Insurance » Auto Insurance » How to Review Your Car Insurance Policy?
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How to Review Your Car Insurance Policy?

If you want to make sure that you’re getting exactly what you would expect, you should review your car insurance documents. Here are the things to focus on.
Author: Russell White
Russell White

Writer, Contributor

Experience

As a finance geek and Content editor with 13 years of journalism experience, Russell makes sure every article has the right flow, edits for accuracy, and consumer value. In addition, Russell contributes his own ideas about budgeting, savings, and credit cards.

Review & Fact Check: Baruch Mann (Silvermann)

Russell White

Writer, Contributor

Experience

As a finance geek and Content editor with 13 years of journalism experience, Russell makes sure every article has the right flow, edits for accuracy, and consumer value. In addition, Russell contributes his own ideas about budgeting, savings, and credit cards.
Author: Russell White
Russell White

Writer, Contributor

Experience

As a finance geek and Content editor with 13 years of journalism experience, Russell makes sure every article has the right flow, edits for accuracy, and consumer value. In addition, Russell contributes his own ideas about budgeting, savings, and credit cards.

Review & Fact Check: Baruch Mann (Silvermann)

Baruch Mann (Silvermann)

Financial Expert, The Smart Investor CEO

Experience

Baruch Mann (Silvermann) is a financial expert and founder of The Smart Investor. Above all, he is passionate about teaching people how to manage their money and helping millions on their journey to a better financial future.

You can trust the integrity of our unbiased, independent editorial staff. We may, however, receive compensation from the issuers of some products mentioned in this article. See how we make money.

Table Of Content

In the United States, the age of the driver is one of the factors that determine auto insurance rates. Data from ValuePenguin shows that young adults at age 18 years pay the highest auto insurance of $7,396 on average. However, as they mature, they become better drivers, which reduces their risks, consequently attracting lower insurance cover fees. Drivers aged 25 pay the lowest premium of $3,348.
Chart: Average Car Insurance Expenditure in the U.S. 2021, by Age (in USD)

So, how do you make sure that you’re getting exactly what you would expect on your insurance? You could talk with your insurance agent. Or you could sit down with your insurance documents entirely on your own.

Why You Should You Review Your Car Insurance?

If you have recently had an accident or a major life change, you need to review your car insurance policy. It will change when you have had an accident or when the policy is up for renewal.

Most of the time, you only need to review your car insurance policy yearly, as car insurance policies last for a year and then will renew. Reviewing the policy will see if the car insurance company has changed anything automatically. It will also allow you to change anything you need to If you want to change your coverage choices.

Now, remember that you’re trying to make sure you’re getting the coverage that you need. That means you’re going to have to read everything. If it's possible, examine all of your documents carefully. Otherwise, you could end up with trouble down the line.

Is It Difficult To Review Your Policy?

It shouldn’t be difficult to review your car insurance if your company gives you a full print out or explanation of what the feature of the policies means. Reviewing your car insurance is a good plan because it will show if you need more or less coverage.

There may some clauses or part of the insurance that you don’t understand though. In this case, it might be in your best interest to contact your car insurance policy provider to explain to you what the part of the insurance claims means. The main part to pay attention to is the deductibles and how much monetary coverage you have for liability and personal protection.

How Long It Should Take?

It should only take a few hours to review your car insurance. Reading through your policy may take some time though if you have never read through one before or if it’s your first-time having car insurance.

You can also ask to review the policy with an agent so that it doesn’t take as long. Reviewing it with an agent will ensure that you get everything explained to you properly and that you don’t waste time trying to figure out numbers and what certain clauses mean. Just make sure to read everything carefully. Let's start!

1. Declaration Page

This is where you’re going to get a general overview of what your car insurance covers. It’s the place that you want to start when you evaluate your insurance coverage. That way you have a general idea of what you’re looking at.

You will usually find things like vehicles and individuals who are covered, the types of coverage, limits, and deductibles on each and even how long the policy is for. You’ll also find different discounts and surcharges for your account so you know what you’re paying.

Make sure you look at who is covered and whether all of them need to be on your insurance. You also want to make sure you’re covering everyone you thought you were.

2. Mandatory Coverage

Your state will have specific minimums for what you need to have in your coverage. Make sure that you know what those minimums are and that your coverage fits those requirements.

  • Bodily Injury – In most states, you will have a specific minimum you need for this coverage. It’s what takes care of any injury to the other party if you are at fault for the accident. Medical expenses, lost wages, pain and suffering and even a lawsuit against you will be covered under this part of your insurance.You’re generally going to see two different numbers listed where the first number is a maximum paid per person injured in one accident and the second is the maximum paid per accident. Any amount needed over that amount is up to you to pay.
  • Property Damage – This is another important piece in most states. If you are at fault for an accident your insurance will pay for any damage to the other person’s property, whether that’s a vehicle or some other object.This is usually put in with the bodily injury coverage and comes up as a third number on the list. That’s the maximum your insurance will pay. After that, you’re on your own to cover the costs.

These are things that you absolutely have to have, but only to specific levels. Once you’ve surpassed the state minimum it’s up to you if you want more coverage. You should make sure that you have at least that state minimum, however.

Does Insurance Cover If You Drive Someone Else's Car?

In most cases, if you are driving a friend’s car, a rental car, or a dealership loaner car, you are covered for liability insurance. This means if you are hurt and need medical attention or if the car needs repairs, you will be covered under the other person’s insurance policy.

However, this only applies if you have been given permission to drive the other person’s car. If you have received permission, the owner’s policy will cover you if you get into an accident.

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3. Optional Additions

These are the things that your state doesn’t require but you might have anyway. Things like uninsured or underinsured motorist coverage or collision insurance will fall into this section.

  • Collision: This is the part of your insurance that covers your vehicle if you get into an accident. Whether you hit another vehicle or an object your collision insurance will take care of it up to your maximum if you have this kind of insurance. This doesn’t do anything about medical coverage or any kind of damage not caused by a driving accident. It may also be required if you have a lease or a loan on your vehicle.
  • Comprehensive: This type of insurance takes care of non-accident related damage. If your vehicle is damaged by fire, flood, hail or anything else that’s not related to an accident this coverage takes care of it. You will not have to worry about the damage up to your current maximum (and not counting your deductible).
  • Uninsured/Underinsured Motorist: Now, if you get into an accident with someone and it is not your fault the other insurance company is responsible. If the other driver doesn’t have insurance or doesn’t have enough insurance, that’s where this comes in. This will cover any additional costs and fees up to your maximum. So, if you have more damage than their insurance will cover this is the insurance you’ll use to take care of the expenses.
  • Other: There are other types of insurance that you can also look into and add to your policy. These are things like towing, property protection, lease coverage and more. In many cases, these may be more expensive than they’re actually worth, but you also want to make sure that you consider them carefully. Look at what they cost and what you’ll get out of it.

4. Exclusions

A automobile insurance exclusion is simply language in your policy that spells out what isn't covered. It's possible that some drivers and vehicles will be excluded from coverage. It's possible that some situations aren't covered.

Simply put, if you file a claim based on one of these exclusions, your claim will be refused.

Standard exclusions, which occur in most plans, and customized exclusions, which are unique to your policy, are the two types of vehicle insurance exclusions. A named driver exclusion is one of the most popular car insurance exclusions. This signifies that one or more members of your family are not protected by your insurance coverage.

Assume that your spouse has a poor driving record and that insuring him or her would cost you hundreds of dollars per month. Maybe your 20-year-old son received a DUI, and you want to keep him off your insurance policy to avoid paying exorbitant premiums. Taking a high-risk driver off your policy can save you money, but that driver must understand the restrictions! If they drive your car nevertheless, they're breaking the law by driving without insurance.

If you drive a vehicle that doesn't belong to you without having a “reasonable belief” that you have permission to do so, your auto insurance will not cover you if you get into an accident. In most cases, this exception does not apply to family members who use your vehicle.

You’ll generally have a section that refers to this. Make sure you fully understand your exclusions such as:

  • Damage to your property
  • Damages from business use of your vehicle
  • Damages from livery use of your vehicle
  • Intentional damage to your vehicle
  • Intentional damage to someone else’s vehicle
  • Damage by certain specified events

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5. Discounts/Offers

You may actually be eligible for different discounts on your policy if you meet certain requirements. These could vary from highly exclusive to broad categories and could give differing discounts. Some may give minor discounts and some may be higher.

  • Good grades
  • Drivers-training courses
  • Multi-vehicle
  • Multi-policy
  • Online only
  • Clean driving record
  • College/Occupation/Membership
  • Advance payment

If you qualify for any of these discounts make sure you let your agent know. Ask them about any other discounts that may be offered.

6. Medical Coverage

If you are injured in an accident medical coverage can cover your expenses related to any kind of injury. This doesn’t have to be injury from an accident where you are driving. It can actually be injuries from being a passenger in another vehicle as well.

So, if you are in a vehicle that is in an accident your medical expenses would be covered. It doesn’t matter if it’s one of your vehicle or if you are driving.

Improve Your Policy Conditions  – Things To Consider

Once you know all of these things about your policy you’ll be able to start looking at options. You can plan out ways to improve your policy and make sure that you have the right coverage. This might mean changing the minimums, the deductibles, adding coverage and more.

  • Deductible – You have the ability to set different deductibles for different aspects of your policy. You may also be able to choose the maximum of these aspects. You want to make sure you know what the amounts are and how it affects your premiums. Raising your deductible or lowering the maximum may lower your premium.
  • Value – If your vehicle is starting to get older or already has some damage you may want to reconsider the type of coverage that you have. You may want to look at different types of coverage that aren’t as expensive. That’s because your vehicle isn’t going to be worth as much to fix. Or it might not even be worth what you’re paying for the extra coverage.
  • Risk Level – Is your vehicle at high risk of being damaged? If it is then you may want more coverage. If it’s not then you may want to lower the amount of coverage that you have. In case you’re a very safe driver you may not need the highest level of coverage. If you’ve been in several accidents before you may want to look into better coverage.
  • Credit Score – Your credit score affects a number of different things in your life. Your car insurance can be one of them. If you show a high credit score you may be able to reduce your premium. This shows the car insurance company you’re a safer person and that you’re less of a risk overall.

Your credit score can play a crucial role in the cost of your auto insurance. This chart created using data from The Zebra highlights the dramatic difference in the average cost of auto insurance between good and bad credit.

Whether you are looking for minimum or full coverage, the chart shows that you can expect to pay almost double the rate if you have bad credit, compared to good credit.

Average Auto Insurance Rates For Good and Bad Credit

What Happens If You File a Claim For Car Insurance?

You will be asked whether you would like to file a claim against your car insurance after you have reported the accident. Your provider will send you a form to fill out and return with supporting evidence if you answer yes. To avoid any mishaps, it is a good idea to keep a copy of your claim form.

Expect to wait for a response about your insurance claim. It's not always easy, even if the driver is clear.

A claims assessor will inspect your car and determine the cost of repairs if it was damaged. A list of approved garages will be provided to you. You should not repair your car before this time. Your insurer might refuse to pay and you could lose any right you have to a car courtesy.

Your car insurance policy will pay you a sum equal the vehicle's value before it was destroyed if your vehicle is written off. You might be surprised at how much this amount is, especially if your car has suffered a significant decline in value. This is why you need to learn more about GAP insurance.

You can appeal to your insurance company if you feel the valuation was unfair. You can appeal to your insurer if you are unhappy with the outcome.

How Will Claiming on My Auto Insurance Policy Impact my Premiums?

Your premiums will be affected regardless of whether the accident was at-fault or not. Because if you have been in an accident, even though it was not your fault, insurers will consider you a higher risk.

As you would expect, however, a nonfault claim will not raise your premiums as high as an at fault claim.

If I get into an accident, do I need to make a claim on my auto insurance policy?

In some cases, it is better to not make a claim for a car accident. If the damage isn't severe enough that you can afford to repair it yourself, it will be cheaper than paying the excess fee. In this case, it might be better to keep your no-claims bonus.  Even if your claim is not filed, you must still inform your insurance company that you were involved in an accident.

What is the Most Reliable Car Insurance Company?

JD Power is a great resource for information about insurance companies and their service. To create rankings of the best insurance providers, the company surveys customers.

The 2020 study identified key areas, including ease of use. The website experience was responsible for 34% of total interaction scores, but it also had an impact on overall customer satisfaction. Claim history also had an impact on brand loyalty. If a claim is denied, customers are more likely not to be satisfied and will renew their policy.

This is understandable, since it doesn't really matter how great an insurer is if you have to file a claim.

The 2020 JD Power Auto Insurance Study shows that the top-ranking brands differ by region. GEICO is the top-ranked brand in three areas, followed by State Farm in two.

FAQs

The main things you need to focus on are if you meet your state’s minimum requirements for insurance. If you enter in your address, usually the insurance company will not allow you to purchase less than what the state requires, but you still need to ensure you have all the minimums, so you are driving legally and safely.

You should also pay attention to what your deductible is. This is the amount you will pay if you get into an accident. You will have to pay the deductible amount before the car insurance company will give you any money towards car repairs or medical bills.

If you have other people listed on your policy, such as a spouse or dependent, they will be covered by your insurance policy if you happen to get into an accident and need medical attention or car repairs.

If the person is not on your policy, but you gave them permission to take the car somewhere, they will also be covered by your insurance. However, if you are driving someone else’s car without them knowing, you might face your own bills if you cause an accident whole in their car. Check with your individual policy to make sure other people can drive your car and be covered.

Liability insurance is the cheapest kind of insurance and it’s required in most states for all drivers. Third party insurance is the minimum level of insurance you need by law. It’s the cheapest because it offers the least protection of all the types of insurance that are available.

However, having the cheapest option is not always the best choice. You might want to consider paying for a higher premium if it means having more protection and a lower deductible. This will ensure you are more protected if you get into an accident and need help.

There are 5 different types of car insurance that you should keep in mind when you are buying a policy. Liability insurance is the main one because it will cover you in the event you are in car accident, and it’s determined that the car accident was your fault.

There is also collision coverage which covers for the repairs of your car is the car is totaled or the repairs exceed the cost of the vehicle. Collision coverage is not required, and many people choose not to buy it. Comprehensive coverage is when your car is damaged by something other than an accident such as a weather incident or a stolen car. 

There is also personal injury protection insurance and uninsured/underinsured motorist protection insurance.

Even though insurance covers most things, there are always some things that you might find are not covered by car insurance. If you don’t have collision insurance, then your insurance will not cover the car repair fees.

If you have personalized your car in any way and added things not originally on the car, then the car insurance will usually not pay for you to repair these items. You might also find that your car insurance does not pay any repairs if you were using the car for commercial uses such as for Uber or Lyft. This is especially true if your car is still under a loan.

Some places online offer free ways to check your car insurance history, you will just need your VIN number. If you can’t find a place to do it online, then you will need to go to the DMV. An agent at the DMV can enter in the VIN number and find the information for you.

Even though insurance covers most things, there are always some things that you might find are not covered by car insurance. If you don’t have collision insurance, then your insurance will not cover the car repair fees.

If you have personalized your car in any way and added things not originally on the car, then the car insurance will usually not pay for you to repair these items. You might also find that your car insurance does not pay any repairs if you were using the car for commercial uses such as for Uber or Lyft. This is especially true if your car is still under a loan.

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