Blog – Vernfonk Insurance

Auto insurance policies can be intimidating, full of technical terms and jargon that’s hard to follow. In this post, we’ll show you how to read and understand your auto insurance policy.

Before we get into the nuts and bolts of a typical auto insurance policy, you should understand why it’s important. For example, a good policy can help you in several ways by:

• Protecting your car and the investment you made in it.
• Paying for expensive medical bills if you’re involved in a crash.
• Paying for any legal bills that stem from a collision, especially if you’re sued.
• Protecting against costly repairs if your vehicle is vandalized.

In this post, we’ll guide you through the process of reading an insurance policy so you’ll know what to look for, what to note, and what details you need. Our insight will help you learn how to read and understand your auto insurance policy.

5 Sections of an Auto Insurance Policy

An auto insurance policy typically consists of five sections. The first four identify who the insured driver or drivers are, outline the coverage terms, and note the exclusions as well as the conditions. The fifth section usually contains additional miscellaneous information that’s pertinent to your policy.

1. The Declaration Page

Typically the first section of the policy, the declaration page, names you as the insured driver along with any other drivers who are protected by your policy. It also identifies the risks the policy covers, its limits, and how long the policy is valid.

On the declaration page, you’ll likely see a description of the vehicle the policy covers, including the make, model, and VIN, the premium you’re expected to pay, and the deductible you have to pay before the insurance company pays its portion of a claim.

2. The Insuring Agreement

The insuring agreement summarizes the major promises the insurance company offered you through the policy, stating what it covers. This includes paying for losses and medical costs if you’re hurt in a crash, for example, or agreeing to defend in you a liability lawsuit resulting from a crash you caused.

Insuring agreements typically list all of the risks or perils the insurance company will cover — if it’s not listed, it’s not covered. They also usually include information on your auto insurance coverage, like noting whether your policy is comprehensive or whether it specifically provides protection against:

• Collisions
• Bodily injury and property damage
• Uninsured and underinsured driver coverage
• Personal injury protection, or PIP

In Washington state, drivers are required to carry at least $10,000 of property damage liability coverage. If you’re a driver in Tacoma, Seattle, Spokane, or any other city or town in the Evergreen State, you’ll likely find this detail in the insuring agreement.

If you choose to include additional coverage options, like rental reimbursement or roadside assistance coverage, you’ll likely also find this information here.

3. The Exclusions

The exclusions section of your auto insurance policy notes all of the risks that your insurer will not cover, including losses and vehicle damage caused by, for example, daily wear and tear.

4. The Conditions

Provisions that qualify or place limitations on the insurer’s promise to provide a service or pay are typically found in the conditions section. This one is important because if these conditions aren’t met, the insurer is not required to take action on your claim.

Suppose a driver backs up, hits your parked car while you’re grocery shopping, and drives off before you get back to the vehicle. In that case, you may receive some protection if you have uninsured motorist or property damage coverage on your policy, but that’s not entirely guaranteed. If the conditions on your auto insurance policy state this type of crash is not covered, you’ll have to pay to repair the damage yourself.

5. Additional Information

The last section of an auto insurance policy usually includes miscellaneous information related to your policy. This may consist of definitions, citing specific terms used throughout the policy. It may also have endorsements and riders or written provisions that modify the policy’s original provisions in some way — like adding another driver to your policy.

Tips To Figure Out How To Read and Understand Your Auto Insurance Policy

It’s easy to feel muddled by jargon and technical insurance lingo when you’re reviewing your policy. Here are a few tips to help guide you through it.

• If a section of the policy refers to information from another section, turn to that specific section and read it immediately. Say the insuring agreement briefly cites an exception to your collision coverage noted in the conditions section. Stop right there, turn to the conditions section, and read exactly what that exception is.
• Pay close attention to specific words and phrases. An example would be the use of conjunctions or joiner words – specifically for, and, nor, but, or, yet, and so. If a sentence states that your policy insures both you and your daughter, for example, it means the two of you are covered when driving. If it instead says that the policy insures you and your daughter when you’re driving but not under certain conditions, you’ll want to make sure you understand what those conditions are.
• Look up any insurance terms that may not be clear to you — that’s typically why insurance policies include definitions in the last section. If you’re stuck on something else that’s in the policy, look it up online or reach out to your insurance agent and ask them to explain.
• If you’ve modified your auto insurance policy, specifically changing old information or including new provisions, make sure these modifications are accurate, correct, and meet your needs. In most states, insurers must send you a copy of your updated policy. Once you receive yours, read it immediately and notify your insurer if anything’s off.

When you know how to read and understand your auto insurance policy, you’ll have a good sense of who and what your policy covers for the length of time it’s valid, which is usually a year. You’ll also be able to determine what’s essential and what’s not, based on your needs and your driving habits. And remember, if you have any questions about your policy, you should consult with an expert who can explain the terminology and the extent of the coverage.