What drivers need to know about their car insurance policies
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Reading the auto insurance policy is probably not the favorite reading list for most policyholders. However, drivers should familiarize themselves with it. Drivers who understand their car insurance policies will manage them better and make the best choices based on their needs.
To better understand auto insurance policies, drivers will need to know the following:
What is an auto insurance policy? The purpose of an auto insurance policy is to allow drivers to drive legally while protecting the driver and their passengers in the event of an accident. Basically, car insurance is a contract between the policyholder and the insurance company. Almost all states except
New Hampshire, require motorists to purchase minimum auto insurance before hitting the road with a vehicle. If possible, drivers are advised to purchase more than the minimum required by the state. In the event of a serious accident, the minimum amount will not be sufficient to cover all the damage caused. A car insurance policy probably includes three basic types of coverage. First, medical coverage covers the cost of treatment for anyone injured in an accident when the driver is at fault. Second, property damage covers damage to or theft of the insured’s vehicle. Third, liability insurance covers the costs of injury or property damage to the other driver.
- When to review the car insurance policy? Major life events can affect the price of insurance. Getting a new car is one of those events. To protect their new purchase, new car drivers will likely add new options to their insurance policies. Multi-risk, collision and gap insurance are coverages that new vehicle owners are encouraged to add to their insurance policies to better protect their new vehicles. Getting married can help drivers save money on their insurance policies by taking advantage of the multi-car discount. However, adding a teenager to the auto insurance policy can increase premiums. Also, in this situation, many policyholders purchase additional coverage because teenage drivers are more likely to be involved in car accidents. Another reason to review the auto insurance policy is to improve the financial situation of the insured. When the financial situation improves, it means that more of the policyholder’s personal assets are at risk if he is involved in an accident while he has not taken out sufficient liability insurance.
- How to manage car insurance expenses. Drivers can save money by increasing the deductible. By doing so, they can lower their monthly premiums. However, some drivers cannot afford to pay large sums out of pocket, so it is not recommended for them to increase the deductible. Policyholders who own cars that aren’t worth a lot of money can save money by waiving collision and comprehensive coverage. Shopping around with multiple insurers can help drivers find the best rates.
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