Why Your Auto Insurance Policy Needs An Annual Check Up

The simple answer to why your auto insurance policy needs an annual check-up can be summed up in one word: Protection. If there have been changes in your life over the past year, the coverage provided by your auto insurance policy may no longer be sufficient to protect you, your family or your assets. An annual review may also reveal that you’re paying for coverage you don’t really need.

Where to start

Find your auto insurance Declarations Page and start your review right there. This page provides a summary of the coverage limits and their associated costs. It also lists the names of the insured, the automobiles covered, and the address where those cars are kept. Changes to any of this information can trigger a premium decrease or increase. That’s why it’s a good place to begin your review, especially if you’ve married, divorced, bought a first-time home, or moved in the past year.

Where else to look

The Insuring Agreement is the part of the auto insurance policy that discusses the events and/or circumstances that the policy does not cover. Too many people make assumptions about their coverage and that can cause a problem later on when a claim is denied. Know what’s in this section so you know the areas where your coverage may be lacking.

Know your state’s laws

Each state differs in the amount and type of auto insurance coverage it requires drivers to maintain. A lot of drivers simply tell their insurance agents they want the minimum amount the state requires without realizing that this may be inadequate.
A good example is liability insurance. If while driving your car you injure another individual or that individual’s property, your liability coverage would be used to compensate that individual for damage to himself or his property. If the coverage amount is not enough to cover those costs, your major assets could be seized and used for payment should there be judgment against you.
Coverage that typically is not required by the state but is advisable to have includes Collision, Comprehensive, Uninsured/Underinsured Motorist, and Medical Payments coverage.

If you don’t know the purpose of these required and optional auto insurance coverage types, take time to find out. Then, once a year, decide whether having the coverage, increasing the coverage, or not having it makes the most sense in your current situation.