How to Read & Understand Your Insurance Policy

The last thing anyone wants to deal with in the aftermath of an accident or loss is learning they don’t have as much insurance coverage as they thought. That’s why at Direct Auto, we can’t overstate the importance of understanding your insurance policy and coverages.

While your insurance policy is meant to serve as an explanation of everything you’re covered for (and everything you’re not), it’s not the easiest thing to read and understand. So, we’re sharing simple, easy to understand explanations of the most common parts of an insurance policy.

Want to learn how to read your insurance policy, so you actually understand it? Just keep reading!

Declarations

Your insurance policy’s Declarations section “declares” which coverages you’ve elected, and which you’ve declined. The Declarations page is usually the first page of the insurance policy and is clearly labeled “Declarations Page” or “Your Policy Declarations.”

Information on the Declarations page includes:

• Personal information, like your contact information and policy number.
• Policyholder information, and the information of anyone else insured under the policy, like a spouse or dependent.
• The insured property, or the property the policy protects, plus any relevant information, such as a VIN number.
• Coverages, as well as a list of the protections, deductibles, limits, and premiums for each coverage. If you have more than one vehicle on your auto insurance policy, the Endorsements section states the specific coverages for each vehicle.
• The policy period, which are the effective dates of coverage.
• The premium, or the amount you’ll pay over the policy period.
• Discounts applied to your premium, like a safe driver discount, multi-vehicle discount, anti-theft device discount, etc.
• Surcharges if you’ve done something that’s impacted your premium, such as receiving a ticket or filing a claim.

Coverages

The Coverages section of your insurance policy explains the specific insurance included in your policy, such as comprehensive, collision, and liability coverages for bodily injury and property damage. This section offers a more in-depth explanation of what property is covered and for what damages.

Exclusions

Your insurance policy’s Exclusions section details what might be excluded from coverage depending on the type of loss. Common auto insurance policy exclusions include, but are not limited to:

• Intentional damage or bodily injury
• Using your vehicle for drag racing
• Catastrophic events, such as war or nuclear disaster
• Acts of God, such as hail damage, damage caused by flying debris, or a tree falling on your car
• Using your vehicle for delivery or ride-hailing (such as Uber or Lyft) purposes

Limits

The Limits section of your insurance policy identifies how much the insurance will pay depending on the type of loss and the types of property affected. As the policyholder, it’s important to be comfortable with your limits. Even though something might technically be covered by your policy, that coverage is only valid up to a percentage of the loss or specific dollar amount.

Conditions

The Conditions section is the legal agreement between the policyholder and the insurance provider. It lists the rules, obligations, and other responsibilities that both parties are required to adhere to.

Common conditions include:

• The documentation needed when filing a claim
• The amount of time you have to file a claim after an accident
• Policy cancellation instructions

Duties After a Loss

What do you do if you get into an accident? The Duties After a Loss section of your auto insurance policy lists instructions on what to do when a loss occurs, such as notifying emergency services, promptly contacting your insurance provider, and protecting the property from further damage. Understanding how to act in the event of an accident or loss can keep you safe and help the claims process run more efficiently.

Endorsements

As a policyholder, you have a lot of choices when it comes to customizing your auto insurance policy. Some drivers only want to meet state-mandated liability coverage minimums, while others want to add more protections. Those additional coverages can be found in your policy’s Endorsements section.

An endorsement, also referred to as a rider, allows you to design an auto insurance policy that suits your needs. Common car insurance endorsements include uninsured and/or underinsured motorist coverage, roadside assistance, car rental insurance, modified car coverage, and classic car insurance.

Read Your Insurance Policy

How do you read your insurance policy? It’s not that difficult. If you’re the primary policyholder, you can usually find a copy of your insurance policy by logging into your account. You can contact your agent or insurance provider to request a hard copy too. Additionally, when it nears the time to renew your policy, your insurance provider will provide you with a current copy of your Declarations page and will tell you of any material changes made to your policy.

At Direct, we encourage our customers to take the time to read their insurance policy and understand their coverages. But we’re humans too – we know how difficult it can be to digest insurance language. That’s why our friendly agents are always ready and willing to explain coverages and break your policy down in easy-to-understand terms, so you understand precisely how you’re protected.

Got a question about your auto insurance policy? Curious about your coverage? Meet with your friendly Direct Auto agent or call 1-877-GO-DIRECT (1-877-463-4732) for more information.