Insurance documents can be difficult to understand. If you have a car insurance policy, it’s important to read it carefully and make sure everything makes sense, including all the insurance industry jargon and fine print.
Here’s what you should know about the different parts of an auto insurance policy, what each one means, and some key car insurance terms.
Car insurance policies vary by car insurance company but typically include these elements:
Declarations page: Also known as the “dec page,” the policy declarations page is a summary of your coverage, limits, premiums, and deductibles. It can give you a quick overview of your policy.[?]
Definitions: The definitions section defines key terms your policy uses. Most of these terms are industry terms the average person might not know.
Coverage: In the coverage section, you’ll learn about your specific coverage. This may be liability, collision, comprehensive, uninsured/underinsured, personal injury protection, and/or medical expenses coverage.
Exclusions: Exclusions will outline any circumstances or perils that your policy won’t cover. For example, if you have a liability-only policy, you won’t have coverage for glass damage, accidents with animals, and vandalism, and they’ll be in this section.
Endorsements: Often referred to as riders, endorsements are changes or additions you’ve added to your policy. A few examples of car insurance endorsements include rental car reimbursement and roadside assistance.[?]
Cancellation terms: The purpose of the cancellation terms section is to explain how and when you or your insurance company can cancel your policy. It might state that you have to give your insurer at least 30 days notice when you cancel, for example.
Contact information: Your policy will explain how to contact your insurer or insurance agent to ask a question, make a change, or file a claim.
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A car insurance declarations page lays out all the key components of your policy. If you want to know what your auto insurance covers, it’s a good place to turn to. In most cases, a declarations page will be the first page of your policy and include the following information:
Insurance company details: You’ll see the name of your insurer, its logo, and its contact information. If you used a local agency or car insurance agent to buy your policy, you may find its information as well.
Policyholder information: This includes the name of the person or people listed on the policy. Policyholders may be you, your spouse, or your children.
Vehicle details: A list of all the vehicles your policy covers, including their makes and models and vehicle identification numbers (VINs), will be present.
Policy number: This is a unique number you’ll receive when you buy a car insurance policy. It helps the insurer find your policy when you file a claim or make changes to it.
Policy term: The policy term or policy period states how long your car insurance coverage is valid. Most terms are six or 12 months.
Coverage types and limits: In addition to the types of coverage you chose, the declarations page will list coverage limits or the maximum amounts the insurer will pay for each covered auto accident.
Deductible: The deductible refers to the amount you’ll pay out of pocket before your car insurance coverage kicks in and covers the rest.
Premium: This is the monthly or annual fee you’ll pay in exchange for car insurance.
Endorsements: Endorsements you choose to add, like rental car reimbursement or roadside assistance, may alter your coverage and premium.
Discounts: If you’re able to secure any discounts, the decorations page might list them.
Financial institution information: You may see the name of your lender if you took out a loan or lease on your vehicle.[?]
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Multiple types of car insurance coverages may appear on your auto policy, including:
Car insurance deductibles state what you’ll pay out of pocket after you file a valid car insurance claim.
For example: Let’s say you have a $1,000 deductible. If you get into a car accident that causes $5,000 in damage and you file a claim, you’ll have to pay your $1,000 deductible before your insurer will cover the remaining $4,000.
While a higher car insurance deductible means lower insurance premiums, it may not make sense if you’re on a strict budget or have limited savings at your disposal. Before you choose a higher deductible, make sure you can pay more out of pocket if you have to file a claim.[?]
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Car insurance policies are often lengthy documents. With this checklist, you can zero in on the most important parts to review.
Your policy number: Your policy number is on your car insurance card or the declarations page of your policy.
Coverage types and limits: The declarations page will list an overview of your policy’s coverage and the limits that apply to it.
Deductible: To check your deductible, look at the declarations page.
Policy term: To find out how long your policy is valid, check your insurance card or the declarations page.
Contact information: For questions, changes, or help with the claims process, you can contact your insurer or insurance agent using the contact details on your car insurance card or the declarations page.
Understanding your car insurance policy is as important as finding the right insurer. Here’s some additional information about how to read your auto insurance policy.
The numbers on your policy make up a unique code tied to your insurance coverage. This code is called your policy number. Your insurer will use your policy number to track your policy and process any claims you file.
Coverage limits typically contain three numbers and dashes. For example, your limits may be 25/50/30. This means your policy covers $25,000 in medical expenses, $50,000 for all injured parties, and $30,000 in property damage.
Factors like your budget, auto insurance coverage preferences, and unique needs will determine your ideal car insurer. It’s a good idea to shop around and compare your options to hone in on the best insurance company.
A car insurance card is usually easy to read. It’ll likely include your insurer’s information, your name, the other policyholders, vehicle information, and policy term. You may have a physical or digital version of your card, depending on your insurer.
The “fine print” may be under the terms and conditions section of your policy. It typically includes important restrictions and limitations you should be aware of before you commit to a car insurance plan.
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