CarInsurance.com Insights
- The declarations page of your policy provides a quick summary detailing who is insured, what vehicles are insured and your coverage limits.
- The discounts you receive and the amount you pay for your car insurance, called the premium, are listed on the declarations page.
- The policy form, the longest part of a policy, contains background information regarding conditions, exclusions and riders.
When a person registers a car with their state’s Department of Motor Vehicles, they must show proof of insurance. But most people don’t understand their coverage or how to read an insurance policy.
However, being uninsured in a costly accident could be financially catastrophic. Here’s what you need to know about your car insurance policy.
What are the parts of an insurance policy?
Reading a car insurance policy does not appear to be for the faint of heart, but once you have your document in hand (or up on your computer screen), it’s easier than you think. There are many parts to an insurance policy and the key terms below can help you to understand what appears in your policy.
Policy number
This long number assigned to your policy is an identifier for the coverage that you purchased for your vehicle or vehicles. The policy number can include letters or numbers and should be denoted on all correspondence or paperwork from your auto insurance provider. The auto insurance cards you carry in your vehicle also include your policy number.
Policy term
This is the length of time that your policy is in effect. Most terms are six months to a year, at which point a renewal may occur. The policy term is from the start date to the expiration date listed on your policy. If you plan to switch auto insurance providers at any point, know when your previous term expires to avoid a lapse in coverage.
Policyholder address
This is the address for the person or persons to whom the policy belongs.
Named insured(s)
Just another way of stating who is covered by a policy, the ‘named insured’ specifies who the policy protects in an accident. In most cases, the ‘named insured’ is the same person as the policyholder, who is responsible for making payments for the policy and any changes. But the named insured can also refer to another driver listed on the policy who may not be the policyholder, such as a spouse or child, who is protected by the insurance policy.
Coverages
These are the protections and benefits that an auto insurance policy provides. Your detailed coverages could list what you purchased for liability, collision, comprehensive and other coverages.
Policy premium
This is the cost for all your coverages and benefits during the policy term. If you choose a 12-month policy, it’ll cost more than a six-month policy, but then you only need to think about renewals annually instead of every six months – and you can pay in monthly installments as well. To receive a rough idea about what your insurance would cost, estimate the cost of your car insurance before renewal.
VIN(s)
Standing for Vehicle Identification Number, the VIN is a 17-digit number given to a vehicle made in the U.S. This number is printed on your policy paperwork and inside your car, typically on the dashboard or inside the driver’s side door. Although the VIN looks like a random series of letters and numbers, it contains information regarding the model, make and year of your car.
Coverage types/limits
In addition to details about your coverage types — like liability, collision and comprehensive insurance — your policy will also list the limits for liability coverage. If you have a split-limit policy, these limits show how much the auto insurance provider will pay for injury or bodily harm to others in an accident and also the maximum it will pay for property damage.
Split limits are typically divided into bodily injury per person, bodily injury per accident and property damage per accident.
Discounts
These detail the reduction in your premium from the discounts you qualify for, such as bundling discounts, good/safe driver, loyalty, etc.
If you have other questions about the meaning of terms in your policy, you can use a car insurance glossary for more context.
What is a car insurance declarations page?
An insurance declarations page summarizes your policy. You can find important information listed there, such as who is insured on the policy, what vehicles are covered and how long the policy is in effect. Other items that should appear on your declarations page include:
- Your vehicle identification number or numbers
- Types of coverage
- Coverage limits
- Deductibles
- Vehicle discounts
- Policy discounts
- Payment plan
- The name and phone number of your insurance company
Once you have a policy in effect, your policy declarations page will be sent to you by email, in the app or by mail. You can also access it online since most insurance companies now provide online access to policy documents. You can print it from your account or read it online to review the details.
How do I make changes to my declarations page?
After your policy is in place, you might need to make changes. Examples could include adding a new driver – such as your teenager who just obtained their license, increasing or decreasing your deductible, or purchasing a roadside assistance plan.
Changes like these can increase or decrease your premium. Ensure you get an updated declarations page after you make changes to show that your policy reflects the changes.
“Always get an updated declarations page (or a ‘Dec page’) when changes are made,” says Noah White, an agent who sells auto, life and burial insurance with Ark Insurance. “This is important because if anything were to happen, you know exactly what’s covered, and so does each insurance company. Always remember they will do what they can to not pay, or make the other carrier pay.”
What is the policy form?
The policy form, which follows your declarations page, contains the other essential parts of an insurance policy. Think of the policy form as the boilerplate information provided to all customers who purchase an auto insurance policy from a company. This general information is available to insureds and provides greater context for the information listed on the declarations page.
Remember that some of the information in the policy form may not reflect what’s in your policy. For example, you could find several pages devoted to optional coverages you didn’t purchase. However, other consumers may have purchased those coverages as part of their policy.
The policy form may include a list of definitions for words or phrases like “bodily injury,” “family member” and “property damage.”
Following that, you can find details about the following:
- The insuring agreement: This is the agreement from the carrier to the insured. It describes what will be covered and what will not be covered.
- Conditions: These are the conditions upon which losses are covered or when or how insurance will kick in.
- Exclusions: These are items not covered in the policy. They are usually precise. In the liability coverage part of the insuring agreement, exclusions might include the following:
- Property being transported by the insured
- Property that is being rented or used by the insured
- For liability, when using the vehicle for public or livery conveyance
- For liability, vehicles used in racing contests
- Endorsements/Riders: These are extra coverages, like rental vehicles, rideshare coverage or roadside assistance, that are added to a policy and have an additional cost.
What are liability limits in car insurance?
On the declarations page of your auto insurance policy, you will see your liability – these are the maximum amounts the insurance company will pay out in an accident.
These limits are typically written as three three-digit numbers with slashes between them, representing split limits. The split limit numbers are read in the thousands’ place.
Split-limit policy
A split-limit policy represents coverage broken into three separate limits: the amount paid for bodily injury in an accident per person, the maximum amount paid in total for all injuries, and the maximum amount paid for property damage to another person’s vehicle in an accident. For example, liability coverage with split limits of 100/300/100 means that your auto insurance provider should pay up to:
- $100,000 for bodily injuries to a single person in an accident you cause
- $300,000 total for bodily injuries to all people in an accident you cause
- $100,000 for property damage for other vehicles or other property per accident you cause
If the expenses of a crash exceed what your insurance company will pay, you are responsible for the additional costs, meaning they come from your pocket. If you have higher limits, you’ll have more coverage if you are at fault in an accident.
Combined single limit policy
Another option is a combined single-limit policy, which works differently. A combined limit is the total amount that your insurance company will pay out per accident, no matter how the payments are used—to cover bodily injuries, property damages or both. Instead of getting a policy with split limits of 100/300/100, you might choose a policy with a combined limit of $500,000.
“A combined limit of, say, $500,000 means that’s what you have in total coverage for the accident,” White says. “Split limits are better, in my opinion. That way, each scenario has an allocated amount.”
Frequently Asked Questions: How to read a policy
What is the most important part of a car insurance policy to read?
The declarations page is key — it shows your coverage types, limits, deductibles and premium amounts in one place.
How can I tell what my car insurance actually covers?
Look at the coverage section of your policy. Each type (liability, collision, comprehensive, etc.) lists what’s covered, the limits and your deductible.
Where can I find the deductible on my policy?
Your deductible will be listed under each coverage type, such as collision or comprehensive, on the declarations page.
What are exclusions in a car insurance policy?
Exclusions are situations your policy doesn’t cover — for example, using your car for ride-sharing without the proper coverage.
How do I know if I have full coverage?
“Full coverage” typically means you have liability, collision and comprehensive. Check your policy for all three to confirm.
Can I change my policy if I don’t like what I see?
Yes. You can update limits, deductibles or add/remove coverage anytime. Changes may adjust your premium.
Why is it important to read my policy carefully?
Understanding your coverage prevents surprises at claim time and ensures you’re not underinsured or paying for extras you don’t need.
Final thoughts on reading your car insurance policy
Learning how to read your insurance coverage is tricky, but becoming familiar with the terminology in your policy helps. Anytime you need a refresher on your coverages and liability limits, look at your declarations page and other insurance documents.
Resources & Methodology
Sources
A.N. Nunes Insurance Agency. “Split Vs. Combined Auto Liability Insurance Limits.” Accessed July 2023.
Statista. “Number of Motor Vehicles Registered in the United States from 1990-2021.” Accessed July 2023.
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