Insurance is supposed to serve as a safety net, but sometimes that net has some unexpected holes. Even if you have full car insurance coverage, you could have less protection than you think because of exclusions and limits lurking in your policy's fine print. Car insurance policies can vary considerably when it comes to who's covered and when. "Insurance is not a commodity," says Bill Wilson, associate vice president of education and research for the Independent Insurance Agents & Brokers of America. "Buying an auto policy is not the same as buying a two-pound bag of sugar." Instead, he says, it's more like buying a bicycle. You have to evaluate features, the company's reputation and reliability and match the product for how you plan to use it. That's why it's not only important to compare car insurance quotes, but also to compare policy details before purchasing. "You should always ask for a full copy of your policy and read through the whole thing," says Penny Gusner, consumer analyst for Carinsurance.com. "It's better to know what coverage you have than to find out you don't have the coverage you need after something bad has happened." Here are six examples of how coverage might be less than you expected.
1. Lower liability coverage for some drivers
In some states insurance companies can include "step-down provisions" for auto liability coverage, which lower the policy's liability limits to state minimum insurance requirements when you let a driver who's not on the policy use your car. Say, for instance, you have liability limits of 100/300/50 ($100,000 for bodily injury liability for one person, $300,000 for all injuries and $50,000 for property damage in an accident). You loan your car to a neighbor, who gets in an accident. Under a step-down provision, your liability limits for that accident would automatically drop to your state's minimum required liability limits. Those limits vary by state, but are far lower than 100/300/50.