Understanding Automobile Insurance

Understanding automobile insurance isn't difficult once you understand the basic premise of a car insurance policy, which is to cover your expenses in case your car encounters damage. The amount of coverage you choose is as important as what kind of coverage you choose.

Learn the basics on automobile insurance.

Understanding automobile insurance goes beyond understanding the basic concept of coverage, but should extend into having a good understanding of your own policy. You may know full well what automobile insurance is for, but if you don't know anything about your own coverage then it's time you sit down and carefully review your policy.

Here are some items that are usually covered by an automobile insurance policy:

• Collision: This pays to repair or replace your vehicle in the event of an accident. Most policies cover collisions whether or not you are at fault, but if you are the person at fault there is a good chance your policy premium costs may increase after the claim.
• Medical: This pays for medical bills associated with a covered auto accident.
• Vandalism, fire, and other events: There are a variety of instances that are covered by most automobile insurance policies, such as hail damage, fire, and other unfortunate events. Which items are actually covered, however, depend on the details of each particular policy.
• Liability: This covers you in case you cause damage to another car, property or person while driving your car.
• Rental car: If your car is damaged by a covered accident and is in for repair for an extended period of time, most policies cover the cost of a rental car.

Various policies cover other items as well. Check with your insurance provider to find out what coverage you actually have.

Understanding automobile insurance includes becoming familiar with the things that an average policy will not cover. Remember that coverage is only for the things you pay for; scrimp on your insurance and you'll probably wind up with less coverage than you may have realized.

Here are some items that are usually not covered by an automobile insurance policy:

• Mechanical problems: Unless the mechanical problems are a result of an accident that was covered under your policy, the repair costs are going to come out of your own pocket. An exception to this, of course, is if you have a warranty or extended warranty that will cover the repairs, either completely or partially.
• Small repairs: If you have a small, inexpensive repair that does not go beyond the cost of your deductible you will have to pay for it out of pocket. Many policyholders do not even bother submitting claims for small damages because they don't want to deal with a potential increase in policy cost after the claim is submitted.
• Replacement costs beyond the value of the car: It isn't cost effective for your insurance company to pay for repairs beyond the value of your car, and they certainly won't pay out a replacement claim beyond how much your car is actually worth. This is regardless of how much money you actually owe on the car. To cover yourself for any deficit in the event of a total loss you can purchase Guaranteed Asset Protection, also known as GAP.

It's important to review your coverage carefully so you know what you are covered for and what you are not covered for. It is likely that you may not have the full spectrum of coverage that you assume you have, so contact your insurance agent for a full review of your policy so you can adjust accordingly.

You may have to pay more for all the coverage you need, but in the event of a claim it may be worth it.

If you need help deciding how much car insurance to purchase, or if your automobile insurance policy seems utterly foreign in the words used, contact your insurance representative and request a thorough policy review.

Don't feel apprehensive about asking as many questions as you need to in order to understand your car insurance policy.

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