What is an insurance policy?
A car insurance policy is a product for sale. Unlike other products for sale, it is a type of product that is intangible. You cannot touch, feel, or see it. In short, the insurance company is selling to you a promise to “take care of you” if an accident happens. The specifics of this are spelled out in the pages of your policy under the Insuring Agreement. The Insuring Agreement says that in return for your payment of the insurance premium, they will insure you. Moreover, they will insure you subject to all conditions, definitions, terms, and limitations specified in the insurance policy and only with the coverage listed on your declarations page. Your policy is made up of the policy contract, the declarations page, and any endorsement added to your insurance policy. If you take the time to read your policy, you will see that it starts defining all terms. For this article, we will begin there as well.
Insurance Coverage by Definition
Understanding the definitions of words in your policy is essential to understanding your insurance company’s contractual obligations. Your insurance policy does not cover every possible automobile or situation. Your policy narrowly defines what automobiles it will cover and under what circumstances. For example, the term “covered auto” may be defined in your policy as any automobile shown on your declarations page that is “your auto.” In other words, if the vehicle in question is not listed on your declarations page, it may not be covered. More specifically, if the vehicle in question is not owned by you, this could be another example of not fitting the full definition of “covered auto.” If you do not own it, it is not “your auto.” Insurance companies are very serious about definitions in your policy. While reading your insurance policy, you may discover that some words keep appearing in dark print and others do not. Words in dark print usually are the insurance policy’s way of signaling to you that this is an important word, and you should go back to the page of your policy that addresses definitions for further clarification if needed
Insurance Policies and Parts of Coverage
After definitions, a car insurance policy will typically go straight into the various coverage parts and how those coverages may or may not apply. It is essential to know that your policy is going to discuss all possible types of coverage. This does not mean you have all of these coverages. Your declarations page, not your policy, specifies what coverages you actually have. For example, you may have a copy of your policy that goes into detail regarding rental coverage. However, if you did not purchase rental coverage when you bought your policy, nothing in the policy about rentals will apply to you. In effect, your insurance policy is saying if you purchased rental coverage, here is how it works. Again, always reference your declarations page, not the policy, to know what kinds of coverage you have.
Most auto policies have the same general categories of coverage. They are as follows: Liability to Others, Medical Payments to Others, Uninsured Motorist Coverage, Damage to Vehicle, Roadside Assistance, Duties In Case of an Accident or Loss, and General Provisions. Each of these categories is listed in your policy as different parts of your policy. For example, Liability to Others may be listed after definitions as “Part 1.” Medical Payments to Others may be listed as “Part 2.” Uninsured Motorist Coverage may be listed as “Part 3,” etc. You do not need to read your entire policy to understand your coverage. For example, if your declarations page clarifies that you did not purchase uninsured motorist coverage, there is no need to spend time reading that section of your policy. If you believe your declarations page is missing coverage you are supposed to have, you should speak to your insurance agent or insurance company’s customer service representative and have this addressed.
Understanding Exclusions to Insurance Coverage
Your car insurance policy gives coverage. Exclusions take it away. Every insurance policy has exclusions. If an exclusion applies to an accident, no coverage will be afforded. Take the time to read the exclusions listed in your policy so that you know what is or is not covered by your insurance company. It is best that you know this now and not after the fact. Also, do not assume all insurance companies list the same exact set of exclusions. Every insurance company is different. For that matter, insurance companies can differ within the confines of their general brand name. Just because the same insurance company insures you and another person does not mean your policies, including listed exclusions, are automatically identical. Insurance companies diversify under their general brand name to manage risk. That is, they do not like placing all their eggs in one basket. This diversification tactic can sometimes result in policies being slightly different. It does not hurt to look at your friend’s policy for general ideas. But if you want to know the truth about exclusion on your policy, ultimately, you will need to look at your own policy. You can easily obtain a copy of your own policy by calling a customer service representative from your insurance company.
While exclusions may vary from policy to policy, some exclusions seem standard and are frequently found in the average insuring agreement. A few of these are listed below.
Your insurance company may deny coverage after an accident if:
- the accident occurred while committing a crime;
- the accident occurred while transporting people or goods for money;
- the accident occurred with no permission given to another to use your vehicle;
- the accident occurred while an excluded driver was operating your vehicle; and,
- the accident occurred while the driver of your vehicle was within the scope of employment.
- the accident occurred as a result of an intentional act to cause an accident.
Again, always read your own policy to understand the specifics of your own situation.
Understanding Automobile Insurance Endorsements
Your car insurance policy provides coverage. Exclusions take it away. Endorsements give it back again. Endorsements can apply to other types of insurance coverage, not only car insurance. You can purchase an endorsement to your already existing insurance policy for an additional premium or price. When an endorsement’s policy language comes into play, it may increase the extent of already existing coverage, add coverage back that may be excluded otherwise, or limit additional coverage depending on the circumstances. The most common type of endorsement purchased by auto-owners and home-owners is an Umbrella Policy Endorsement (sometimes referred to as an umbrella). An umbrella policy is a separate policy from the original policy and is identifiable by a policy number that is separate from the policy number on the original policy. In short, these are two separate policies that work together or in harmony. As a practical matter, an umbrella policy is considered a type of backup to the original policy’s coverage. Most insurance companies will not sell an umbrella policy unless the insured first agrees to purchase significant initial policy coverage. In the event of an accident, the insured’s Umbrella Policy Endorsement would come into play only after the initial coverage proves to be insufficient to cover damages. The specifics of what an Umbrella Policy Endorsement will or will not cover must be arrived at by reading the policy itself. Do not assume. If you run into an obstacle and do not understand the language of the policy, contact the insurance professional that sold you the policy in the first place. It is reasonable to assume that they can provide clarity regarding the product they sold to you. If you currently do not have an Umbrella Policy Endorsement, it is a low-cost way to increase your coverage significantly.
The Myth of Full Coverage
The term full coverage is popular with those who sell insurance and the public sector in general. It is not a popular term for those experienced in claims. Experienced claims adjusters can quickly tell you why this is poor terminology to describe any car insurance policy. This is not to say that one cannot have good coverage. But the phrase full coverage seems to imply that everything is covered such that there can’t be any issues. In other words, full coverage means there is nothing to worry about. In the popular sense that full coverage is used, one typically means they have every kind of coverage offered. But keep in mind, you can have every type of coverage and still have the lowest possible limits for each category. Minimum coverage on every category is poor coverage. Yet, it is often touted as having full coverage. Let us think of it this way. What if you cause an auto-accident where five (5) people are seriously injured. If you have the lowest possible liability limits on your policy, this will not be enough to cover all the damage caused. After your policy limits are paid, all persons not fully compensated may now come to you personally. Having all bases covered is not enough. You must have the appropriate amount of coverage for each of those bases.
Another reason to question full coverage is due to the literal sense in which no amount of coverage is guaranteed to be enough. As mentioned previously, you can have good coverage. But good coverage can sometimes still not be enough. In one case recently that came through our office, the at-fault motorist had a $1,000,000.00 liability policy. One would think that this is enough coverage. However, when you add up medical treatment, compensation for pain and suffering, and the possibility of multiple jury awards against a DUI driver, $1,000,000.00 may not cover it all. $1,000,000.00 in coverage is good coverage. At the same time, there is never a guarantee that any amount of coverage will ever be enough.
We Can Help You Understand Your Car Insurance Policy!
We know that our clients need helpful information. That can be helping someone understand the legalities of a car accident or helping someone understand a car insurance policy. Using our twenty plus years of experience as Georgia injury lawyers, our goal is to provide expertise, superior care and tailored support to you and your injury claim. If you are injured because of another driver’s negligence and the insurance company is not helping you understand your rights, give a call so that we can speak to you about all of your options.
Contact us online to request a free case evaluation. If you would prefer to speak right now, call us at (770) 717-5100 and we start working to help you. We answer our phones every day during normal business hours and as well as during nights, weekend and holidays. We look forward to talking to you.
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