Your policy outlines what your car insurance company will do for you and what your responsibilities are.
Auto Insurance Policy Breakdown
You don’t need a dictionary, Wikipedia, or United Nations-worthy translator. You’ve got The Zebra to give you the straight story on what each part of your policy is actually saying. Grab all that paper your insurance company sends you through that antiquated system—you know, the one with folks in navy shorts who drive the white vans—and take a closer look at your insurance policy.
Think of your declarations page as an invoice of the important parts of your policy going into specifics about who, what, and how much is covered.
The declarations page breaks down into info about:
- YOU, including your identifying & contact information—legal name, address, etc.—and anyone else in the household whom you’ve identified as a driver of the vehicle being insured. Many insurance companies will use local records to find potential relatives or other folks that live in your house, so if you don’t want to pay to insure them, you’ll have to make sure to list them as an excluded driver. A licensed agent can fill you in on the details.
- YOUR WONDERFUL CAR. The declarations page gets close and personal with your car in all his/her glory. Your premium is partly determined by whether you use the car for work or pleasure, so that will likely be noted here, in addition to Vehicle Identification Number (VIN), which is just your car’s serial number, and make and model.
- YOUR LIEN HOLDER. The page will also list the bank or holder of your title if you are financing a vehicle. Often times it is required by your dealership that the bank be listed on your insurance documents before you can drive the vehicle off the lot so it is important that you notify your agent about your lien holder so they can be included on your paperwork.
Why should you pay attention to your declarations page?
- First, it’s critical that everything listed on it is correct and up-to-date. If you’ve moved, your insurance company needs to know that. (You’d be amazed how much a change in zip code can affect rates.)
- If you are at a dealership about to buy a car, this page (also called a binder) will need to be sent to your salesperson before you can drive the car home. You don't want to be stuck without your new car because of a paperwork technicality.
This is the nitty-gritty of the deal between you and your company of choice: In the insuring agreement, your insurance company outlines what they’ll do for you, and what they expect you to pay them for those coverages each month. Many times, this agreement will outline the broad scope of insurance, the scope gets narrowed a bit in the exclusions and conditions sections.
Car insurance is usually just one kind of insurance agreement:
- NAMED-PERILS COVERAGE. All this means is that the insurance company is outlining for you precisely what they will cover. If it’s not on the sheet, you ain’t getting any money for it.
Exclusions, Conditions & Definitions
We know all those tiny letters hurt your pretty eyes, but the etcetera stuff is important to take a look at, too.
- Exclusions: Are named well, because they outline what the insurance policy excludes, or does not cover. An example for auto insurance? Most companies won’t cover damage due to wear and tear.
- Conditions: The legal responsibilities of both you and your insurer show up here (aka Serioustown.) Sometimes you can also find steps for filing a claim.
- Definitions: Like a little dictionary for your insurance policy—because it’s that damn complicated because it’s necessary for legal purposes. Also known as ‘fine print.’
And just because they’re that friendly, some companies will throw in an accident report, which you can keep in your glove box as a reminder of how to handle the situation should you happen to have an accident.
ID Card/Proof of Insurance
This is what you will keep in your glove box (or saved on your smartphone if you live in a state that allows it) to show proof of insurance. There are numerous reasons to have one of these babies on hand but the two common are when you are pulled over and when you are updating your vehicle tags.
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