The ramifications of the "fine print" in contracts, agreements, and other documents are legendary for causing future problems. While the reality is often not quite that damaging, the more obscure items in a document can sometimes be troublesome. If they weren't, would we really need the amazing number of lawyers that practice today? To quote a well-worn cliché, "the devil is in the details."
Most people don't want to spend the time on the details - for understandable reasons. Yet it is typically the details that can end up either costing or making you money. This is never more true than with insurance contracts.
Why it is important to read the "fine print" in an auto insurance policy
Sure, insurance agreements are tedious and boring to read. But, understand that they are meant to be tedious. Actually, they are meant to be complete and cover all eventualities - eventualities that can be of critical importance to you.
After reading your auto insurance policy, note any items that you don't fully understand. Don't worry if there are many, as car insurance policies, like most insurance documents, are written in legalese, not simple English. This is necessary because they are legally binding documents.
Talk with your agent or company about any items or paragraphs that are confusing or unclear. Seek out explanations that come in terms that a lay person can understand. Car insurance costs are relatively easy to understand, but the fine print regarding the details of your coverage can often be a mystery.
For example, assume you have a $500 deductible on most items in your auto insurance coverage. You park your car in the lot at the supermarket. When you're finished shopping, you notice a large dent in your vehicle. Someone has hit your car and left the scene without leaving a note or contact information. You will normally file a claim under the "uninsured motorist" coverage since this is technically a hit and run incident. Does the deductible still apply?
If you have a good car insurance policy, the deductible is often waived for this type of claim. Yet many auto insurance policies will not allow a waiver of the deductible. In other cases, you must call claims and ask to have it waived. This type of question should be addressed in the fine print of your auto insurance policy. As you can see, the difference can end up being very important to you.
Important parts of your auto insurance policy often found in the fine print
Here are some questions that can be important, but may be located in the "fine print" of your auto insurance policy:
If I lend my car to a friend or family member, is he or she covered under my insurance policy?
The answer is a strong "maybe." In many, but not all states, insurance "follows the vehicle," not the driver. At first glance, this makes little sense. Autos don't cause accidents, people do.
Yet, the insurance industry and many state regulations, in moments of infinite wisdom, have decided that when you are driving someone else's car, it is their insurance (or lack thereof) that applies. Check your local regulations and read your car insurance policy's fine print to understand which coverage applies.
When I rent a car, does my auto insurance cover me?
In most (emphasize "most") cases, your auto insurance policy will cover some or all of the risks of driving a rental car. However, you should read the fine print in your policy to learn the coverage you have when renting a vehicle. Find out what you may not be covered for and ask the rental car company what it costs to buy their coverage.
If I have an accident with "no-fault" car insurance, will my premium increase?
Read the fine print to learn what your auto insurance policy provides in the event of an accident that results in a paid claim. It may or may not be clear how your premium is affected.
Understand your policy
These are just a few of the conditions that often reside in the "fine print" of auto insurance policies. Many of the most important areas of your car insurance policy live in the lesser-known details of your coverage.
Take nothing for granted as this approach could be very expensive. Ask you agent or company for an understandable explanation for any clause, paragraph, or provision of your car insurance costs and coverage that mystify you.
See also: Compare auto insurance quotes
