Watch Out for Hidden Car Insurance Traps

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Shopping for car insurance can be a very difficult task especially if you get lost in the policy’s fine print. When reading a car insurance policy most people only focus on the main idea and they usually jump over the fine print because they believe that they are just legal expressions which have no influence over the policy. However, these legal expressions can hide a lot of car insurance traps and in order to avoid them it is essential that you understand all of the policy’s clauses. Today we are going to cover the main auto insurance traps in order to teach you how to recognize and avoid them.

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The Limits Of Liability clause
Limits of liability is a common clause in most contracts but it is also one of the biggest car insurance traps. It is usually used to balance the risks assumed in a contract with the small profit or fee received for a service or performance. In a car insurance policy this provision is used in order to limit how much the insurance agency will pay the policy holder. The biggest trap in such a clause is the phrase “as defined by us”. This phrase is generally used when describing the repair costs. It means that the company will not pay more than the normal per hour labor rate of local repair shops. However, certain insurance companies will use that phrase in order to force you to accept below rate repair shops which usually use after market parts. If you insist on going to better shops you will have to pay the difference out of your own pocket. Keep in mind that after market parts could void the warranty on your car parts.

Appraisal clause
An insurance policy is basically a contract but not all insurance agencies use the same standard clauses. The appraisal clause is an element that should be present in all policies in order to protect the policy holder. It is a clause that allows the policy holder to seek an appraisal if the insurance agency offers less that the car’s worth for a totaled vehicle. It is important to ask if this clause allows for a court of jurisdiction resolution. This means that if the policy holder and the insurance company appraisers don’t agree on the value of the car, they can solve this problem in a court of jurisdiction.

Who is covered by the insurance?
When it comes to the people covered by the insurance, there are several types of policies that you can choose from. The cheapest policy is the one that only covers the policy holder. You can also choose a name-insurance-only policy which covers the policy holder as well as other family members that must be mentioned in the contract. The most expensive policy is the family policy which covers all the family drivers as well as other people to whom the policy holder may lend the car to. Unless you hold a family policy, it is advised that you avoid borrowing your car to people outside your family.

These are the main car insurance traps but there are many more misunderstandings which could cancel your cover in case of an accident. The best thing to do is to ask as many questions as possible in order to thoroughly understand the policy. If the insurance company is not very flexible with the policy, it is best if you look for another one. For example, an insurance agency that doesn’t have an appraisal clause or who refuses to stipulate the court of jurisdiction resolution is rather suspicious and it is best if you avoid it.