When you buy a car insurance policy, your coverage will set terms and conditions on when and how it will pay you. This helps insurers control the degree of liability they assume by offering you a policy. As a result, you might not receive full compensation for all of your vehicle damage. Still, you want to get as much coverage as you can use to make yourself secure. Let’s look at how your policy might restrict your coverage and how you can get around these limits.

Liability Coverage Limits 

Most states require drivers to carry certain amounts of liability insurance. This is coverage that will pay third-party drivers (or other people) for their vehicle damage or injuries when the insured driver is at fault for the wreck. You must always have the minimum amount of coverage required by your state. 

Suppose that your policy includes $10,000 in property damage liability coverage. This means your plan will pay up to $10,000 for another driver’s vehicle damage. However, if that person has $18,000 in vehicle damage, then your liability limits won’t increase. You’ll have a potential for an $8,000 deficit that you must pay. 

To get more coverage, you can often increase your liability limits. As a result, you’ll have more liability coverage in case of extremely expensive accidents. 

Deductibles 

Most physical damage coverage (collision & comprehensive coverage) will pay for damage to your own car. However, these policies will often include deductibles. Deductibles are the costs of claims that the insured must pay by themselves. 

If you have a $1,000 collision deductible, then you pay the first $1,000 of your damage costs. So, if you have $3,000 in vehicle damage from a wreck, then you pay $1,000 and your policy will pay up to $2,000. Usually, your insurer will subtract the cost of the deductible after they appraise what they will pay for your cumulative damage. 

By increasing your deductibles (such as from $1,000 to $2,500) you might be able to save money on your premiums. However, this is also a higher repair cost you must pay yourself, and any vehicle damage below your deductible cost won’t have coverage. Therefore, choose the deductible that is best supported by your wallet. 

Cash Value Settlements 

Should an accident total your car, your policy might not pay for the full cost of a new car. It might only pay you the car’s actual cash value (minus a deductible cost) which is its used value at the time of the accident. However, this is not the same amount you might need to buy a new car. To get that coverage, you might need to upgrade your policy to include replacement cost coverage. 

Don’t forget, in many cases your policy only comes with liability coverage as base coverage. Therefore, you’ll likely need to add damage coverage into your coverage to make sure you receive adequate protection. Our agents can help you choose the most affordable benefits for you.