When you purchase an auto insurance policy, the company mails a thick packet of papers to you. The terms of your policy and ID cards are enclosed, as well as a policy declarations page. This page is designed to help you quickly see the limits of coverage in force. I’m going to upload photos of a sample declarations page and help point out the key criteria you need to understand.
EFFECTIVE DATES, POLICY NUMBER, AND PREMIUM
The top of the page should start off by listing your name and address. The policy number is the contract number assigned to your policy. This allows the company to locate you without using your personal information publicly. The effective dates will also be listed in this section. Auto policies can be sold in terms of 6 or 12 months. It’s important to keep track of this date so you know when to switch out ID cards as well as pay renewals on time. The total premium, including all discounts will be clearly marked as well. This amount is subject to change if endorsements are made to the policy over the course of the term. Changes such as adding or removing vehicles or drivers will re-rate the premium.
BODILY INJURY LIABILITY
This is absolutely the most important number on your declarations page. Bodily injury liability is the coverage you purchase to be paid out on your behalf when you are liable for injuring another person. It’s important to remember that this is a limit. When another person is injured, they want ALL the expenses incurred paid for by you. Their health insurance will not pay out when another insurance is primary on the claim. And your auto insurance would be primary if you are liable.
I cannot over stress this enough. Ambulance, life flight, hospital stay, surgery, rehab, pain and suffering, medications, and therapy are all just a portion of the expenses that will need to be paid. It’s very important that you pick a limit of protection that offers just that, reasonable protection. If your limit of bodily injury liability is maxed out, you can still be sued for the remaining balance. If you have several assets, you may want to purchase a liability umbrella which gives an additional $1-$5 million in protection.
Notice on this policy, the liability limits are $250,000 per person up to $500,000 per accident. Should the driver of this policy cause injuries to another person, the policy is able to pay up to $250,000 to cover the expenses incurred. If multiple people are injured, the total cannot exceed more than $250,000 per each person but can pay up to $500,000 toward all involved outside of those riding in the insured’s vehicle.
UNINSURED MOTORIST LIABILITY
This coverage should match the level of protection you carry for bodily injury liability. If someone else is liable for an accident and they don’t have insurance or have high enough coverage, this applies. You would receive payment from your insurance company under this section. The insurance company then subrogates the liable party and attempts to collect the money. Having this protection allows you to receive your money right when you need it and keeps you out of court.
The amount of money listed here is the limit that can be paid out to repair a vehicle, sign, fence, or any property that is damaged as the result of an accident. This policy has a limit per accident of $100,000. If it’s a multi-vehicle accident, that money can be used up quickly. The $100,000 would be divided up by all damages in total, not per damaged item.
UNINSURED MOTORIST PROPERTY DAMAGE
Just like with uninsured motorist liability, this coverage is in place to protect you if someone damages your vehicle and they do not carry insurance or enough insurance. Your policy will pay to repair your vehicle up to the policy limit and then subrogate the liable party to recoup the expenses paid. Again, this keeps you from having to fight for the money yourself and gets you right back on the road with a repaired or new vehicle.
Stay tuned for our next post later this month as we dive into more coverages.