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Understand Your Insurance Policy

From the car insurance coverages and limits you choose, to the cost of your premium, your policy details everything about your car insurance. Generally speaking, car insurance policies are broken up into 5 sections.

Knowing what these sections entail will help you make sure you understand everything from the price of your policy to dealing with a claim when it arises. 


When you get a car insurance quote, you are typically required to provide the insurance company with:

  • Personal information.
  • Information about the car you want to have insured.

This information is used to help determine your premium. It is also put in the declarations section of your car insurance policy.

Required information often includes the following:

  • Your name and the name of the drivers in your household.
  • Your address.
  • Your car’s:
    • Make.
    • Model.
    • Year.
    • VIN.

Car insurance companies will often also note in the declarations section that your driving record and the driving records of other drivers on the policy have been verified.

Coverage Parts

This section of a car insurance policy, also referred to as the insuring agreement, is a detailed list of the coverages and limits you and your company have agreed to be included in your policy.

Depending on the types of coverage you bought, this section could include:

  • Liability.
  • PIP insurance (in no-fault states).
  • Comprehensive.
  • Collision.
  • Medical payments.
  • Uninsured/underinsured motorist.
  • Towing and labor.

In addition to these insurance coverages, the Coverage Parts section of your car insurance policy should include your information regarding any deductibles that apply to your car insurance coverages.


This section of your car insurance policy is a list of events or drivers that are NOT covered under your policy.

An example of a common auto insurance exclusion is a named driver exclusion. This means simply that a specific driver is excluded from your policy. You don’t pay to cover him, and in return, he has no coverage to drive your vehicle.

This type of exclusion is commonly used by policyholders who live with someone who has a poor driving record and would significantly raise the premium.

Other common exclusions include (but are not limited to):

  • Coverage for your own property damage or injury under a liability claim. (Liability insurance only applies to the other party in an accident you cause.)
  • Coverage for an accident that occurred while the vehicle was used for commercial purposes if the claim is made under a personal policy.
  • Fraud/intentional damage or injury caused by the insured.
  • Damage to rental vehicles.

Make sure to read the Exclusions portion carefully so you aren’t left paying out of pocket when you thought you had coverage.


In the Conditions section of your car insurance policy, you can find:

  • Information regarding your payment requirements.
  • Steps for making a claim.
  • Information on resolving disagreements with your insurance carrier.

Beware: This section has a bit more of a legal tone, so it may be harder to read. If you have any questions about the above, make sure to ask your car insurance agent.


Legal language continues in this section; essentially, related key terms within your policy are meticulously defined, as well as your legal rights.

While this section may be dry and hard to read, it is extremely helpful in understanding your policy if you don’t know insurance lingo.

Car insurance polices can be wordy and difficult to understand. Do not hesitate to contact your car insurance agent for any clarifications or concerns regarding your car insurance policy.

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