Most of the time, contract terms and provisions regarding auto insurance coverage are fairly easy to understand. However, there could be small or fine print included in the policy contract that might surprise you and provide less protection or make you liable in some circumstances. So, you should always make sure that you carefully review every part of your car insurance policy contract and make sure that you understand the provisions thoroughly to avoid any unpleasant surprises.
In some car insurance policies, the insurance company may use built-in language intended to make filing a speedy claim more difficult in some situations. You should always be aware of the type of dispute resolution mechanisms that are agreed to in the policy contract. If the policy contract contains language that allows one party to avoid arbitration and request a civil trial, you may want to consider using another insurance company.
This type of language is included for the sole benefit of the insurance company. If there is ever a dispute over an unpaid auto insurance claim, such as a large personal injury claim or an uninsured motorist claim, the insurance company will probably use this loophole to force you into a costly civil court trial. So, look for a policy contract that will require arbitration in the form of a three-member arbitration panel or a nonbinding mediator.
Always make sure that you’re aware of the maximum coverage limits payable under your policy contract. Ensure that the policy limits are reasonable and provide adequate protection in the event you are involved in a major accident and someone is seriously injured or even killed. If you’re found to be at fault in a major accident, your policy limits may not be enough to adequately compensate victims of the accident. So, always make sure that you understand the maximum limitation coverage limitations for your policy.
You should carefully review your policy contract, and see what types of provisions are made for loaning your vehicle to a friend or family member. Sometimes, policy contracts will exclude coverage for people that are not listed as drivers on the policy. You should try to choose policy coverage that provides coverage based on the car and not the driver.
Check your policy contract carefully to see how your policy will handle minor claims such as claims for a windshield repair or minor damage caused by a hail or ice storm. Many policies will not require you to meet the deductible for these types of claims and your policy premium rate should not be increased. However, you should always check the terms of your policy contract just to be sure.
Always check the small print in your policy contract about policy cancellations. There may come a time when you choose to change insurance companies, sell your vehicle or otherwise simply don’t need car insurance. In these situations, you may need to cancel your policy. Some companies will charge hefty cancellation fees and penalties when policies are terminated early—so always make sure you understand your insurance company’s cancellation policy. If you find that cancellation policy is overly restrictive, consider changing insurance companies the next time it is time to renew your policy.