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3 Commonly Ignored Parts Of A Car Insurance Policy
July 30th, 2010
Three commonly ignored parts of a car insurance policy are uninsured and under-insured motorist coverage, liability coverage exclusions, and certain policyholder duties in the event of a claim or lawsuit. While some consumers shop for cheap car insurance in order to keep costs at a minimum, it's important to know the availability of some important car insurance coverage and some notable policy exclusions and duties in case of a car accident.
Uninsured and Under-insured Motorist Coverage
Commonly ignored car insurance coverage is uninsured (UM) and under-insured motorist (UIM) coverage. UM coverage provides insurance coverage when the person that caused the accident does not have liability coverage. Conversely, UIM coverage provides coverage when the person that caused the accident does not have sufficient liability coverage to fully compensate the alleged injuries.
This coverage is required in some states, while optional in others. In optional states, consumers may seek cheap car insurance and avoid purchasing UM and UIM coverage in exchange for paying a lower premium. These consumers may be making an unwise decision because if a car accident injury occurs, victims may look to this coverage for pain and suffering compensation and uncovered medical bills and lost wages. If the policyholder waived this coverage, it is not available.
Liability Coverage Exclusions
Car insurance coverage contains some notable policy exclusions. These exclusions are commonly ignored until a car accident occurs. For instance, an at-fault driver who was not granted permission from the owner ("permissive use") to operate the insured vehicle may preclude liability coverage. Another exclusion involves intentional conduct. If the driver intentionally collides with another vehicle or person, such conduct may bar liability coverage. Some liability insurance also contains an exclusion when a driver uses the insured vehicle in order to transport other persons or property in exchange for a sum of money.
Policyholder Duties
Policyholders are not immune to certain duties (sometimes referred to as "conditions") in the event of a claim or lawsuit just because they think cheap car insurance was purchased. For example, if a car accident claimant files a lawsuit against the insured, the insured must participate and cooperate in the legal defense of the lawsuit. Although the insurance company provides an attorney for the insured and covers the associated legal expenses, the insured has the duty to provide a copy of all legal papers received and participate in the lawsuit. Failing to cooperate can violate the duties section of the policy, and if founded, the insurance company could ultimately deny coverage for the lawsuit.
Understanding these commonly ignored parts of the auto policy can enhance your understanding of how car insurance coverage works.
