How to Understand Auto Insurance Forms & Endorsements

Although auto insurance is an important tool for protecting financial security, few drivers take the time to review their policy forms and endorsements. These forms are essential for understanding what your policy does and does not cover. They also outline your rights as a policyholder, as well as the rights you give up by maintaining your policy. Reviewing auto insurance forms and endorsements can seem overwhelming, but they are fairly simple to understand.

Instructions

Policy Form

1. Read your policy book from cover to cover. The policy form is the most important document in your auto insurance forms packet. It is also the most difficult to understand. Thoroughly reviewing your policy book will give you a wealth of information about your policy coverages, terms and limitations.

2. Study the "insuring agreement" section for each policy coverage. This section provides specific details about what types of losses each coverage will pay for.

3. Pay special attention to any section titled "exclusions." Exclusions are circumstances when your insurance company will not pay for a claim, even if coverage would have been available otherwise. For example, most policies exclude coverage if the driver has an accident while using the car to carry out a crime.

4. Review the "definitions" section of your policy. Don't assume that your insurance company defines "vehicle," "accident" or even "you" the same way you do. Subtle differences here can make the difference between a smooth claims experience and a financial nightmare.

Coverage Forms

1. Review your coverage forms, which document which coverages you have purchased. The most important form is the declarations page, which lists all coverages and limits on your policy, as well as the amount you pay.

2. Compare the information on your identification cards to the contents of your declarations page. Identification cards are designed to be carried in your car. If you have an accident or are stopped by a police officer, this card will serve as proof of insurance.

3. Review any certificates or insurance or proof of coverage forms issued by your insurance company. These forms list coverages and limits, but not premiums. You may need a certificate of insurance to register your car or reinstate your driver's license.

Endorsements

1. Study any endorsements, sometimes called "riders," that are included with your policy packet. Often, they contain information about optional coverages that are not part of the insurance company's standard policy package. Insurance companies typically issue a separate endorsement for each optional coverage.

2. Review coverage endorsements for limits, conditions and exclusions. This will give you information about how much the coverage will pay if a loss occurs, and when the coverage applies.

3. Pay special attention to endorsements that change the policy without adding coverage. These endorsements may add exclusions, restrict coverage or alter rights and obligations under the policy. Information contained in these endorsements supersedes information in your policy book.

References

• Understanding Your Auto Insurance Policy

Resources

• NAIC: Consumer Alert - Understanding Your Auto Insurance Policy