How to read your car insurance policy

Maggie has twenty years of experience working in media. She is a writer and editor on car insurance and related issues. Before joining CarInsurance.com, she reported on health, education and lifestyle for magazines, websites and newspapers in Nevada.

Reviewed by: Laura Longero Executive Editor

Laura is an award-winning editor with experience in content and communications covering auto insurance and personal finance. She has written for several media outlets, including the USA Today Network. She most recently worked in the public sector for the Nevada Department of Transportation.

When a person registers a car with their state’s Department of Motor Vehicles, they must show proof of insurance. But most people don’t understand their coverage or how to read an insurance policy. However, being uninsured in a costly accident could be financially catastrophic. Here’s what you need to know about your car insurance policy.

Key Highlights Written by: Maggie O'Neill Contributing Researcher

Maggie has twenty years of experience working in media. She is a writer and editor on car insurance and related issues. Before joining CarInsurance.com, she reported on health, education and lifestyle for magazines, websites and newspapers in Nevada.

Reviewed by: Laura Longero Executive Editor

Laura is an award-winning editor with experience in content and communications covering auto insurance and personal finance. She has written for several media outlets, including the USA Today Network. She most recently worked in the public sector for the Nevada Department of Transportation.

Table of Contents Table of Contents

What are the parts of an insurance policy and how do you read them?

Reading a car insurance policy does not appear to be for the faint of heart, but once you have your document in hand (or up on your computer screen), it’s easier than you think. There are many parts to an insurance policy and these key terms can help you to understand what appears in your policy:

Policy number

This long number assigned to your policy is an identifier for the coverage that you purchased for your vehicle or vehicles. The policy number can include letters or numbers and should be denoted on all correspondence or paperwork from your auto insurance provider. The auto insurance cards you carry in your vehicle also include your policy number.

Policy term

This is the length of time that your policy is in effect. Most terms are six months to a year, at which point a renewal may occur. The policy term is from the start date to the expiration date listed on your policy. If you plan to switch auto insurance providers at any point, know when your previous term expires to avoid a lapse in coverage.

Policyholder address

This is the address for the person or persons to whom the policy belongs.

Named insured(s)

Just another way of stating who is covered by a policy, the ‘named insured’ specifies who the policy protects in an accident. In most cases, the ‘named insured’ is the same person as the policyholder, who is responsible for making payments for the policy and any changes. But the named insured can also refer to another driver listed on the policy who may not be the policyholder, such as a spouse or child, who is protected by the insurance policy.

Coverages

These are the protections and benefits that an auto insurance policy provides. Your detailed coverages could list what you purchased for liability, collision, comprehensive and other coverages.

Policy premium

This is the cost for all your coverages and benefits during the policy term. If you choose a 12-month policy, it’ll cost more than a six-month policy, but then you only need to think about renewals annually instead of every six months – and you can pay in monthly installments as well. To receive a rough idea about what your insurance would cost, estimate the cost of your car insurance before renewal.

VIN

Standing for Vehicle Identification Number, the VIN is a 17-digit number given to a vehicle made in the U.S. This number is printed on your policy paperwork and inside your car, typically on the dashboard or inside the driver’s side door. Although the VIN looks like a random series of letters and numbers, it contains information regarding the model, make and year of your car.

Coverage types/limits

In addition to details about your coverage types—like liability, collision and comprehension insurance—your policy will also list the limits for liability coverage. If you have a split-limit policy, these limits show how much the auto insurance provider will pay for injury or bodily harm to others in an accident and also the maximum it will pay for property damage.

Split limits are typically divided into bodily injury per person, bodily injury per accident and property damage per accident—written like 100/300/100.

Discounts

These detail the reduction in your premium from the discounts you qualify for, such as bundling discounts, good/safe driver, loyalty, etc. If you have other questions about the meaning of terms in your policy, you can use a Car Insurance Terms Glossary for more context.

What is a car insurance declarations page, and how do you read it?

An insurance declarations page summarizes your policy. You can find important information listed there, such as who is insured on the policy, what vehicles are covered and how long the policy is in effect. Other items that should appear on your declarations page include:

Once you have a policy in effect, your policy declarations page will be sent to you by email, in the app or by mail. You can also access it online since most insurance companies now provide online access to policy documents. You can print it from your account or read it online to review the details.

After your policy is in place, you might need to make changes. Examples could include adding a new driver – such as your teenager who just obtained their license, increasing or decreasing your deductible, or purchasing a roadside assistance plan.

Changes like these can increase or decrease your premium. Ensure you get an updated declarations page after you make changes to show that your policy reflects the changes.

“Always get an updated declarations page (or a ‘Dec page’) when changes are made,” says Noah White, an agent who sells auto, life and burial insurance with Ark Insurance. “This is important because if anything were to happen, you know exactly what’s covered, and so does each insurance company. Always remember they will do what they can to not pay, or make the other carrier pay.”

What is the policy form of an insurance policy?

The policy form, which follows your declarations page, contains the other essential parts of an insurance policy. Think of the policy form as the boilerplate information provided to all customers who purchase an auto insurance policy from a company. This general information is available to insureds and provides greater context for the information listed on the declarations page.

Remember that some of the information in the policy form may not reflect what’s in your policy. For example, you could find several pages devoted to optional coverages you didn’t purchase. However, other consumers may have purchased those coverages as part of their policy.

The policy form may include a list of definitions for words or phrases like “bodily injury,” “family member” and “property damage.” Following that, you can find details about the following: