Understanding Your Car Insurance Policy

Having a good car insurance policy is an important aspect of being a car owner. In fact, almost all states mandate that you either carry a minimum level of insurance coverage or have proof of financial responsibility.

The minimum levels vary among the jurisdictions. If you only have the minimum amount of car insurance that is required, that is known as liability coverage. This is designed to pay for the property damages you cause and to pay for the medical expenses of others up to your policy limits. Two types of liability coverage are required in almost all jurisdictions, including bodily injury and property damage.

As important as car insurance is, it can also be very confusing. Studying over your car insurance policy can help you ensure you are getting the best policy available to you.

Policy Declarations Page

The declarations portion of your car insurance policy mostly contains the important details about you and your car, such as:

  • Your:
    • Name.
    • Date of birth.
    • Address.
  • The names of all drivers in your household.
  • Your car's:
    • Make.
    • Model.
    • Year.

Additionally, your declarations will lay out the basic coverages, limits, and deductibles of your policy.

Coverage Parts

This part of your car insurance policy details what is covered as part of your agreement.

Depending on what you purchased, you can expect to see coverages such as (but not limited to) the following:

  • Liability
  • Comprehensive.
  • Collision.
  • Uninsured/underinsured.

Exclusions

Even the best car insurance policies don't cover everything. In this section of your auto insurance policy, you can learn about the limitations of your coverage.

Common exclusions include:

  • Coverage to your own property damage and bodily injury under your liability coverage.
  • Named driver exclusion — any specific drivers you do not want on your policy.
  • Fraudulent claims.

Conditions

This section delves into much of the legal aspects of your car insurance policy. It contains specifics regarding:

  • Your premium payment requirements.
  • Steps to making a claim.
  • Resolving disputes with your car insurance company.

Definitions

While it may be one of the more difficult sections to read, this section is still a key part of your car insurance policy. Here, all the key terms of your policy are defined in a very detailed manner that would make any good lawyer happy (they probably wrote these definitions).