How to Read Your Auto Insurance Policy

Updated May 3, 2024  |   Published August 22, 2023

An auto insurance policy is a contract between you and your insurance company. You agree to pay the cost of the insurance policy, called a premium, and to obey the insurance company’s stated rules. In return, the insurance company agrees to pay for certain expenses associated with an accident or other covered losses. Have you ever read through your entire auto insurance policy? Before you renew your car insurance, it might be a good idea to go through your the entire  policy to review your coverages, and see if anything has changed. Continue reading for a step-by-step walkthrough on how to read your auto insurance policy.


Parts of an Auto Insurance Policy

There are several parts to an auto insurance policy. The two major parts are: the declarations page and the policy form. Some other parts of an auto insurance policy are the insurance ID card and verification of insurance.


Declaration Page

A car insurance declaration page is typically the first page of the insurance policy. It contains basic information about the nature of your policy as well as basic information about the insurance company themselves. This page allows you to tailor an insurance policy to your needs, because it gives a summary of what your auto policy covers. While it may not go into great detail about each facet of your insurance coverage, it can give you a general idea of your coverage limits and the basic parts of your policy. An insurance declaration page will typically contain the following information:

Policy number

This is your unique policy number, which you’ll need when working with your insurance company for  a variety of needs, but especially filing a claim.

Policy term

Lists the effective date and expiration date of your policy. Don’t wait until your policy period has ended to renew, as a lapse in insurance coverage can be problematic.

Policyholder address

The address listed must be that of the policyholder, which should also be the primary location at which the vehicle is kept.

Named insured

Any resident of your household with a valid driver’s license should be listed under “named insured” or “additional drivers” unless you specifically exclude them.


Lists bodily injury and property damage liability, as well as any other coverages such as comprehensive, collision, etc.

Policy limits/deductible

Lists the amount that each coverage can pay out, as well as the out-of-pocket costs for you related to each coverage, otherwise known as the deductible.


The amount you’ll pay over the course of the policy term. Can be listed as a six-month or one-year total.  Some insurance companies allow for you to pay monthly as well, though this usually comes at a steeper rate than paying in full.


Insurance Policy Form

There are several different parts of the Insurance Policy Form, including:

Insuring Agreement

This is where your insurance company promises to actually provide coverage in exchange for the premium you pay. It also explains the specifics of what is covered in your policy. This is where you’ll find any causes of loss that are explicitly covered.

Conditions of an insurance policy

This section lists all of the obligations and rules that you are required to adhere to. If you breach any of these terms, there is a possibility that your claim will be denied, and thus your coverages won’t pay for damages.

  • This also outlines the required documentation for filing a claim. If your insurance company doesn’t have the required documentation, they can’t properly evaluate the accident. It also outlines how long after the accident or damages occur that you have to file a claim.
  • This section also contains information regarding the terms for cancellation of the policy. The terms are meant to hold both you and the insurance company accountable. You can cancel your policy at any time, but your insurer has to provide you with advance notice, and can only cancel your policy for a specific set of reasons.

Auto Insurance Policy Exclusions

This list of exclusions covers everything that your insurance policy won’t cover, which is also important to know before filing a claim. These exclusions can vary from policy to policy, but they commonly include:

  • Intentional damage or bodily injury
  • Government action or confiscation
  • Using a vehicle for prearranged racing events
  • Catastrophic events: war, nuclear accidents, etc.
  • Using your vehicle for delivery/ride-share purposes

Endorsements or riders on a car insurance policy

This is where you add any specific coverages you may need. If you own a modified vehicle, be it for mobility, performance, or cosmetic reasons, your modifications will most likely require extra coverage. Other add-ons include things like rental car coverage, roadside assistance, or coverage for transportation costs should your vehicle be unable to be driven. It’s important to note the cost of your premiums will likely increase when you add additional endorsements.


Insurance ID Card

This is designed for you to keep with you, whether digitally or in your car, wallet, etc. It is an important document to have handy. On it, you’ll find the insured’s information, vehicle details, VIN, policy period and the insurance company’s information, along with your policy number.


Verification of Insurance

Similar to the declarations page, this document is usually a one-pager. It contains all of the vital information regarding your policy. It will also list the coverage limits, named insured(s), and vehicle information.


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