How To Read Your Car Insurance Policy

Although reading your car insurance policy can reveal details on how you’re covered, it probably won’t win any literary awards. But if you’re ever in an accident or other covered event, being informed can help you feel more confident if the unexpected happens. You’ll know how you’re covered and when that coverage applies. You’ll also be able to review your policy payout limits and your deductible.

Your auto policy is built into two main sections:

Declarations Page

Also known as the information page, the declarations page is typically positioned at the beginning of an auto insurance policy. In this section, you’ll find details on the named insured — the person or people covered under the car policy.

It’s here where you’ll find policyholder contact information details. You will also probably be able to review your policy period, view a description of covered autos and see the limits of liability for covered vehicles. The declarations page will also identify your premium and rating information along with all the endorsements that apply to your policy.

Policy Form

Next up is the section that defines policy terms, contains the insuring agreement and other provisions of your auto coverage. It’s sometimes referred to as a coverage form or coverage part of your policy. The policy form also holds details on endorsement, exclusions, conditions, riders and covenants that might be present in your policy.

Note that some of your policies or endorsements will have forms that dive into the details and specifics of your coverage. Those form numbers may appear on your declarations page as a point of reference for you and your agent. Car insurance numbers can be explained by comparing them to a table of contents where each number references a different chapter.

Let’s explore the design of your auto policy and learn about what this important document can tell you.

How to Read Your Declarations Page

Containing a summary of your essential auto coverage, the declarations page will drill down into details of your car’s policy. It will outline your policy's coverages, monetary limits and your deductible. Declaration pages typically specify active discounts and reference relevant auto insurance policy forms, as well as other endorsements.

Named Insured on the Policy

At the top of the page, you will see the name and address of at least one named insured. The first person named is the primary named insured. There can be multiple named insureds — these are the policyholders.

Additional Insured

If you’ve got an active loan on the vehicle, your lender will likely be listed as a loss payee. They may even be defined as an additional insured on the vehicle as well. The declarations page is frequently what your dealership’s finance department will need to verify that your coverage meets their minimum requirements.

Drivers on the Policy

This section identifies the names of all drivers that will be covered under the auto policy.

Vehicles Covered

Usually listing the year, make, model number and vehicle identification number (VIN), this section of your policy will identify all your policy’s insured vehicles.

Policy Period

This section consists of the effective date, which is the date the policy started. It will also include the termination date — the date on which the policy is no longer active.

Coverage

Here’s where your auto insurance policy defines how much coverage you’ll have — in dollars — depending on the type of covered event. These are the financial details of your agreement with your insurance company. You’ll find information on the cost of your insurance premium.

Limits

The limits section of your auto policy covers the maximums that your coverage will pay out, for a given covered loss, like an auto collision. So, what do insurance coverage numbers mean? Often these numbers are displayed as a series — like 30/60/25 — that define upper limits on a given covered loss:

• $30,000 bodily injury limit payout per person
• $60,000 bodily injury limit payout per accident
• $25,000 limit payout on property damage

Deductibles

The declarations section will also house details on deductibles, or the amount you pay out of pocket before your insurance company covers any financial loss from a car accident.

Premiums

This is the total the amount you pay for your auto insurance coverage.

Applied Discounts

Here’s where you’ll find details on active discounts and other financial incentives that can save you money. At American Family, we offer over a dozen ways to help you save on your coverage.

Other Important Documents Included in Your Auto Insurance Policy

Now that you’ve explored the declaration section of your policy, let’s look at the rest of it. The remainder of your policy contains important documents and cards that you should either have in your car or review before filing them away.

Insurance Policy Form

A type of standard document that explains benefits and limitations of your policy. Consider it the terms and conditions section of your automobile policy. The content of these forms is based on the types of auto insurance and coverages you’ve purchased.

Insurance ID Card

Designed to be downloaded to your phone, printed out and kept in your car or both, the insurance ID card is a key document to have handy. On it, you’ll typically find the insured’s name, address, vehicle details, VIN, policy period and the insurance company’s name and contact info, along with your auto policy number.

Verification of Insurance

Similar to the declarations page, this document is usually a one-pager that contains all the vital stats of your policy, base insurance and optional coverages. It will also list the coverage limits, named insured(s) and vehicle data.

Insurance Agreement

Defining the way your insurance policy will operate is the insurance agreement. It’s the portion of your auto coverage policy where the insurer promises to keep their end of the agreement as long as you pay your premiums and comply with certain requirements. This document will usually define the agreement in general terms and point to other supporting documents to spell out how coverage is granted, limited or excluded.

Exclusions

This section of your auto policy identifies situations where coverage may be denied or excluded due to a specific reason. Usually, a list of named hazards — also called perils — will be identified, where coverage for a loss won’t be allowed. Easily prevented losses, like water or rain damage to your car that results from windows being left open during a storm, won’t be covered. Many policies also state that normal wear-and-tear on your car is not covered.

Conditions

Conditions help specify when and how coverage is carried out by the insurance company. For instance, you may be required to file a police report if your car has been vandalized. Other conditions are state or federally mandated that help to protect the consumer.

Contact American Family Insurance to Learn More About Your Auto Insurance Policy

We’ve got the resources you need to get the most out of your policy. And a big part of that is being confident that you understand your insurance coverage. Take a look at these resources that dive deep into auto insurance terms and definitions:

• American Family Insurance’s auto insurance glossary
• How to transfer insurance to your new car
• Ways to assess how much car insurance you need

While you’re getting up to speed on your car insurance policy, be sure to reach out to your American Family Insurance agent for a review of your coverage limits. Think of your agent as your trusted adviser — able to help you with any questions you might have — so you understand how carefully you’re insured.