March 24, 2011

What To Do If Your Auto Insurance Policy Is Confusing

A confusing auto insurance policy can be frustrating. You might not even be able to figure out your extent of coverage. Learning a few basic auto insurance terms can take the confusion out of reading your auto insurance policy.

One of the most popular auto insurance terms is the word coverage. This means the protection and benefits provided by an insurance contract. You will want coverage in the event of an accident that causes damage, injury or losses.

While the word accident seems simple, it can be more complicated than it looks. An accident is an unforeseen event that is not under the control of the insured that incurs a loss. Insurance rates are determined by hazard, which is the likelihood an accident or loss will occur.

Once an accident happens, an appraisal might be done. An appraiser or claims adjuster reviews the damage done to the car and issues an estimate cost for repairs. If your vehicle is totaled, the adjuster figures out the actual cash value (ACH). The ACH is the value of the car at the time of the loss.

At this point, you will want to check the declarations of your confusing auto policy. Also called a deck page, this part of your car insurance policy gives the details about your insurance company, you and the limits of your insurance coverage. An attached endorsement or amendment might be added to the policy later to modify the terms of the insurance contract.

If your car was damaged, another auto insurance term you want to figure out is the limit of liability. This refers to the most amount of money under your insurance policy to cover losses. At this point, peril might be mentioned. This refers to the cause of the loss of accident, such as a slippery roads or an explosion.

Beyond damages to the vehicle, there could be bodily injury to those involved in the car accident. Bodily injury is an injured suffered by a person. A claimant is a person or entity who is presenting a claim for losses.

Once responsibility is determined, the word subrogation might arise. Subrogation is an attempt to recover losses from the party responsible for them. Even if your insurance company pays for collision damages under your policy, they will subrogate the money from the person responsible to try to get their money back.

An important basic insurance term to know is the word agent. An insurance agent can help you understand a confusing auto insurance policy. An agent is a representative for the insurance company and sells insurance policies. Your agent should be able to help you navigate a confusing insurance policy so the terms are more understandable.