Car insurance is meant to provide consumers with financial protection should they be required to make a claim because of an accident or their vehicle has been damaged for several other reasons. A basic car insurance policy is generally divided into five separate sections. Section one contains general information about the policy holder, such as name, address, vehicle information, policy number, and the length of the policy term. Part two includes the coverage. Liability is usually mandatory. The minimum required limits vary from state to state. Optional coverages include collision, comprehensive, personal injury protection, and medical coverage. The conditions will review legal statements and the payment requirements of the policy holder. The definition section will outline the meanings of terms used throughout the policy. One of the most important sections of the policy is the exclusion section.
Not every car insurance policy will cover every situation or type of damage. The exclusion section will comprehensively outline what’s not covered by the insurance policy. Every driver is encouraged to carefully read through their policy in order to fully understand exactly what’s covered and what’s excluded from their coverage. This will prevent them from experiencing any surprises and possibly having to pay a large amount out of their pocket.
Most basic car insurance policies will not extend coverage if a person is using their vehicle for commercial purposes. For example, if a person regularly delivers pizza with their vehicle and is involved in an accident, the insurance company will likely deny coverage. This type of work means that the driver faces more exposure to possible claims and accidents. Company vehicles are also excluded from basic insurance policy coverage. These types of vehicles should be insured under a commercial vehicle policy.
A basic auto insurance policy will only cover items that have an engine, such as cars, trucks, SUVs, and motorhomes. Boats, travel trailers, utility trailers, golf carts, and ATVs will usually require a person to purchase a separate policy. The same rule applies for personal property. If a person carries personal items in their vehicles, such as a computer, cameras, or cell phones, these are not covered through an auto insurance policy if the vehicle is damaged, stolen, or vandalized. Instead, these would be covered under a homeowner’s policy.
Car insurance is one of the most important purchases a person will make. Without it, they could face heavy fines, penalties, and possible lawsuits if involved in a serious accident. Once a policy is purchased, it should be carefully read to understand all coverages and exclusions. If a person has any questions or concerns, they should contact their insurance agent for clarification.