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Welcome to the best Michigan insurance resource! Michigan has the most unique insurance laws in the United States. Learn about what it takes to be insured properly as a Michigander. Get saving tips, mandatory coverage amounts, and answers to many frequently asked questions.

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Understanding Your Auto Insurance Policy

A typical auto insurance policy will have an array of features, which can befuddle the average person. It’s recommended to understand what these terms mean and what a “good” insurance policy will look like before signing on the dotted line. It is important to learn all the intricate terms a policy could feature and what a person should be looking out for.

It is possible to save money and find a great option as long as these terms are recognized and defined beforehand.

Key Terms

The average consumer will look at a few details and ignore the rest. This is not only a poor way of looking at things, but it can also lead to life-changing issues later on when the policy is required to protect you. Therefore, it’s best to take action right now and understand key terms you should be on the lookout for as a buyer.

These are terms all experts state are necessary when you’re hoping to get a good deal.

1) Collision and Comprehensive
2) Third-party Liability
3) Deductible
4) Optional Coverage
5) Accident Forgiveness
6) “Fault”
7) Total Loss
8) Policy Limits
9) Endorsement

It is these nine terms you should understand and research when it comes to your auto insurance policy provisions. Let’s go through all of them one by one.

Collision and Comprehensive: Collision coverage refers to repair costs associated when your vehicle is involved in an accident. Comprehensive coverage entails damage for everything else other than accidents which require repair work.

Third-Party Liability:
Refers to the amount paid out to other drivers when you’re at fault.

Deductible: This is the set amount you’re required to pay for repairs before the insurance agency puts in its share. It’s best to have this as low as possible to the extent you can afford the extra premium. The lower the deductible, the higher the premiums will be.

Optional Coverage:
These are added features on top of the foundational elements of your policy. These can be adjusted based on what you require.

Accident Forgiveness: This feature refers to the first accident (regardless of fault) being written off by the insurance company. This accident won’t impact your rates at all.

Fault: This refers to who caused the accident according to the police investigation. If a report was not filed, the “fault” could be disputed in court.

Total Loss: This is a set amount where the vehicle’s repair costs are more than the vehicle’s total value at that point in time. In this case, the car is replaced and considered a total loss.

Policy Limits: This is a term given to define set limits for each feature (i.e. deductibles and liability payments). These limits are often established for each claim a person makes.

This is an added feature to protect a particular part of the vehicle (i.e. expensive rims) and its related details.

Saving Money On Your Auto Insurance Policy
For those who wish to save money, you can play around with these features and the policy limits that have been established.

Deductibles are a good place to start. You want to work on setting this as low as possible, so you’re not paying out of pocket for each claim. However, if you want a reduced monthly bill, you can increase the deductible. Consider the cost/benefit of collision and comprehensive insurance for older cars.

What Can Be Ignored?

While it is important not to ignore everything, it is possible to get away with select terms that are seen in policies.

What are some of these terms?

1) Regulations
2) McCarran-Ferguson Law
3) Financial Responsibility Law

In general, once these are found on the page, you don’t have to consider them any longer as they are standard in all policies. What are these terms? They are referring to state and federal laws put in place which have to be followed by insurance companies. These are mentioned, so you’re aware they’re being met by the agency that is selling you a policy. It doesn’t matter if these are present or not as they’re legally required regardless.

These are the nuances one should be thinking about when considering auto insurance. There are many details to consider, and those who are on top of things will get a far better deal than those who skim through and ignore the terms outright. Take your time to recognize these conditions and see how they impact your policy in the short and long-term. Until you do this, you will be taking a massive risk with your policy.

Written by Guest Author Jeff Thornhill
Jeff is a writer for and an avid car enthusiast.


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