How to Read and Understand Your Auto Insurance Policy

To make sure you’re getting a good auto insurance policy, it’s important to know how to read an auto insurance policy. You can’t be sure that you’re getting the auto insurance coverage you want without understanding auto insurance itself. There’s no shame in not knowing what certain terms or sections mean in a car insurance policy, but you’ll want to know what they mean and how they affect you. You’d hate to get into a car accident to then realize you don’t have the type of plan or amount of coverage that can help pay for it. Here’s a brief explanation on what to expect in an auto insurance policy and what it means to you.

Declaration Page

The declaration page is typically the first page of an auto insurance policy that provides general information about the plan. It will usually contain the policy number, the length of the policy’s term, and auto insurance limits. It also contains information about the insured, such as your name, the names of any other persons listed under the policy, your address, and other personal information that is relevant to your policy.

It will also contain information about the car or cars insured under your policy. This can include the year, make, model, vehicle identification number, and address where the insured car is garaged. If you took out a loan to purchase your car or leased it, information about your lender will also be listed on the declarations page.

Depending on your insurer, the declarations page may list discounts, surcharges, and other related information.

Insuring Agreement

The insuring agreement is the main entree of your auto insurance policy. It explains in detail the insurance coverages your are purchasing and any exclusions or expenses that the policy doesn’t cover. It is a broad scope of what you are buying in the policy.


The coverages listed in auto insurance policies may vary depending on what protections you are purchasing. Here are some definitions for some of the more common coverages purchased for auto insurance:

Liability: This protection covers medical payments, repairs, and legal settlements of physical injuries or damage done to someone else’s person or property that was a result of an accident caused by you or someone other driver covered under your auto insurance policy. Liability insurance limits are broken down into a per person limit for bodily injury, per incident limit for bodily injury, and a limit for property damage.

Collision: Coverage provided whenever your car is damaged in a collision with another car or other object, regardless of who was at fault.

Comprehensive:  This coverage pays for theft or damages caused by something other than a collision such as fire, hail, windstorms, falling objects, or contact with wild animals. This type of insurance varies, so pay attention to what specific events are covered or excluded in the comprehensive coverage portion of your overall policy.

Personal Injury Protection (PIP):  Sometimes known as Medical Payments Protection, PIP will help pay the medical bills of the policyholder and any passengers in the insured vehicle that were injured during an auto accident, regardless of who was at fault. This coverage might also pay for lost wages and funeral costs.

Uninsured Motorist Coverage / Underinsured Motorist Coverage:  This insurance will make payments for damages done to you or other members under your policy if they are struck by a driver that has no auto insurance or has insufficient auto insurance coverage to pay.


A deductible is the amount you are expected to pay before your auto insurance policy goes into effect. When you are looking over your coverages, you should know how much you’re expected to pay as a deductible before filing a claim. This can also help you manage your money. You can lower your auto insurance premium if you are willing to increase your deductible.


When looking over your policy, you’ll see the payment limits of each type of insurance coverage. This will let you know how much your insurance company is willing to pay out in a claim for a certain incident or item. If the amount you need to pay exceeds the limit listed on your policy, you’ll be responsible for paying off the remaining amount.

Insurance Endorsement

An insurance endorsement is an addition or amendment to your auto insurance policy. This could include other forms of coverage or exclusions that you and the insurance company agreed to be added to the policy. This may alter the cost of your premiums, depending on what changes are being made to the insurance plan. An insurance endorsement can be added at the time of purchase, mid-term, or at the renewal of the original policy.

Knowing these terms can help you better understand what your auto insurance policy does for you. However, if you can always talk to your insurance agent if you still have any questions about your policy. Remember, the better you know your policy, the better prepared and protected you’ll be.

After reading through your car insurance policy, do you think you deserve better coverage? Freeway Insurance can offer you a wide range of auto insurance plans and rates that meet your needs while saving money. Give us a call or get a free car insurance quote online to get started.