How Understanding Your Insurance Policy (Including the Fine Print!) Can Save You Money

If you own a car, you’re required by law to have a current auto insurance policy and keep proof of insurance inside your vehicle. Like many, though, you probably haven’t spent a lot of time diving into the details of your policy. Many people don’t understand even the basics of automobile insurance. Here’s a short course (not a crash-course!) to get you up to speed on what’s in your policy and how it affects you when you get in an accident.

Your policy usually consists of five different sections:

• Declarations contain unique information such as the name and address for each driver in your household, the make, model, and vehicle identification number (VIN) of each vehicle, the policy number, and duration. It also spells out the type of coverage you have, including policy limits and deductibles. You’ll want to make sure that the information you provide your insurer is accurate—they can deny your claim if you have misrepresented any key facts.

• Coverage Parts/Insuring Agreement outlines the options and limits that you purchased, such as liability, medical, collision, and comprehensive. This section tells you what your insurance company promises you in return for your payment.  

• Exclusions detail what is not covered. By highlighting the limitations of your policy, the insurance company tells you exactly what is covered when you make a claim. Knowing these exclusions allows you to make changes that strengthen coverage. 

• Conditions are the legal responsibilities of the insured and the insurer, such as premium payment obligations, steps for filing a claim, and methods for resolving disputes.

• Definitions, often referred to as the “fine print,” explicitly defines the terminology used in the document and include the rights of the insurer and the policyholder.

Making Informed Decisions

So, now that you know the building blocks of your policy—how does having a greater understanding help you make better decisions about cost and coverage? Here are just a few critical areas to examine:

• Collision coverage covers the loss to your vehicle when it is in an accident. Choosing the correct deductible can be a real balancing act. You pay a lower premium for a higher deductible. This is great if you never or rarely get in an accident. On the other hand, it can cost you a lot of extra cash if you have a high deductible and find yourself with multiple claims. How many miles you drive, the kind of driving you do, and your ability to remain focused at the wheel can help determine whether you need a higher or lower deductible.

• Liability covers the property and medical losses of another party if you’ve cause an accident, including legal fees. Bodily injury covers items such as medical costs and the lost salaries of someone you have injured, while property damage pays for repairs to vehicles and other property. In California, the minimum bodily injury coverage is $15,000 per person and $30,000 per accident. Property damage is $5,000 minimum. Higher amounts of coverage raise premiums but can protect you when damage is more costly. Remember, you’re on the financial hook when you cause an accident, and insurance can protect your assets in the event of a crash.

• Coverage for uninsured and underinsured motorists covers you up to the policy limits when you incur damages, and the driver either has none, or too little, insurance and limited assets that you can recover. Like every aspect of insurance, having too much insurance that you never use and having limited coverage when you need it can cost you.

Make sure to keep yourself adequately covered and read the fine print of your policy to make the best choices possible for you and your family. It is also critical to know where to bring your vehicle if you get in an accident. We use only high-quality parts and provide outstanding workmanship to return your vehicle to you in pre-collision condition. For the best choice for Sonoma County autobody repair, contact Cline Collision Center online or call us at 707-591-9909 today!