Understanding your auto insurance policy
Your policy begins with a Declarations Page. This page lists the information that is unique to your policy. It indicates the policy number and provides important information, including the policy term, coverage limits, and information about the insured. If you bought the policy for your car, you are probably the named insured. This page may also contain the names of other drivers in your household, if they're covered under your policy. Also included is your complete legal address, which may not be the same as the address where you keep your insured auto. The address where the car is kept factors into the cost of your premium (the amount that you’re paying your insurer for the insurance coverage), but your legal address is where all correspondence about your policy will be sent.
If you took out a loan to purchase your car and you still owe money on it, the lender will be listed on the Declarations Page. Since your lender has a financial interest in your car, it is entitled to receive payment under your auto policy if your car is damaged, destroyed, or stolen.
The Declarations Page also contains a description of the vehicle (or vehicles) covered under the policy. For each covered auto, this description includes the car’s year, make, model, vehicle identification number, and the address where the car is kept. The Declarations Page also lists how each vehicle is used (for example, driving back and forth to school or work, just around town, or for business purposes). An estimate of annual mileage may also be listed on the Declarations Page. Your premium will be partly based on this information about your car and how it's used.
If you chose to purchase one or more endorsements to expand and/or restrict the coverage under your policy, these endorsements will be identified on the Declarations Page by name, form number, and date. The endorsements must be listed on the page in order for your insurer to provide that particular coverage.
Finally, the Declarations Page shows the annual policy premium. The total premium is a figure that comes from adding up the separate premiums charged for each specific type of coverage with the limits that you've chosen.
The Insuring Agreement
The general agreement section of your auto policy states that when you pay the premium, the insurance company agrees to provide coverage to you, as explained in detail later in the policy. The definitions section explains words and phrases used throughout the policy (for example, "your covered auto").
The Insurance Services Office's Personal Auto Policy Form
The Insurance Services Office's Personal Auto Policy Form is a common standardized policy many insurance companies use. You may find this common form attached to the Declarations Page of your auto policy. This form typically has six main parts labeled A through F. Parts A through D are coverage parts, and parts E and F are conditions.
- Part A—liability coverage. This provides protection for claims against you when the use of your insured car caused bodily injury or property damage to someone else.
- Part B—medical payments coverage. This provides coverage for medical expenses that you and other people incur as a result of an accident, regardless of your negligence or liability.
- Part C—uninsured and underinsured motorist coverage. This provides coverage for losses that you and others experience when injured through the negligence of an uninsured or unidentified hit-and-run driver or when you are injured by a driver who does not have enough insurance. (Coverage for underinsured motorists is mandatory in some states.)
- Part D—coverage for damage to your auto. This provides coverage for your losses as a result of damage to your insured vehicle and/or its contents. This coverage consists of two parts: collision and other-than-collision (also known as comprehensive). Other-than-collision losses include such things as fire damage and theft.
- Part E—duties after an accident or loss. This spells out what you are required to do if you have an accident or if another loss occurs. It’s important to note that if you do not fulfill the requirements spelled out in this section, your loss may not be covered.
- Part F—general provisions. This specifies certain conditions that apply to the entire policy or insuring arrangement. These include provisions if you declare bankruptcy or commit fraud, among other things.
If you've chosen any optional coverage, your policy may also refer to one (or both) of the following:
- Extended transportation expenses coverage. This pays higher-than-basic limits for you to have a rental vehicle while your insured car is being repaired.
- Emergency roadside assistance coverage. This covers the cost of towing.
Still have questions? Call and ask!
Call your insurance company if you have any questions about a particular section of your policy—or any other questions. A customer service agent can describe policy provisions, clarify your coverage, and explain any terms that you don't understand.