What Is an Auto Insurance Policy?
Summary
An auto insurance policy is an agreement between you and an insurer. In exchange for monthly premium payments, they agree to cover certain events or losses up to an agreed-upon limit; typically this includes state minimum liability coverages as well […]
An auto insurance policy is an agreement between you and an insurer. In exchange for monthly premium payments, they agree to cover certain events or losses up to an agreed-upon limit; typically this includes state minimum liability coverages as well as collision and comprehensive protection.
Most basic policies provide six forms of coverage: bodily injury liability, personal injury protection, property damage liability, collision and uninsured/underinsured motorist. You can usually purchase additional coverages to increase limits and pricing.
Coverage
Policy that protects you and your family against damage from motor vehicles. It typically provides liability, medical payments and collision coverage.
Liability insurance covers injuries sustained due to accidents caused by you or other drivers covered under your policy, whether intentional or otherwise. Furthermore, personal injury protection (PIP) helps cover immediate medical costs regardless of who was at fault as well as lost wages.
Comprehensive car coverage reimburses for damages caused by events other than collision, such as theft, fire, vandalism and hail. In some policies, rental reimbursement and original equipment manufacturer coverage (OEM coverage) can also be added at an additional premium cost.
Premiums
Premiums are payments you make in exchange for insurance on your car from a specific company. They may be made monthly, every six months or annually.
Insurance premiums depend on many variables, including your age and gender. Your credit and driving histories also influence premium costs; your car’s make and model could even have an effect on this cost; choosing higher liability limits as well as comprehensive and collision coverage can raise premiums, while selecting lower ones can decrease them.
Your premium will likely be reviewed periodically, at which time it can increase or decrease depending on circumstances surrounding its review. This typically happens when renewing or making modifications such as adding drivers/vehicles; you may also select to change or raise/lower deductible amounts as appropriate.
Deductibles
An insurance policy typically contains deductibles for various coverage types, including collision and personal injury protection. Liability coverage generally does not have any deductible.
WalletHub states that the amount of your deductible depends on several factors, including its age and value of your vehicle as well as your risk tolerance and expected frequency of claims filings. A higher deductible could help lower premium costs; however, choose one which you can afford should an accident occur.
Your agent can provide quotes with various deductible amounts, and may suggest increasing it if you drive in areas frequented by deer or are susceptible to hailstorms.
Agents or brokers
Insurance agents or brokers can assist you in tailoring the details of your policy to your individual needs. Most are licensed by state regulators, so make sure that their qualifications and training meet with those of your policy. It is also important to openly discuss any needs you have with these professionals.
Agents work exclusively for one insurer and may only sell policies from that carrier. Their expertise includes assessing risk and suggesting ways to manage it, which often reduces premium costs.
Brokers provide consumers with multiple policies from different insurers and can be invaluable resources when trying to navigate all the available options. A broker should disclose any fees charged and how they are compensated as well as provide you with copies of your auto policy.
Declarations page
The Declarations Page offers a concise overview of your auto insurance policy, outlining coverage types, limits and deductibles as well as premium information and any discounts applicable. In addition, this page lists vehicles covered by your policy along with drivers covered under it.
The dec page provides detailed information on each vehicle, such as its year, make and model as well as its identification number, any lienholders listed with their addresses as well as additional drivers listed and their locations.
Your insurance provider should automatically send a new declarations page whenever your policy renews or changes, either online through their portal or via mail. Be sure to keep a copy handy and review it frequently for accuracy.