In car insurance, the insurance policy is basically a contract between the insurance policyholder and the insurance company, which clearly state the terms and conditions that the insurance policy holder is legally obligated to cover in the event of a claim. In return for an upfront fee, also called the premium, the insurance company promises to cover damage caused by perils outlined in the policy language in exchange for a payment made by the insured. A simple car insurance policy typically covers damage caused by collision with another vehicle, theft, fire, vandalism and weather-related events. In order for your car insurance policy to be in effect, you must purchase a minimum amount of coverage, which varies from company to company.
In addition to the minimum requirement coverage, there are a number of additional types of coverage provided through insurance policies. Depending on your location, a variety of additional policies may be available to you. These policies are commonly referred to as “conformity clauses.” Some of these types of coverage include uninsured motorist, underinsured motorist, personal injury protection, rental car coverage, property protection, and nationwide coverage. In most instances, your premium will increase the more coverage you receive. Therefore, the declarations page that lists the covered incidents is an important part of reading your insurance policy.
The declarations page of an insurance policy will list both the incidents and the damages associated with each occurrence. If the coverage details are not detailed enough, an inexperienced insurer may end up undercharging for the agreed upon minimums. This is why it is imperative that the appropriate declarations page be read and understood before signing or accepting the contract. If your insurance policy has too many general perils listed, an inexperienced insurer might not be able to accurately calculate your premium accordingly. The declarations page is also extremely important because it spells out under what circumstances your insurer is required to make a claim. If the details on the declarations page do not explicitly spell out when an insurer needs to make a claim, the carrier should be able to provide you with the number of years during which you have agreed to accept full and total payment for your premiums.