Auto Insurance Myths

Having vehicle insurance gives a feeling of security. After all, if something goes wrong, the insurance company will take care of things, right?

Maybe.

Understanding what isn't covered in your policy is just as important as what is covered -- or maybe more important if an accident catches you unawares.

Myth: Whatever dollar amount the state requires for bodily and property damage liability coverage is plenty.

Not necessarily. It depends on your assets. If you have an accident that includes bodily injury to others and you are sued, you could lose all your assets. It's the same with property-damage liability. If you hit someone else's vehicle, your insurer will take care of the costs, but only up to the limits of your policy. You might not be covered for the complete expense if the other person owns an expensive vehicle.

Opt for umbrella liability coverage for damage costs that run over the limits of your policy.

If a liability case goes to court, verdicts of $1 million or more could be handed down against you. Buy liability insurance with a deductible that starts where your regular policy stops.

Myth: If your vehicle is totaled in an accident, the insurance company will pay off.

They'll probably pay something, but the amount likely won't be what you expect, and it might not even be enough to pay off what you still owe on the car. They'll pay based on the cash value of the car, a wholesale amount.

Opt for gap insurance to cover the difference between what your insurer will pay for your totaled vehicle and what you still owe on it.

Myth: If someone hits your car, the other guy's insurance will pay for the damage.

Maybe, if the other driver has insurance.

Buy uninsured motorist coverage, in case another driver hits you and has no insurance.

This insurance is a cheap but valuable addition to your policy.

Check the exclusions on your policy to be sure what it won't cover. Look for "Acts of God" such as flooding or hail, accessories you've added to the car such as an expensive stereo, coverage while driving someone else's vehicle or someone is driving yours, and break-ins where expensive items like cell phones or laptops are stolen from your vehicle.

David Uffington regrets that he cannot personally answer reader questions, but will incorporate them into his column whenever possible. Write to him in care of King Features Weekly Service, P.O. Box 536475, Orlando, FL 32853-6475, or send e-mail to columnreply@gmail.com.

(c) 2010 King Features Synd., Inc.