Home Car insurance How to read your auto insurance policy How to read your auto insurance policy View Carriers Please enter valid zip Compare top carriers in your area Written by Mark Vallet Mark Vallet Mark is a freelance journalist and analyst with over 15 years of experience covering the insurance industry. Reviewed by Ashlee Tilford Ashlee Tilford Ashlee, a former managing editor, insurance, at QuinStreet, is a journalist and business professional. She earned an MBA in 2014 with a concentration in finance. She has more than 15 years of hands-on experience in the finance industry. Updated on: September 11, 2024 Why you can trust Insure.com Quality Verified At Insure.com, we are committed to providing the timely, accurate and expert information consumers need to make smart insurance decisions. All our content is written and reviewed by industry professionals and insurance experts. Our team carefully vets our rate data to ensure we only provide reliable and up-to-date insurance pricing. We follow the highest editorial standards. Our content is based solely on objective research and data gathering. We maintain strict editorial independence to ensure unbiased coverage of the insurance industry. Auto insurance policies are filled with legal jargon that can make them confusing to understand. This is because a policy is a legal contract that binds the insurance company to perform specific actions under certain circumstances for an agreed-upon premium. Insurers want the contract to be as specific as possible, so policies are detailed and written in legalese. Resist the temptation to gloss over your insurance, because understanding your insurance policy can help avoid costly coverage gaps or frustration with your insurer after an accident. As the saying goes: an ounce of prevention is worth a pound of cure. To read and understand your auto insurance policy, start with the declarations page because this defines your coverage, insured drivers, vehicles, and more. Review the declarations page periodically to ensure accuracy. Ensure you understand key terms in the definitions section, which clarifies who and what is covered. Also be aware of exclusions that may restrict your coverage and impact claims. Key Takeaways The declarations page tells what coverage you have on your policy and which you have declined. The definitions section includes details like who is insured, what is insured, and when it is insured. When you change your policy, like adding or removing a car or driver, the company will send you a new declarations page. If you find that you have gaps in your insurance or are underinsured, you should shop for more coverage. Review the declarations page The declarations page is arguably the most important page of your policy, but it shouldn’t be the only page you read. “The declarations page ‘declares’ what coverages you have elected to have on your policy and which you have declined,” explains Carole Walker with the Rocky Mountain Insurance Information Association. “It also includes details about coverage levels, deductions, named drivers and the price you pay for each coverage.” The declarations page should be the first page and clearly labeled as “your policy declarations” or “declarations page.” With many car insurance companies, you don’t have to wait for a paper copy to arrive — you can log in and view your policy online. The information included on the declarations page includes: Personal information: Your policy number and personal information, such as your address. Insured drivers: Names of all of the drivers insured under this policy. Insured vehicles: The vehicles insured by this policy, including the VIN numbers. Schedule of coverages: A listing of the coverages, limits, deductibles and the premium for each coverage. This should be broken out by vehicle if you have multiple vehicles on your policy. If a coverage is not listed in this section, you don’t have it. Policy period: The dates the policy is in effect. Discounts: Any discounts that have been applied to the policy. Surcharges: If you’ve received a speeding ticket, or made a recent claim there will be a surcharge on your premium. Click here to zoom in Review your policy regularly When you make changes to your policy, such as adding or removing a car or driver, you should be sent a new declarations page that shows the alterations to your policy. If you don’t receive a new one within a week after the change, call your insurance company: Confirm the policy changes were made Request that your carrier send you a new declarations page showing the changes “It’s imperative that this page be reviewed at each renewal to ensure everything is accurate and the basic details have not changed,” warns Paul Dreher with Lawley Insurance in Buffalo, New York. How to choose the right car insurance coverage levels and limits Choosing the proper coverages and levels is one of the most important parts of car insurance. Without the proper coverage, you may be responsible for damages. “It’s very important to have enough liability insurance, because if you’re involved in a serious accident, you may be sued,” advises Loretta Worters, vice president of communications with the Insurance Information Institute. Here is a rundown of the various coverages and recommended levels: Liability: Covers medical expenses, legal settlements, and repairs for injuries or damage caused by you or a designated driver to others’ property or persons. It also applies when driving someone else’s car with permission. Required in most states, coverage levels vary and are typically represented as 100/300/100, indicating limits per person, per incident for bodily injury, and property damage. Collision: Pays for damage to your car from a collision, regardless of fault. Deductibles range from $250 to $1,000, with higher deductibles generally leading to lower premiums. Comprehensive: Covers non-collision damage to your vehicle, such as theft, natural disasters, vandalism, and glass damage. Deductible amounts are selectable, typically from $100 to $1,000. Medical payments or personal injury protection (PIP): Covers medical expenses, lost wages, and funeral costs for the policyholder and passengers injured in an accident, regardless of fault. Medical payments or personal injury protection coverage requirements vary by state. Uninsured and underinsured motorist coverage: Pays for damages if you, a family member, or a designated driver are hit by an uninsured or underinsured driver. Coverage requirements differ by state, and some states allow you to reject it, which would be noted as “insured rejects” on your policy declarations page. QuickTake How to cancel your car insurance policy What to do after after the death of a policyholder What is a named driver exclusion and how does it affect your car insurance? 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You will need to refer back to the definition page often,” advises Kristofer Kirchen, with Advanced Insurance Managers. Defined words will be bolded in the policy. Here are a few key terms: Family member: Take note of what is considered a family member or insured driver. “Ideally this should read ‘and or any insured’ which is a broad definition, not ‘the insured’ which is a much more narrow definition,” warns Amy Bach with United Policyholders. If your policy only notes “the insured” or “named insured” under the coverages section, you have a restrictive policy that does not extend coverages to those who are not specifically listed on the policy. This means your vehicle isn’t protected if a relative borrows your car and gets into an accident. Covered autos: Some policies may not cover damage to “substitute vehicles,” including a loaner or rental car. Actual cash value (ACV): Collision and comprehensive policies typically pay the market value of the car at the time of loss, which may be less than what you owe if the car is newer due to depreciation. Gap insurance can help cover the difference. After-market parts: Parts made by companies other than the auto manufacturer. Adding an original equipment manufacturer (OEM) endorsement ensures only OEM parts are used for repairs, though it costs more. This option is beneficial for vehicles like classic cars, where OEM parts are preferred for repairs. Keep an eye out for words and phrases such as “does not apply to,” “except,” “all,” and “however.” These words can proceed or follow coverage explanations and drastically change the meaning. If you see words you don’t understand, check the definitions page or contact your insurer for clarification. Read the insuring agreement Car insurance policies will have an insuring agreement for each coverage type: liability, uninsured/underinsured, medical/PIP and collision and comprehensive. “The insuring agreement is the actual binding contract that governs whether or not coverage is afforded in the event of a loss,” explains Kirchen. It defines what is covered and how it is covered. Understand exclusions and limitations of your car insurance policy Here are a couple of tips from Kirchen about reading your policy: If the policy refers to another section when describing coverage, read the section immediately to ensure there are no exclusions. Pay particular attention to the exclusions in each section and those that apply to the policy as a whole. Exclusions can have a major impact on a claim. Items listed on your policy as an “exclusion” are not covered. Common exclusions include the following examples, with a note of what section of the policy they are considered: Intentional damage to others, bodily injury or property damage (liability) Property damage to your own property (liability) Damages caused by your vehicle being used for livery purposes (liability) Damages caused by using your vehicle for business purposes (liability) Intentional damage to your own vehicle (collision and comprehensive) Damage done to your vehicle by war, bio-chemical attack, nuclear exposure (collision and comprehensive) Personal items that are not permanently installed in your insured vehicle (collision and comprehensive) Any vehicle used for competing in any prearranged or organized racing or speed contest (liability, plus collision and comprehensive) If you have a restrictive policy, there may be many more exclusions. For example, your policy may not pay out if you allow permissive drivers or extend coverage to rental vehicles. Frequently asked questions How do I read my insurance card? Your auto insurance card provides a small glimpse into your policy – you might have a paper card you keep in your vehicle, or it might be downloaded to your smartphone. This card will usually display the name of the insured person — which is usually you — and the person’s address. It will likely have details on the insured vehicle, like its VIN. It will also provide your auto insurance policy number, the name of the insurance company and the company’s contact information. How do I know if my car insurance covers commercial use? You will likely need commercial car insurance if you use your vehicle for business purposes outside of commuting, such as driving for a rideshare app. To determine if your policy covers commercial use, read the agreement or contact your insurance agent. Generally, personal policies exclude coverage for commercial activities and you likely need to buy a separate commercial auto policy. Don’t try to turn your vehicle into a business without knowing if you’re covered because you might not be protected. What key terms or clauses should I pay special attention to when reviewing my car insurance policy for the first time? When shopping for car insurance and perusing a policy for the first time, put a special focus on coverage types, limits, and deductibles. You also want to have a clear idea about exclusions. Be aware of any endorsements that modify your policy and any coverage conditions. If you have any questions or changes, contact your insurer. Mark ValletContributing Researcher | . .Mark is a freelance journalist and analyst with over 15 years of experience covering the insurance industry. In case you missed it Best Car Insurance Companies of 2024 Car insurance rates by state in 2024 What is full coverage car insurance? How much does car insurance cost for seniors in 2024? 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Part 1: How insurance companies spot bogus claims Insurance options for rideshare drivers 10 things that are illegal but shouldn’t be 1/1 On this page Review the declarations pageReview your policy regularly How to choose the right car insurance coverage levels and limitsUnderstanding confusing terms in your auto insurance policyRead the insuring agreementUnderstand exclusions and limitations of your car insurance policyFrequently asked questions ZIP Code Please enter valid ZIP See rates