Basic Automobile Policy Contents
Automobile insurance policies normally contain the same five basic sections found in most types of insurance policies: 1) declarations, 2) an insuring agreement, 3) definitions of terms used in the policy, 4) conditions, and 5) exclusions. Insurance policies are contracts between the insurance company and the insured, and like all contracts, policies should be reviewed to understand what is and is not agreed to by the insurance company and the insured.
Declarations at the beginning of most policies list or “declare” what is being insured. In the case of an automobile policy, the brand, make, identification number and any lien holder on listed automobiles will be listed. The declarations page also is likely to list basic information about the insurance being provided, including when the insurance is effective, monetary limits on the insurance, and what kind of insurance is included.
An “insuring agreement” usually follows the declarations page. The agreement basically states what the insurance company will do in return for the agreement of the insured to pay for the insurance. Because the insuring agreement contains the obligations of the insurance company, the person or company buying the insurance should read and understand the agreement to be sure that it contains what is expected and desired. The insurance company and its brokers or agents are sources of additional information that may be needed. Also, states have offices which regulate insurance companies, and those offices may be able to provide further information about the meaning and significance of statements in the insuring agreement.
Definitions of terms used in the policy normally are in a section following the insuring agreement. These definitions should be reviewed so that any incorrect assumptions about the meaning of terms in the insuring agreement can be avoided.
Conditions are in a section of the policy designed to alert the insured to requirements for obtaining coverage and payment of claims under the policy. There may be conditions describing when and how to report an accident to the insurance company and what the insured must do to assist the insurance company in resolving a claim.
Exclusions normally are listed in the closing section of the policy. Exclusions basically describe what will not be covered under the policy. Intentionally causing an accident or using an automobile in racing events are examples of activities for which coverage under the standard policy would be excluded. The insured should review such exclusions to understand precisely what the insurance company and the insured have agreed that the insurance contract will not cover.
As with all contracts, policyholders should keep in mind that it may be advisable to seek legal advice if a concern should arise over the meaning or significance of any terms or provisions in an insurance policy.