Why your auto insurance can be complicated
You’ve probably heard of basic insurance.
But it’s a complicated system that can get tricky to understand and navigate.
Here’s how basic insurance works, and what you can do to help you get a better understanding.1.
Basic insurance rulesBasic insurance rules are laid out in the Consumer Financial Protection Bureau’s (CFPB) Consumer Guide.
Basic rules apply to all auto policies.
These rules define what you need to pay for coverage, how much you’ll pay, and when you’re required to pay it.
Basic insurance applies to:All auto policies that cover you or your family for your life, and all other auto policies and policies that pay for you for a fixed period of time.
For example, you’ll get a basic policy for the first year, then a higher level policy after that.
You’ll get basic insurance coverage for the rest of your life if you work, rent, own property, and live in a community or ZIP code.
Basic coverage can be extended to cover you if you become disabled or need a home, or if you die.
The basics of basic policy rulesFor example:If you need a basic insurance policy for only the first two years of your policy, you’re entitled to a minimum coverage amount of $25,000.
If you have to cover a lot of other expenses in the first 2 years, you can have your coverage reduced by 50%.
You also need to cover all medical costs in the last 2 years if you’re a dependent, such as a spouse, children, or parents.
If your family members qualify, you get basic coverage for them as well.
You’ll get coverage for:Any medical expenses you’re not covered by basic insurance, such for:Hospitalization costs or medical bills, and prescriptions.
Home repairs and repairs.
Personal and family injuries.
If you’re covered under basic insurance for only two years, your coverage will be reduced by $1,000, or by 50% for dependent children under 18.
You will still be eligible for coverage for children up to age 18, or for those who meet certain income and age requirements.
If both parents or both children are covered, you may qualify for an additional $2,500 coverage.
You can still be covered by all basic insurance if one parent or both are covered.
If your basic coverage is limited to two years and you have a medical condition that limits your coverage, your medical care provider may need to charge you for the treatment.
If this happens, you have the option to take out another basic policy with no out-of-pocket limits.
For example, if your primary doctor charges $400 for your first appointment and $600 for your second appointment, you could opt for the second basic policy that has no out of pocket limits.
If the out- of pocket costs are too high, you should consider other insurance options, such a family or homeowners’ policy.
If so, you won’t need to take the extra steps to pay them off.
You may also be able to deduct some of the costs from your income.
If both your primary and secondary doctors charge a fee for your care, you also need basic coverage if you need more coverage for a medical procedure or a surgical procedure.
For a more detailed explanation, read the CFPB’s consumer guide.1a.
Basic car insurance coverageA basic policy gives you the same coverage for your car as you do for your family and your home.
However, you must pay the full cost of a car insurance policy in addition to any other out-for-pocket expenses.
If a car accident occurs while you’re in a car with an uninsured driver, you don’t have to pay the cost of the accident for yourself.
If the driver is injured or killed in a crash, you pay the driver’s insurance and the cost to repair the vehicle.
If an accident occurs during a period when your car insurance doesn’t cover you, you owe the full amount of your deductible, and the policy will automatically be canceled if you pay a deductible in full, and your car coverage is not renewed.2.
Basic home insurance coverageYou have basic insurance covering the entire home and its contents.
This means that your home is your primary insurance.
If someone else is your insurance policyholder, they must pay your entire cost of repairs and maintenance.
You also have basic home insurance if you own property.3.
Basic renters insuranceYou may qualify to receive a basic renters insurance policy.
You must get the same basic renters coverage as everyone else.
If another person owns your home, you and that other person must both be covered.
You need to sign a written lease with the landlord or other tenant of your home to get basic renters’ insurance.4.
Basic liability coverageIf your car, home, and/or renters insurance is limited, you might qualify for a basic liability policy.
This is basic coverage that covers all damage and any medical expenses that result from an accident.
It also includes your deductible and all out- for