns a car. However, many people don’t fully understand their auto insurance policy and what it covers. This can lead to confusion and frustration after a collision when you need your insurance the most. In this post, we’ll explain why it’s important to understand your auto insurance policy and provide an overview of the key topics you need to know.
Types of Coverage
Auto insurance policies typically include several different types of coverage. These include liability coverage, collision coverage, and comprehensive coverage.
Liability coverage pays for damages that you cause to other people or their property while driving your car. This includes medical expenses and property damage. Liability coverage is required by law in most states.
Collision coverage pays for damages to your car if you’re in an accident, regardless of who is at fault. This includes accidents with other cars as well as accidents where you hit an object such as a tree or a pole.
Comprehensive coverage pays for damages to your car that are not caused by a collision. This includes events such as theft, vandalism, fire, and natural disasters.
Each type of coverage has its own limits and exclusions. For example, liability coverage will not pay for damages to your own car or injuries to yourself. Collision coverage will not pay for damages caused by theft or vandalism. It’s important to understand what each type of coverage covers and what it does not cover so that you can choose the right policy for your needs.
Limits and Deductibles
When you purchase an auto insurance policy, you’ll need to choose your coverage limits and deductibles. Coverage limits are the maximum amount that your insurance company will pay out for a claim. Deductibles are the amount that you’ll need to pay out-of-pocket before your insurance kicks in.
Choosing the right limits and deductibles is important because it can impact your out-of-pocket expenses after a collision. If you choose low limits and high deductibles, you’ll pay less for your insurance premiums but more out-of-pocket if you need to make a claim. On the other hand, if you choose high limits and low deductibles, you’ll pay more for your insurance premiums but less out-of-pocket if you need to make a claim.
It’s important to understand that even with what is called “full coverage” insurance, there may be limits to how much your insurance company will pay for a claim. For example, if you have a collision coverage limit of $10,000 and the cost of repairing your car is $15,000, you’ll be responsible for paying the remaining $5,000 out-of-pocket.
In addition to coverage limits, insurance companies may also try to save money by using non-OEM (Original Equipment Manufacturer) or salvage parts in collision repairs. These parts may be less expensive than OEM parts, but they may not meet the same quality standards. If your insurance company chooses to use non-OEM or salvage parts and you want OEM parts instead, you may have to pay the difference out-of-pocket.
It’s important to choose limits and deductibles that fit within your budget while still providing adequate protection. You should also review your limits and deductibles periodically to ensure that they still meet your needs.
Non-OEM Parts and Salvage Parts
After a collision, your insurance company may choose to use non-OEM (Original Equipment Manufacturer) parts or salvage parts in the repair of your vehicle. Non-OEM parts are made by companies other than the manufacturer of your car. Salvage parts are used parts that have been taken from other vehicles.
Using non-OEM or salvage parts can save money on repair costs. However, there are potential risks associated with using these parts. Non-OEM parts may not meet the same quality standards as OEM parts, which could impact the safety and performance of your vehicle. Salvage parts may have hidden damage or wear that could cause problems down the road.
If your insurance company chooses to use non-OEM or salvage parts in the repair of your vehicle, it’s important to ask questions and do your research to ensure that these parts are safe and appropriate for your vehicle.
Communicating with Your Insurance Company
After a collision, it’s important to communicate effectively with your insurance company. This includes reporting the accident promptly, providing accurate information about what happened, and following up on any requests for additional information.
It’s also a good idea to contact your insurance company before you need to make a claim to ensure that you have the right coverage for your needs. This can help you avoid any surprises or unexpected out-of-pocket expenses after a collision.
If you disagree with your insurance company’s decision or feel that your claim has been unfairly denied or delayed, don’t be afraid to speak up. You have the right to appeal their decision or file a complaint with your state’s department of insurance.
Most auto insurance policies also include an appraisal clause. This means that if you and your insurance company cannot agree on the value of your vehicle or the cost of repair/replacement, you can invoke this clause and have an outside appraiser come in to determine an agreed-upon value.
Effective communication with your insurance company can help ensure that you understand your policy and coverage and that you receive the benefits that you’re entitled to.
Understanding your auto insurance policy is important to ensure that you’re covered in the event of a collision. By knowing what types of coverage are included in your policy, how limits and deductibles work, and how non-OEM and salvage parts can impact repairs, you’ll be better prepared to make informed decisions about your auto insurance.
We encourage all drivers to review their auto insurance policy periodically to ensure that they have the right coverage for their needs.