Insurance policy documents are sometimes filled with words and verbiage that is hard to understand. However, if you want to have confidence in your coverage — you need to know what everything means. If you need help understanding your car insurance policy, learn more about some of the harder-to-understand terms.
1. Primary vs. Occasional Driver
To ensure your coverage terms are accurate based on your needs, it is helpful to be able to differentiate a primary driver from an occasional driver. The primary driver is the individual who will most often operate the vehicle, such as the owner of the car. An occasional driver is someone who only drives the car now and then, such as a childcare provider that uses your car to drive around your children occasionally.
Make sure this designation is accurate. Sometimes, people will list a primary driver as an occasional driver in an effort to control costs, particularly if the person has a checkered driving record. However, if the insurance company discovers that you intentionally provided misleading information, they can increase your rate or terminate your policy.
2. Underinsured Motorist
You probably know what an uninsured motorist is, but it is equally important to be familiar with an underinsured one. Every state has a minimum amount of coverage that all drivers are required to legally maintain. Unfortunately, this amount is not always enough to cover the cost of damage.
For instance, consider an at-fault driver with a policy maximum payout of $30k that caused $50k worth of property damage. Underinsured motorist protection is a coverage component that helps cover the $20k of missing coverage for the owner of the damaged property.
3. Loss of Use Expenses
When you do not have access to your vehicle, you can incur all sorts of costs. For example, you may be forced to take public transportation or rent a vehicle while your vehicle is being repaired. These costs are commonly known as loss-of-use expenses, as they are incurred by the loss of use of your personal vehicle.
Keep in mind that the terms concerning what expenses qualify for reimbursement can vary from policy to policy, so it is best to review your policy to see what costs are covered.
If you have any questions about your car insurance policy, the best thing for you to do is to speak directly with an agent. An agent will be able to explain each of these terms, and more, in a way that is easy to understand based on your policy and coverage.
Purchasing insurance — the right insurance — is one of the smartest things you will ever do. While there are definitely differences between homeowners, car, life, and health insurance policies, they all serve the same purpose when it comes down to it. Insurance protects you against financial ruin should a tragedy happen in your life. In the case of homeowners insurance, that tragedy could be a fire or a flood. In the case of life insurance, that tragedy would be your death. The more you learn about insurance, the better the decisions you'll make when purchasing it. So dive into the articles here, and start reading.