Your Car Insurance Policy Explained
Congratulations! You've purchased car insurance. Not only are you legal to drive, you're also protected against all manner of car damage, medical bills and other hazards of the road.
No matter what type of car insurance coverage you purchased, we know there's one thing you'll have in your possession for sure: A big envelope from the insurance company filled with a whole bunch of papers, many of which have a lot of really small words.
This is your insurance policy, and we're going to tell you everything you need to know about it.
Storing Your Policy
First, let's find a nice safe place to keep this envelope of papers once we're done looking through them. For the most part, you'll only really use your ID card. This is either kept in your wallet or on your smartphone. The ID card is what you'll use when you have to prove to someone you have car insurance (like a cop, DMV worker or car salesman).
The policy papers are important, but you won't be carrying them around with you in your day to day life. You still want to keep them someplace where you can find them later, like during renewal time. So find that file folder or desk drawer now and you'll thank yourself later.
This section is mainly all about you.
You'll see a lot of familiar info here. Your name, address, contact information and so on. Make sure that's all correct.
You'll also see some stuff about the other members of your household. They'll either be listed as a driver of the insured vehicle or they'll be Excluded, meaning they're not covered in that vehicle.
Interesting side note: Insurance companies don't just take your word for all that. They'll research through other records to determine exactly who you're living with.
Next, you'll see a bunch of info about your car. Again, check everything for accuracy. Yes, that might mean walking out to your car to double-check that the VIN is correct.
During the application process, you'll likely be asked if you'll be using the car for work or fun. Double-check that part, especially if it's a work vehicle. If you've insured your car for everyday use but have an accident while driving the vehicle as part of your job, well, insurance companies don't like that and there could be problems.
If you're financing a vehicle, you'll see the bank or holder of your title. If this info is missing, the dealer isn't allowed to let you drive away with the vehicle. If the dealership asks for a "binder" this is the page they're talking about.
Check for accuracy and any accidental omissions. All good? Let's move on to:
The Insuring Agreement
This is a general overview of what's covered and what you're paying for the policy. Car insurance providers aren't known for mystery and ambiguity. This type of insurance is called Named-Perils Coverage.
They, quite literally, name all the possible perils which are covered by the policy. These are the only conditions where you'll get a payout.
You know what's more interesting than reading a bunch of insurance information? Reading a bunch of legal information about insurance information! This is the Exclusions, Conditions and Definitions section. If your insurance company is like the majority of them, these pages will have the tiniest font.
Exclusions list everything not covered by the policy. Owner entering car into demolition derby, for instance.
The Conditions are a variety of legal responsibilities. You can skim it. Actually, while you skim it, look for any info about filing a claim. Some carriers put that info here, and that's something you might actually need to find one day if you have to file a claim.
Finally, for legal reasons, there's a Definitions section.
What Else Do You Get?
Insurance. You mainly get insurance, and descriptions of that insurance. But you'll also get some ways to prove to people that you have insurance.
You'll get at least one ID Card which acts as official Proof of Insurance. If they send you more than one card (or some other format of insurance proof, like a piece of paper), we recommend keeping one in your wallet and another in your glove box.
Of course, this is the modern world. If you want store your Proof of Insurance on your smartphone, that's perfectly legal in almost every state. There are some state which don't allow this, however, so you'll have to check with your local DMN or other local agency.
Some companies will give you a small Accident Checklist to keep in your vehicle. This will cover the steps you need to take in case of an accident, such as:
Clear everyone away from any immediate danger, such as a fire
Contact emergency services
Admit no fault
Contact your insurer provider
Each insurance company has their own preferred method of operation here, so you'll want to familiarize yourself with this card. After all, you don't want to read this card for the first time while you're at the scene of an accident.
Now that you're a fully licensed drive with a thorough understanding of your insurance policy, let's make sure you stay that way.
A lapse is any time period when your car insurance has cancelled or expired without renewal. You want to avoid a lapse. Insurers don't like to see that you went without coverage. If you renew with your existing carrier, or apply to a new one, you'll likely see an increase in your rates.
Autopay is an effective solution here. That way you'll never accidentally forget a payment. Pay attention to any snail mail or email from your carrier, too. They'll make sure to notify you when your coverage is in danger of lapsing.
Now puts that packet of papers away (somewhere safe) and get out there to start enjoying the comfort of insured driving!