How to Read Your Car Insurance Policy?
Buying a car insurance policy is easy, but truly understanding your policyRead more
What is a Car Insurance Policy Document?
A car insurance policy is a legal contract between the policyholder and the insurance provider. The policy document outlines the following information:
- Inclusions
- Exclusions
- Terms and conditions
- Premium breakup
- IDV
- Add-ons
Whether you have bought your car insurance online or not, you must have your full policy wording and document, and must be thorough with the same.
Why is it Important to Read a Car Insurance Policy Document?
It is important to read and understand your car insurance policy, as it helps to avoid any misunderstandings when you file a claim. Apart from that, here are some benefits of reading your motor insurance carefully:
- Understand your coverage scope
- Know exclusions and limitations
- Avoid claim rejections
- Understand your add-ons
- Ensure correct personal and vehicle details to avoid any fines
How to Understand a Car Insurance Policy Document?
Here are some of the major components that you must read and understand in your policy:
Primary Policy Document
This is the main document handed over to you as soon as you purchase your insurance. It helps you check the following:
- Policy number
- Policy period (start and end date)
- Insured's name and address
- Vehicle registration number
- Engine and chassis number
- Type of policy (Third-party / Comprehensive / Own Damage)
- IDV (Insured Declared Value)
- Add-on covers
- Coverage details
- Premium amount
You must know that this document contains all kinds of information that your insurance plan offers. The policy document clearly defines who is insured and the terms and conditions of raising a claim, including the inclusions and exclusions under which the car insurance company will pay and not pay.
Endorsements Documents
When you purchase the insurance policy, you get a set of additional documents as known as endorsements. The primary policy is created by the insurance company and given to the customer, irrespective of the state he lives. The rules and regulations of the insurance policies vary from one state to another.
This is why insurance companies that provide car insurance include the endorsements that add some conditions to it, as well as remove some from the main documents of the policy. This happens to make sure that your policy abides by the rules of your state.
Most insurance companies do not regularly update the primary policy documents. This is why they send additional endorsement documents multiple times in a year, as per their local insurance laws. Hence, it is important that you read the endorsement documents carefully and stay updated with the changes made in the primary policy.
Review Declaration
The primary policy and endorsement documents provide a proper description of all the coverage provided by your insurer. Whereas the declaration page specifies the coverage that you have purchased as well as the restrictions under the plan, the declaration page also varies from one state to another, and it contains the following information:
- Name of the person insured and vehicle covered under the policy
- Type of coverage provided under that particular plan
- Limitations and premium breakdown of every coverage
- Surcharge, discount, endorsement as applicable
- Compulsory/ voluntary deductible amount, if any
- No claim bonus discount
Inclusion & Exclusion
The policy wordings also share a detailed list of every inclusion and exclusion. This section is crucial to check the scope of coverage of your policy. It helps to know the exact protection available, helps to avoid claim rejections and is necessary in case you meet with an accident and want to raise a claim. While purchasing the insurance policy, it is important for the buyer to learn about the kind of coverage the insurance plan provides.
Common Mistakes to Avoid While Reading a Car Insurance Policy
Check out some of the common mistakes you must avoid while reading your car insurance policy:
- Ignoring exclusions
- Assuming comprehensive means everything will be covered
- Being unaware of the add-ons
- Not checking your compulsory deductibles
- Ignoring or forgetting the policy schedule
Conclusion
Selecting the perfect car insurance policy for yourself is important. Since you invest so much in your car then protecting it with a car insurance plan is a must. While purchasing an insurance plan, it is vital to read it carefully and understand the inclusions, exclusions, claim process and all of the terms and conditions related to it. Also, purchasing the insurance online would be better than purchasing the policy offline because you can calculate the insurance premium amount as well as compare different plans and choose the one that suits your needs while sitting in the comfort of your home without going to the office or paying the insurance agent's fee.
