Auto insurers

Reverse Engineering An Auto Insurance Policy By Looking At Possible Losses

Auto Insurance Policy

Policies are contracts that allow policyholders pass on the risk associated with driving to insurers. Potential costs of an accident play heavily into the decision making process with regard to how much and what kind of automobile insurance package to purchase. A sensible driver would want to cover large part of financial losses they may face providing they can afford premium payments.

Looking at possible damages a motorist may suffer or cause others to suffer it can be easier to determine the type of a policy. Then drivers will need to get a few quotes to see how much the expected premium is. Accordingly, they can play around a bit to find the ideal coverage and agreeable price.

Essentially a policyholder should expect to suffer at least three types of losses. It would not be hard to find coverage for such losses. In fact, most companies will offer them as package policies to make them more affordable and attractive to applicants.

Bodily Injuries

First of all, it is a legal requirement to buy liabilities car insurance for injuries and damages a driver can cause to third parties. There is no question or argument about this part of a typical coverage except that they can go over and above the limit enforced (never below). A liabilities policy will pay for the injuries and financial loss claims made against to policyholders. It will not pay for losses suffered by policyholders or family members.

If the insured or his passengers are unfortunate enough to be injured in a car accident, then they may have costs in the form of medical bills or time lost off work. Car insurance companies sell two kinds of insurance called Medpay and Personal Injury Protection (PIP), which pays for medical bills and/or time lost off work due to injuries sustained as the result of a car accident. Without Medpay or PIP on his policy, the customer or his health insurance carrier would be responsible for the medical bills.

Damage to The Insured Vehicle

Physical damage may result to the insured’s vehicle due to a collision, theft, vandalism, fire or for many other reasons. A policyholder who wishes to be protected against damage to his vehicle should select both Collision and Comprehensive insurance as part of his policy. Doing so will ensure that the customer’s vehicle is protected against physical damage (except policy exclusions), and that the only out of pocket cost to insured will be the deductible.

If the insured does not have Collision and Comprehensive insurance, then his insurance company would not pay for damages to his automobile. Drivers will have to come up with money to pay for repairs or finance vehicle replacement if it is totaled.

Rental Expenses

Another potential cost of an accident is the rental expense incurred while the insured vehicle is being repaired. If the policyholder has purchased rental insurance from his insurance company, then the insurer would pay for the insured’s rental vehicle while the insured car was being repaired.

However, if the insured has experienced a car accident which left his vehicle unsafe to drive, and had not paid the premiums for rental insurance, then a rental vehicle would be the customer’s financial responsibility. Renting a car while repair are carried out would become another cost of the accident.

Of course, it is possible that a third party may have caused the accident and would therefore be liable for all of the insured’s losses. However, it would still be necessary to get the other insurance carrier to pay for the insured damages. All of the costs of an accident should be taken into consideration when a customer is thinking about insurance and car accidents.