Understanding your Auto Insurance Policy Document

Understanding the basic parts of your auto insurance policy document can help you buy the correct amount of insurance for your situation.

There are five parts of a typical auto insurance policy contract:

Declarations

contains the personal facts for drivers in your household such as name and address, make and model of your vehicle(s), vehicle identification number(s), auto insurance policy number, and policy duration. It also Contains the basic type of coverage you purchased and your auto insurance policy limits and deductibles.

Exclusions

Details what is not covered by highlighting your auto insurance policy's limitations.

Conditions

Lists the legal responsibilities of both the insured and the insurer, including premium payment obligations, steps to filing a claim, and procedures for resolving disagreements.

Definitions

Defines terms and outlines the rights of the policyholder and the insurance company.

Some general definitions include:
Collision Coverage (Collision Insurance Coverage) - covers loss to your vehicle caused in a collision with another vehicle or object.
Comprehensive Coverage (Comprehensive Auto Insurance Coverage) - covers damage to your vehicle caused by an event other than a collision. Examples include fire, theft, vandalism, and falling objects.
Liability - covers injuries and property damage costs caused to others in the accident in an accident in which you were found to be at fault. Bodily injury coverage pays for things like medical costs and lost salary to others, while property damage pays for repairs to other people's property that you damaged (other than your own car). Liability coverage is the basic building block of any auto insurance policy, and minimum liability limits vary from state to state.

Auto Insurance Medical Payments

Covers you and your passengers for medical and funeral expenses incurred in an auto accident, regardless of fault. It will also cover injuries sustained by you while you are operating someone else's car (with their permission), in addition to injuries you or your family members incur when you are pedestrians.

Personal Injury Protection

This is the name usually given to no-fault benefits in states that have enacted mandatory or optional no-fault auto insurance policy laws. Personal Injury Protection (PIP) usually includes benefits for medical expenses, loss of income from work, essential services, accidental death, funeral expenses, and survivor benefits.

No-Fault Car Insurance

Many states have enacted auto accident compensation laws permitting auto accident victims to collect directly from their own insurance companies for medical and hospital expenses regardless of who was at fault in the accident. Although there are many legal variations of no-fault car insurance, most states still allow people to sue the negligent party if the amount of damages exceeds a certain state-determined threshold.

Uninsured Motorists Bodily Injury

Covers you if an accident occurs with an uninsured or hit-and-run motorist who is determined to be legally at fault.

Uninsured Motorists Property Damage

Covers property damages caused by uninsured drivers.

State required minimums may not be enough to protect your assets. Review your auto insurance policy often and thoroughly.