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Your automobile insurance policy is a binding legal contract. It’s very important to take the time to review your insurance policies and understand what your insurance means. Your personal auto policy will have five distinct parts. In most personal auto policy documents, some of these parts will be combined. This is what each section means to you, the insured:
Declarations
This section should be the first part of an auto insurance policy. This portion of the policy will be your personal information and details about the car insured on the policy.
The declarations lists all relevant information about your personal auto policy. This includes:
- The year, make, and model of your car
- Vehicle identification number (VIN) of the insured car.
- You and the other named drivers in your household insured on the policy.
- Policy effective Dates.
- Policy’s coverage types and limits.
- Policy premium.
- Use the vehicle for business or for pleasure, daily distance or annual mileage.
- Finance company or the lender who holds the lien on the vehicle will be listed here as the “loss payee”.
Insuring Agreement
This section outlines exactly what the insurance company promises to provide in return for the payment of your premium. The type and extent of each coverage you’ve purchased will be described in detail here. This section will also explain who is covered under each provision. It’s a long and complicated section, but it’s the most important part of an auto insurance policy.
Definitions
This is where you find all the annoying insurance language, sometimes this section is simply written into the insuring agreement. You can be sure that every relevant term will be narrowly defined, so as to cut down on the possibility of a misunderstanding between the you and the insurance company.
Exclusions
An important section outlining when and who won’t be covered by your policy. Usually this section is a list of all possible circumstances that would allow the insurance company to be free from paying a claim. Be sure to read and understand the exclusions, because you don’t want to rely on some kind of coverage that you don’t really have.
Conditions
This section will be the most important if you are involved in an accident. The Conditions section lists your duties and responsibilities as the insured in the event of a claim situation.
This part of an auto insurance policy usually includes guidelines for contacting the insurance company, obtaining a police report, and filing a claim. Other conditions of the insurance policy may be listed here to as well as the cancellation process for the insurance.
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Blogs In This Series: Auto Insurance Policies 101:
- Liability Coverage
- Uninsured & Underinsured Motorist
- Medical Insurance & Personal Injury Protection
- Optional Coverage-Collision
- Optional Coverage-Comprehensive
- Optional Coverage-GAP
- Additional Auto Insurance Coverage
Glossary of Insurance Terms:
A | B | C | D | E | F | G | H | I | J-K | L | M | N | O | P | Q-R | S | T | U-V | W-Z
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