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What's in your auto insurance policy?

Your auto insurance policy is a binding legal contract between the insurance company and you. Below are what each auto insurance policy is made of:

• Declarations.
• Insuring Agreement.
• Definitions
• Conditions,
• Exclusions,
• Endorsements, and,
• Deductibles.

Declarations in an auto insurance policy include:

• The make of your vehicle, model and the year made
• The vehicle identification number (VIN) of the automobile
• Person(s) covered by that auto insurance policy
• The date from which the policy started covering you
• The type of policy & limits
• The amount of premium you will pay

Sometimes other information, such as the intended use of the auto (e.g. whether for business or for pleasure), the name of the lien holder should the auto be financed etc., are also recorded.

Auto insurance agreement spells out the various provisions and conditions included in that auto insurance policy, in return for the insurance premium. The extent of each type of cover and the individual or/and risk covered by the policy will be described here.

is the terminology used to eliminate the possibility of misunderstanding about the limit of obligations arising under the policy.

Exclusions in the auto insurance policy identifies the type and extent of risks not covered by the auto insurance policy. It lists all those circumstances when the insurance company will not be liable to compensate for any damage caused.

Conditions of the auto insurance policy lay down the action to be taken by the beneficiary, in case a claim is to be made. Such information could include the making of a police report, the procedure to follow in lodgment of claim with the insurance company etc., and information on what will render the insurance policy canceled, is provided here.

Auto Insurance Endorsements are extra benefits available with that insurance policy. These could be:

• Auto towing endorsement pays for a certain number of tows and miles per year.
• Auto glass insurance pays for replacement of window glass in the vehicle, minus a deductible.
• Daily rental endorsement pays the rental car company up to a certain dollar amount per day while your automobile is being repaired from a covered accident.
• Emergency roadside assistance endorsement pays for repairs on the site of breakdown or accident. Often lumped with the auto towing endorsement and called "roadside emergency towing service."

Deductibles are the portion of each auto insurance claim, which is to be met by the insured person or the beneficiary. In a comprehensive or collision auto insurance policy, if the beneficiary agrees to meet a certain portion of each claim (which is called 'deductible'), the insurance premium applicable comes down. The higher the deductible, the lower the insurance premium.

Written by Craig J. Casey

Financial Writer helping people with their insurance problems on the net since 1998.

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