Auto Insurance Guide

This auto insurance guide will explain the common clauses in an automobile insurance policy. Buying auto insurance can be confusing and this column will begin to explain some common questions people have.

The first thing you need to understand is the liability portion of your policy. This is the most important piece of any insurance policy because it is the portion that pays out to cover damages to other people’s property or any injuries sustained in an accident.

Liability coverage is broken down into three parts. The first is how much your policy will pay out to one injured person, the second part is how much the policy will pay out to all injured people, and the third part is the total amount of money paid out to repair damaged property. The limitations are usually written in a three digit series much like a date is commonly written.

If you see 25/50/25 your policy has a $25,000 dollar maximum for one person, $50,000 for all people, and $25,000 for damages. It is important to know that any damages or injuries that cost more than the coverage you have will need to be paid by you. This is why purchasing enough liability coverage is essential to protect you financially.

The other thing you need to be aware of is that collision insurance, while not mandatory, is very important. Without proper collision coverage you will be responsible for paying the entire cost of the repair for your own vehicle if you are at fault in the accident.

The last thing we will mention in this auto insurance guide is uninsured motorist coverage. This is coverage you can purchase in case you are hit by an uninsured or underinsured motorist. It will pick up any of the costs that are not covered by the other driver’s insurance policy.