Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy. Auto insurance provides property, liability and medical coverage:
- Property coverage pays for damage to or theft of your car.
- Liability coverage pays for your legal responsibility to others for bodily injury or property damage.
- Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.
An auto insurance policy is comprised of six different kinds of coverage. Most states require you to buy some, but not all, of these coverages. If you're financing a car, your lender may also have requirements. Most auto policies are for six months to a year. Your insurance company should notify you by mail when it’s time to renew the policy and to pay your premium.
An auto policy generally consists of three main parts, which together, form your auto policy:
- Declaration page - the declarations page (or "declarations" or "dec page") displays information specific to you and your policy. This will usually include the name of the policyholder, your policy number, the policy term, limits of liability and deductibles you selected and the policy premium. It can also display other items such as discounts applicable to your policy, other drivers on your policy and specific vehicles insured. In addition, it will show the other documents that form your policy (in other words, it will tell you what base policy and endorsements make up your policy). The declarations page is usually longer than just one page.
- Base Policy - this document spells out the basic provisions of the insurance coverage and the responsibilities of the insurance company. It also sets forth your responsibilities, which include paying your premium and telling the company when you are in an accident.
- Endorsements - endorsements alter the base policy, just like an amendment alters a contract. Endorsements can add, broaden, limit or delete coverage or change the base policy in any other way.
It is important to read your declaration page, base policy and any applicable endorsements together, as they collectively form your insurance policy.
Note, auto ID cards, which generally arrive with your policy, do not actually form part of the policy. Rather, they provide a convenient way to show that you have insurance. They contain some basic details about your policy, such as your policy number, policy effective date and the specific vehicle insured. Some states require that you keep these in your car as proof of insurance.
Which Documents Do You Need?
Document 1: Driver's License
Your driver's license verifies that you can legally drive and therefore have the authority to purchase car insurance. It also allows insurance providers to check your driving history prior to offering you a policy. With a clean driving record, you'll get much better rates than you could expect to get if you have a history of moving violations. If more than one person will be driving the vehicle you are insuring, drivers' licenses must be presented for all parties.
Document 2: Social Security Numbers
The second document you will need to present to get car insurance is your social security number. Again, if more than one person is driving the vehicle to be insured, each driver will need to either present their social security card or have their number memorized.
Document 3: Bank Information
Insurance companies will need to have information concerning either your credit card or checking account. They will most likely be running a credit check before offering you a policy, since studies have shown that people with a history of making late payments tend to file more claims and cost the insurance company more money. Having an impeccable credit history will work in your favor if you're trying to find the lowest possible premiums and rates on car insurance.
Document 4: Vehicle Information
The insurance company will need to know exactly what car they are insuring with your policy. You will need the vehicle's VIN, which is often printed on a sticker located inside the driver's side windshield or inside the driver's door. Your car dealership can help you locate the VIN if you are unable to find it. Your insurance premiums and rates will likely partially depend on the car you are driving. The newest, safest models tend to cost less to insure than older models which lack airbags or other standard safety features.
