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NEWS you can use

The Anatomy of an Auto Insurance Policy

7/11/2019

18 Comments

 
Not all auto insurance policies are the same. Types of coverage vary. So does the amount of coverage.

Ask yourself — Do I have the right coverage? That’s why it’s important to understand what is available and how much of it you need in order to get you back to where you were before your auto accident.
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Here’s a breakdown of the five parts of an auto policy
Coverage for the other party:
1. Liability — provides coverage for the other party if you are responsible for the accident.

Coverage for you:
2. Other Than Collision (OTC) or Comprehensive — provides payment for the loss or damage to the policyholder’s vehicle caused by something other than collision such as:

  • Fire
  • Damage caused by severe weather events such as hailstorms, hurricanes, lightening, tornadoes, etc.
  • Animal collision
  • Flood
  • Vandalism or riots
  • Stolen vehicles
 
Although optional, Comprehensive Coverage is most likely mandatory by your lender if your vehicle is leased or still financed.

3. Collision — provides coverage for your insured vehicle if it is physically damaged due to colliding with another vehicle or object, or if the vehicle is overturned.

4. Uninsured/Underinsured Motorist — reimburses the policyholder, covered family member or your passengers for bodily injury if they are the victim of an accident caused by a hit-and-run. It also covers the same if a driver who doesn’t have any insurance (uninsured motorist) or a driver who doesn’t have high enough limits to cover the damages or injuries (under insured motorist).

5. Medical Payments — Covers costs for the treatment of injuries to the driver, passengers or struck pedestrians/bicyclists of the policyholder’s vehicle no matter who is at fault, up to the limit of coverage. It also covers ambulance transportation, which is NOT covered under an auto policy.

The takeaway
Choose coverage(s) based on your circumstances, the vehicle use and its age. Then, choose your deductible, which is the amount you pay before the policy reimburses you for your claim.
Ask a Connecticut Insurance Exchange licensed agent to help you choose the best options for your situation. They're here to help and it won't cost you a penny more for their expertise!

Auto Policy Tips
  • The higher the deductible, the lower the premium
  • Review your auto policy coverage when circumstances change such as buying a new car, adding a new driver, or buying a new home
You should also consider adding a personal umbrella policy to cover your assets when your auto policy coverage reaches its limits.

An umbrella policy works like this:
Let’s say you're at fault in a car accident that injures another driver. The other driver’s injuries are severe and cost $450,000. Your automobile insurance will cover the other driver up to the limit of your policy (let’s say that amount is $300,000), minus your deductible. Without an umbrella policy, you would be liable to pay the $150,000 difference out of your own pocket, but the umbrella policy would cover you for the difference up to the limits of its policy (usually $1,000,000).

Related Links:
Medical coverage: PIP vs MedPay
Know your limits!
Why it's VITAL to understand this often misunderstood coverage

18 Comments
Ellie Davis link
2/28/2020 12:38:26 pm

I had no idea that collision coverage will help you to ensure your vehicle if it's physically damaged. My husband is thinking about buying a new car, and we are looking for advice to choose the right insurance. I will let him know about the benefits of collision coverage to help him choose the right coverage.

Reply
Rebecca Gardner link
10/28/2020 01:28:52 pm

It's good to know that medical payments coverage woks for all the passengers in the policy holder's vehicle as well. My brother is looking to find a good auto insurance plan since he's buying an SUV to take on camping trips with his family. I'll pass along this info in case it's helpful for him to use as a reference with auto insurance providers soon.

Reply
Zachary Tomlinson link
11/16/2020 12:05:56 pm

It's amazing how having a collision auto insurance property helps you pay for any repairs your car would incur after a collision. My brother wants to own an SUV that he could use for long road trips this year. I'll share this with him so he'd consider looking into car insurance first before jumping the gun.

Reply
Adam Golightly link
12/17/2020 11:51:38 am

My brother has been thinking about getting insurance for his car. He would really like to get some help from a professional for the best coverage. I liked what you said about how collision coverage can ensure that they are safe if they are damaged.

Reply
Braden Bills link
6/17/2021 10:03:04 am

I'm planning on getting a new car for my son. It makes sense that I would want to get a car insurance policy for it, too! I'll make sure that I do my research to ensure that I get the right insurance company to help me out so that I can get it planned properly.

Reply
Mia Evans link
7/30/2021 11:59:31 pm

Thanks for pointing out that collision coverage would be able to cover if your car is physically damaged. I guess I need to make sure that this is included in the policy when I get car insurance. It's because I am a new driver and still have issues with parking, so my car has to be protected in case I bump into poles or other cars in the parking lot.

Reply
Olivia Smart link
11/4/2021 02:56:19 pm

Thank you for explaining what kind of things are covered by comprehensive coverage such as flooding or vandalism. My husband and I have been wondering what kind of coverage to get for our new car. We'll be sure to include comprehensive in our insurance policy just to be on the safe side.

Reply
Millie Hue link
8/8/2022 09:44:35 pm

Thanks for helping me understand that comprehensive coverage would be mandatory when you get a financed or released vehicle. I will share this information with my brother who will get a car this year as a gift himself. He should definitely be aware of the various car insurance coverage to ensure that he can be prepared for any issues or damages that might happen to the vehicle in the future no matter how careful he is.

Reply
Thomas Clarence link
8/17/2022 02:50:45 pm

You made an interesting point when you explained that it is a good idea to pick car insurance coverage based on your circumstances. I would imagine that some people don't know what circumstances can affect what insurance they need. It would probably be a good idea for these people to consult with an insurance agent that can evaluate their situation.

Reply
Jessie Holloway link
9/20/2022 04:55:37 pm

Thanks so much for explaining the essential components of car insurance. My cousin just bought her first car and she wants to get insurance for it as soon as possible. Knowing each part of coverage will help organize all the plans so we can make the right choice.

Reply
Eli Richardson link
9/23/2022 04:05:50 pm

I'm relieved you described auto insurance policies and how they'd cover your medical bills after an accident. My older brother finally decided to learn how to drive and buy a car next month, so I think your advice about auto insurance will help him find the best policy for him. I appreciate your information on auto insurance coverages and how they'd help you from financial distress.

Reply
Victoria Addington link
9/29/2022 02:44:27 pm

It got me when you discussed that collision coverage offers coverage for your insured vehicle. My friend wants to get auto insurance. I should advise him to get one that fits his lifestyle.

Reply
John Carston link
10/11/2022 11:12:24 pm

It's interesting when you said that you should understand the policy that you need and right for you. My brother informed me the other day that he was planning to have auto insurance that could provide the most suitable insurance policy for protection coverage for his car. He asked if I had any idea what would be the best option to consider. I appreciate this instructive article. I'll tell him that it will be much better if he consults a trusted auto insurance agent as they can provide details about the best plan.

Reply
Steve Smith link
1/12/2023 08:09:54 pm

I like how you mentioned that physical damaged could be chosen as one of your insurance policy. My associate informed me the other day that he was planning to have auto insurance that could provide the most reasonable insurance rates for the physical protection coverage for his car. He asked if I had thoughts on the best option to consider. I love this valuable article, I'll tell him it will be much better if he consults a trusted auto insurance agency as they can provide more information about the best plan.

Reply
lusi Jack link
1/19/2023 11:20:14 am

After reading this informative article, now that we understand all the different types of coverage, so my cousin and I start looking at insurance plans. We know what to look for and what each part covers. This will help us get the best possible insurance for her new car. Thank you for taking the time to explain everything so thoroughly!

Reply
Directory link
2/3/2023 02:52:04 am

Thanks so much for the post

Reply
Daisy James link
3/14/2023 01:49:00 pm

I like how you said that you can get coverage for vandalism and animal collisions. For the past couple of years, I have been saving up money to get my own car, and since I have saved up enough, I wanted to make sure I knew how to get the right insurance coverage for it. I'll keep these tips in mind once I find an insurance company to work with for my auto insurance.

Reply
homeowners insurance cambridge ma link
3/17/2023 02:07:46 pm

Understanding the different parts of an auto insurance policy is crucial in determining the right coverage for your specific needs. This breakdown of the five parts of an auto policy is helpful in making an informed decision about your coverage. It's also important to keep in mind that circumstances can change, and reviewing your policy coverage regularly is essential to ensure you have the right coverage in place. Consulting with a licensed insurance agent can also provide valuable insights into the best options for your situation.

Reply



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    Melanie Thomson-Tregoning is a Licensed Insurance Agent and VP of Marketing for Connecticut Insurance Exchange, Ltd.

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