Auto Insurance: Part II

Read information from Travelers below to find out how to decide what kind of, and how much, auto insurance you need.  Also, learn about how to decipher your policy once you receive it!

What should I consider when purchasing auto insurance?

"When purchasing auto insurance, make sure you find coverage that fits your needs. Think about you and your family's specific circumstances, including your risk tolerance and your budget. If you aren't sure what type of things you should consider, read below. Or, give us a call!

Below are a few simple questions to help you start evaluating your needs.

  1. What is my household salary? What are my assets? How much in savings and equity do I have? Generally, the higher your salary and net worth, the more you stand to lose if you are ever found liable for an accident. The more assets you have, the more coverage you might want to consider.
  2. How old is my car and how much is it worth? Do I own my car outright or is it leased or financed? The model year and original cost of your car helps determine the approximate value of your car today. If the value of the car is low and you own it outright (i.e. no loan or lease), you may want to think about whether you really want comprehensive or collision coverages. On the other hand, if you lease or finance your car, your lender or car dealership probably requires comprehensive and/or collision coverage.
  3. How much am I willing to pay out-of-pocket? Deductibles are applicable to certain coverages, such as comprehensive and collision coverages. In the event of a loss, a deductible is the amount that you must pay out-of-pocket before your insurance kicks in. A higher deductible could lower your premium.
  4. Do I have health insurance? Auto insurance can include medical payments coverage for you and your passengers. If you don't have your own health insurance, you should consider purchasing some type of medical payments coverage on your policy.
  5. Do I have children of driving age? Children are generally more inexperienced drivers and can present a greater risk on the road. If you have children of driving age, you might want to consider purchasing higher limits of liability coverage. "
What is in my auto insurance policy, and how do I read it?
"An auto policy generally consists of three main parts, which together, form your auto policy:

  1. Declaration page - the declarations page (or "declarations" or "dec page") displays information specific to you and your policy. This will usually include the name of the policyholder, your policy number, the policy term, limits of liability and deductibles you selected and the policy premium. It can also display other items such as discounts applicable to your policy, other drivers on your policy and specific vehicles insured. In addition, it will show the other documents that form your policy (in other words, it will tell you what base policy and endorsements make up your policy). The declarations page is usually longer than just one page.
  2. Base Policy - this document spells out the basic provisions of the insurance coverage and the responsibilities of the insurance company. It also sets forth your responsibilities, which include paying your premium and telling the company when you are in an accident.
  3. Endorsements - endorsements alter the base policy, just like an amendment alters a contract. Endorsements can add, broaden, limit or delete coverage or change the base policy in any other way.

It is important to read your declaration page, base policy and any applicable endorsements together, as they collectively form your insurance policy.
Note, auto ID cards, which generally arrive with your policy, do not actually form part of the policy. Rather, they provide a convenient way to show that you have insurance. They contain some basic details about your policy, such as your policy number, policy effective date and the specific vehicle insured. Some states require that you keep these in your car as proof of insurance."

If you still have questions about auto insurance, don't hesitate to give us a call.  We're happy to help!