Paycheck Chronicles

Read Your Auto Insurance Policy

two vehicles involved in a car crash

My daughter and I were sitting in the doctor's office today, and she was bored.  I happened to have a copy of the warranty on our refrigerator in my day planner and I offered it to her to read.  As you can imagine, she wasn't interested, but we did start talking about reading boring documents.

Which brings me to car insurance:  yes, your auto insurance policy is a big document and it has lots of odd words and confusing parts, but you should really read it and try to understand it.  It was actually a lot easier when it came mailed in paper form, as I would put it aside to read when otherwise bored (like waiting in the doctor's office.)  Now I have to either print it out to take it with me or I have to read it online.  Neither are as convenient but that doesn't make it less important.  Every read through, I would pick one or two things that I didn't understand and find out the answers.  With the internet, it is easier to learn yourself, but I've found the reps at my insurance company (I use USAA) to be very tolerant of my questions and they've helped me learn a lot. There are a few more basic topics with which you might want to start:

  • What do all those dollar figures of coverage actually mean?  Is it enough for your situation?
  • Does your policy cover you when you are driving another car, like a rental?  How does that work?  Is the coverage the same outside the US?
  • Do you have towing and labor coverage, and what does it pay for?  Do you have to use certain providers?  What are the limits to the coverage?
Once you've mastered these bits, then you can move onto more exciting things such as:
  • What is stacking vs. non-stacking coverage?
  • What insurance issues are specific to your state?
  • What is uninsured motorist coverage, how does it work, and do you need it?
Even if you only figure out one small part each year, eventually you will have a good understanding of how your policy works.  Understanding your policy is key to making sure that you've constructed the right policy for you.  This will prevent nasty surprises if you ever need to make a claim.

You spent a lot of money on auto insurance, and you expect it to protect your vehicle and also protect you from financial loss.  Take just a little extra effort to make sure that all those things will work!

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