What These Auto Terms Mean…

The biggest mistake I see from people is they really don’t understand what their coverages mean and what exactly is at stake by not being informed.  So here’s some info just in case. Keep in mind that if you cause an accident, and suffer a significant judgment against you, damages over and above your policy limits will be your responsibility. That means your personal assets and even your future earnings could be at risk!!

There are generally six different types of auto insurance coverage. Bodily injury and property damage liability pays for your legal defense costs and judgments against you in cases that involve injuries or damage to other people or property. Often I see someone having $15-50,000 property damage.  This is for your car and other car(s) involved combined. There are a lot of cars on the road in CA that are over 50,000 plus your car!!!  Medical payments coverage pays for the medical expenses of the insured driver and passengers, regardless of fault. Uninsured/underinsured motorist covers losses caused by a driver who is uninsured or has inadequate insurance. Collision pays for accident damage to your own car, while comprehensive insures your vehicle against all other physical damage — including those that result from theft, vandalism or natural disaster. Drivers may also purchase endorsements that extend their coverage even further. Rental reimbursement will pay for a rental car while your damaged vehicle is in the shop. Optional towing and labor insurance kicks in whenever your auto breaks down — not just for accidents covered under the basic insurance. 

The other mistakes I see are in policy limits.  They are the maximum dollar amounts that will be paid by your insurance company in the event of a claim. There are separate limits set for each type of coverage, and higher limits will require higher premiums. Consider the value of your vehicle and personal assets, your tolerance for risk, and the amount you can afford to pay out of pocket when you choose your coverage limits.

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