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Few people are aware of the different part of there car insurance policy. In fact, I would guess that most people do not even read there policy. However, the policy contains many different provisions and it is very important to understand the different sections.

First, we are all aware that we have liability coverage in the event that we strike/injure another person. The minimum limit in New York is $25,000. However, to properly protect yourself, a determination must be made based on your personal assets. If you have sufficient assets in the form of savings, homes, cars, boats etc substantially more than the minimum is probably required.

In addition to liability coverage their is optional collision coverage which will pay for the repairs to your vehicle in the event it is damaged as a result of your own negligence. This coverage is optional (unless the vehicle has a loan or is leased). Without this coverage you will be personally responible for the repairs.

If the vehicle has a loan you should have “gap” coverage which will cover the difference between the value of the car and the loan. We all have heard that the car depreciated when you take it off the lot which is true however the loan does not. Thus, you may have a vehicle worth $10,000 and a loan of $15,000 – in the event the car is totalled – you would be responsible for the $5,000 difference – gap insurance prevents this problem.

No-fault insurance will pay for your medical bills and lost wages. Basic coverage requires no-fault to pay a maximum of $2,000/month in lost wages. Thus, if you have income in excess of $30,000 you should consider additional no-fault coverage.

The policy also contains underinsured motorist coverage. This is coverage that protects you in the event you are injured by another motorist. For example is that other party has the minimum $25,000 set forth above and you purchased $100,000 underinsured motorist coverage – you would be able to collect, assuming you had the requisite injury, the $75,000 difference. This coverage is usually inexpensive and should be considered by all.

Insurance policies are complex. If you are injured in an accident it is best that you contact an attorney to preserve all your rights. Strict time deadlines exist for many portions of the policy, thus contact an attorney early is important.

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