An auto insurance policy is a legal contract between you and the insurance carrier. You must obey the policy terms, and the carrier must play their part. You might not know what the carrier expects of you or what you should expect from the carrier if you don’t understand your policy. The following aspects of your policy underscore the need to scrutinize your policy’s fine print.
Your car insurance policy specifies the dates and deadlines of your respective obligations. For example, most policies specify:
- How long you have to notify your insurance company after an accident
- How long you have to file a claim after an accident
- How long the insurance company has to pay an accepted claim
- Your policy’s expiry date
These dates and deadlines will help you to meet your obligations. They also help you to know what to expect from the insurance company. For example, auto insurance companies have 30 days to settle a Personal Injury Protection (PIP) claim. If you know this, then you won’t worry if your carrier accepts a claim and takes a couple of weeks or so before paying.
Exceptions and Exclusions
Your auto insurance policy also specifies the conditions each claim must meet before the insurance company pays. For example, personal auto insurance typically excludes damages arising from:
- Commercial use of the vehicle
- Criminal use of the vehicle
- Added accessories, such as custom rims
These details protect both you and your insurer. For example, you won’t use your personal car for livery if you know your policy doesn’t cover commercial risks. That way, you protect your coverage and minimize the risk exposure to your carrier.
Your auto insurance policy is a contract between you and your carrier. The risk of disputes is inherent in any form of contract. That is why auto insurance companies like to include dispute resolution clauses in their policies. Below are two common examples of these clauses.
Right of Appraisal
This clause allows you to dispute your carrier’s estimate, especially or property damage. You hire an independent appraiser, and your carrier does the same. The two appraisers appear before an independent umpire who decides what the fair estimate is.
Many people know that they can file a lawsuit against their car insurance companies in case of an unsatisfactory claim payout. However, the lawsuit typically comes after mandatory arbitration. In case of a disagreement, each side presents their claim in front of an arbitrator who rules on the dispute. You can only file a claim if the arbitration fails.
You have the right to cancel your auto insurance policy at any time. However, most insurance companies have cancellation policies that you should know before you buy coverage. For example:
- You have a cooling period of 14 days (that the law guarantees regardless of the insurance company)
- The insurance company will charge you for the days they insured you if you cancel your policy
- Some companies charge cancellation fees
- Some companies require written cancelation requests
- Some companies require notice before cancellation
Any of these things can affect your future relationship with your insurance carrier. Say you want insurance coverage, but you are also looking for a job overseas. You need a policy that you can cancel with minimal fuss and expenses.
The best term to understand your policy is before you buy it. Discuss your insurance needs with an experienced insurance agent so that they can guide you to the best policy. Talk to Family Insurance Centers for all your insurance needs. Our close working relationship with dozens of insurance companies means we can match everyone with the right coverage.