As auto insurance rates continue to rise across the country, it’s tempting to reduce coverage to receive a lower monthly premium. However, removing necessary benefits can leave you vulnerable in the event of an accident.
We encourage drivers to review their auto insurance policies to understand the benefits and determine if any adjustments need to be made. Undoubtedly, some auto insurance terms can be difficult to decipher, especially when you’re going through page after page of policy documents. A particularly important word to watch out for is exclusion.
Understanding car insurance terms
Auto insurance is mandatory for all registered vehicle owners and varies by state in the type of coverage required. Financial institutions may also require specific auto insurance limits if the vehicle has a lien.
Understanding car insurance terms can be confusing, and drivers often pay too much or don’t have enough coverage because they don’t understand their policy. Having the right coverage will not only protect your vehicle and its occupants in the event of a car accident, but can also protect you against theft, vehicle damage, and other unforeseen circumstances.
An insurance agent can describe your policy and explain your current benefits and limitations. However, if you don’t have an agent, you’ll want to know the specific terms of auto insurance, such as the exclusion, and how it may affect you and your family.
What is an exclusion?
Access Insurance defines an exclusion as “something your car insurance policy will not cover.” For example, there might be an exclusion in your policy that states that coverage might be denied if you are driving while intoxicated and cause an accident.
Most auto insurance policies contain a list of exclusions that vary by level of coverage and type of policy. There are also industry-wide exclusions that are very common and that consumers should be aware of before accepting a policy.
Bankrate suggests, “When shopping for car insurance and comparing quotes, it can be helpful to compare exclusions to ensure you get the coverage you want.”
Some examples of possible car insurance exclusions to be aware of
Understanding all of the exclusions included in your current auto insurance policy is key to avoiding a claim being denied because you were unaware of your coverage limits.
Although basic liability insurance may seem attractive due to the lower premium, it can exclude real estate and medical expenses that could ruin you financially. Collision insurance will cover any damage caused by collision with another vehicle, structure or object, but has an exclusion for non-collision damage. Comprehensive insurance covers all other types of damage that does not involve a collision, such as vandalism.
There are also driver-based exclusions that allow you to prevent high-risk drivers from using your vehicles, such as a teenager or roommate. Be aware that this does not apply in all states and you will need to check with your auto insurance company to see if this is possible in your specific scenario.
Many auto insurers also have a coverage exclusion for acts of God or intentional acts of destruction. Some policies provide a personal property exclusion or prohibit drivers from using their vehicle for business purposes or traveling outside the country.
It is important to read your auto insurance policy carefully to see what exclusions apply. You can also apply for a car insurance endorsement or policy endorsement to modify your plan to include coverage for ride-sharing insurance, gap insurance, or roadside assistance benefits.
Understanding your auto insurance policy and its exclusions will protect you and ensure you have the coverage you need.
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