A car insurance policy is a contract between the policyholder, usually the car’s main driver, and the insurance provider. The insurer agrees to protect the policyholder against financial losses outlined within the policy (this is an important note because if it’s not in the contract, insurance companies will not cover it).
As a policyholder, you are concerned with your premiums, coverages, exclusions, and payouts. The premiums are what you pay to keep the policy. Coverages are those conditions outlined explicitly in the policy, where your insurance company will payout. Exclusions are special cases that will nullify your policy, such as driving while intoxicated, preventing you from receiving payouts. And the payout is the amount up to which an insurance provider will make you whole.
The policy is usually set for a term of 6 or 12 months, where the insured pays monthly premiums to keep it enforced. If the insured stops paying premiums, the insurance provider will stop coverage immediately. If the uninsured driver causes an accident while driving, then they are personally on the hook for the costs of damages.