How to read an auto insurance policy

Understanding your auto insurance policy is key to determining if you are properly insured. It is important to understand the components of your car insurance policy and how they relate with your financial protection. In all states except for New Hampshire, vehicle owners are required by law to carry a certain amount of insurance coverage to register and drive a car. Although car insurance is required, have the coverages, limits, features and exclusions been explained to you before? If not, you may find that you are paying for coverage you may not need, or going without the valuable coverage protection you thought you had.

How to understand and read your auto insurance policy

Car insurance policies go beyond the coverages on your ID card. While your ID card certifies that you have current coverage, it does not contain critical details. You can find the key information about what is included or not in your auto insurance policy on the declarations page as well as the policy form (also known by a policy jacket).

The declarations page on your auto insurance policy contains basic information about you, your household drivers and the car insured. It also lists the insurance company that provides the coverage. You can also find details about what is and what is excluded from your policy. The policy jacket provides a detailed overview of your car insurance’s specific coverages, limitations, exclusions, and conditions.

What are the components of a car policy?

There are multiple components of a car insurance policy, including the various coverage types you have selected for your insurance plan. In a standard auto insurance policy, coverages commonly include liability, uninsured and underinsured motorist (UM/UIM) and medical payments or personal injury protection (PIP). Although liability is mandatory in most states, the minimums may vary from one state to another. PIP and UM/UIM might also be required.

Optional coverages commonly include comprehensive, collision, roadside assistance, rental car reimbursement and full glass coverage, among others. Lenders may require you to have comprehensive and collision coverage if you finance or lease your vehicle. These coverages cover your vehicle for physical damage so that it can be repaired if it is damaged by an insured incident.

Car insurance policies are composed of limits, coverages, deductibles and personal information. Your unique policy number and policy period will be provided by the insurance company that insures your car. In some cases, it may also include a yearly policy. To understand your auto insurance policy, it is essential to fully understand what you can expect in the event of a claim.

What is a page for car insurance declaration?

The declaration page for car insurance is the most common page in a policy. It contains basic information about the policy, including vehicle information, deductibles and coverage limits. The declaration page contains all the information necessary to determine your policy’s coverage, including:

  • Policy number: This is the unique number that your policy has been assigned. You can use it to file a claim or make changes.
  • Address of policyholder The primary address of the driver. Also, where the car is stored when it’s not being used.
  • Named insured: This is the primary insured, or group of people, on the policy. It should match the title for the vehicle.
  • Premium: The amount that you pay for the policy during its term, usually six months to a year.

Exclusions from car insurance policies

Your car insurance policy excludes certain perils. Exclusions from car insurance policies can include:

  • Delivery or rideshare without specific coverage
  • Catastrophic events like nuclear attacks and acts of war can occur
  • Participating in prearranged racing events
  • Intentionally causing bodily injury or property damage to other people
  • Intentional damage to your car
  • Normal wear and tear
  • Failure mechanical
  • Accidents that occur while engaging in illegal activity
  • Police seizure
  • Vehicle not permanently attached to personal property

A driver exclusion can also be made for a specific driver. This is often known as a named-driver exclusion. This could be a household member with a poor driving record, or someone who is not covered by the policy. The policy does not cover the excluded driver if the vehicle is involved in an accident.

Considerations for key policy decisions

When reviewing your auto insurance policy, these are key policy considerations. A binding contract between you, the insurance company, is an insurance policy. It requires you to make on-time payments and follow the guidelines. The insurance company must pay for any covered losses. You can cancel your auto insurance policy at any time. However, your insurance company must notify your prior to cancelling your policy. They also have limits on how and when they can cancel your car insurance. These are some of the things you need to be aware of when reviewing your auto insurance policy.

  • Insuring agreement is a contract between you and your insurance company that provides coverage in return for your premium payment. You will also find details about what is and what is not covered.
  • Conditions: These are the rules, obligations and provisions that you agree to follow in order to receive coverage when you file a claim. This could include a time limit for filing a claim or terms that the insurance company uses to determine if the policy is terminated, such as a failure to pay in a timely fashion.
  • Limits: These are the limits that the insurance company must pay. They can be set in the policy as a maximum amount per claim or per person. A bodily injury limit of 100/300 would mean that the insurance company will only pay $100,000 per person and $300,000.00 per accident for any bodily injuries you cause in an accident covered by the policy.
  • Cost: The cost, or premium, is the amount you agree to pay to the insurance company in exchange for the policy limits and coverages provided in the insurance policy. The auto policy may be terminated if the premium is not paid in full by the end the policy term.

Questions frequently asked

How can I find the best auto insurance company?

To find the best car insurance company, you may have to shop around to gather several quotes from different companies. You can compare the same coverages to find the company that offers the lowest rates for the coverages you need. Prices, coverages and limits, as well as exclusions, can vary from one state to the next. Car insurance costs will vary depending on your driving record, make and model of your car and claims history.

What do I do if my car insurance policy is not valid anymore?

Reviewing your car insurance policy every renewal period is a good idea. This will allow you to see if there are any changes that need to be made. You can change your coverage or get a new car while your policy is still in effect. Many insurance companies will offer a free review to verify your coverage and determine your needs.