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Why You Should Always Read Your Car Insurance Policy Document?

By Vikas Chandra Das
21 July 2022, 11:46 AM

While a policy document might not be interesting to read, it is vital that you read and, more importantly, understand what your policy says. It has significant consequences on whether the insurance you received does what you want it to do for you. It also helps you know your rights as a policyholder while filing claims.

Top Reasons to Read Your Car Insurance Policy Documents for Sure

There are seven good reasons that we will discuss to read the car insurance policy documents before signing.

1. To check for any discrepancies on the declaration page.

The page lists coverage, exemptions, insured individuals, vehicles insured, and so on. It is where you're going to sign the policy. There might be a mistake on this page if you have not read the policy text. This discrepancy can cost you when there is a need to make a car insurance claim.

E.g., Jayant forgot to buy a zero-depreciation car insurance allowance when purchasing car insurance. Today, the insurance would not cover the replacement of products such as plastic, fiber, glass, etc., if he were to make a claim. Had he read the policy in advance, he might have corrected it.

2. To get an idea about the jargon used in the policy.

What can be more complicated than insurance policy text with all legal terminology and insurance jargon? But that's no excuse to cast reading yours as unimportant. All that jargon is essential when it comes to your coverage. 

The very aspect that decides whether or not you will be paid out might be the existence or absence of those words or phrases. First, to make it simpler, go through the 'Definitions' section that describes all the terms used.

It helps you make sense of what you're reading. If the text is still incomprehensible, please contact your insurance broker for clarifications.

3. To have a clear understanding of all your coverage details.

The 'Coverage' section outlines the conditions in which auto insurance coverage will be provided. This section sets out the conditions applicable to the filing of the claim and the various compensations provided.

Please take note of each point to ensure that there are no gaps in your coverage.

4. To be aware of all the exclusions.

It is essential to read the section on exclusions. Here you can get information about your coverage limits and in which cases you cannot make a claim. With this list, the insurer determines the circumstances in which you will not be compensated for losses.

If you know the exclusions, you will try to find alternative solutions to cover your car. Also, some of the exclusions can be protected by insurers but at an extra premium.

This section covers the maximum sum of money you're going to be paid in the event of a claim. There are often numerous limits applied to different parts of your policy, such as the replacement and liability limit. It also discusses the value of the deductibles.

5. To understand the terms and conditions.

Check the 'Conditions' portion of the policy document for an exhaustive list of terms and conditions. It refers to the protocol that you should follow when an accident occurs. For example, in case of robbery, you might have to report to the police.

This section also explains what you should do if the insured has passed away, what steps to take, the paperwork needed, and how to cancel the policy.

This segment also tells you what the insurer's obligations and policyholder's responsibilities are. These are regarding payment of premiums and maintenance of the vehicle insured.

If you do not meet the policy conditions, the insurer can deny any claims you make under the policy. Hence, the need to be thorough with this section.

6. To know the geographical limits.

The 'Endorsement' segment tells you of the geographical region in which your policy is applicable. When driving outside this predetermined location, you are not entitled to file a claim.

This segment also allows for coverage outside this region for the charge of an extra premium. You may then set up a personalized policy using this section.

7. Reading your policy helps you stay on top of modifications.

The 'Endorsement' portion of your policy also provides you with options to add coverage or expand coverage limits. Insurers may also issue special endorsements that broaden or restrict scope.

Everything done under your policy's endorsement clause is part of your policy and is part of the deal between you and the insurer. You must keep track of any changes made under the endorsement, so you don't get caught by surprise.

Seeking Customer Service

Reading through the policy text will make you much more equipped to make a rational decision regarding your car insurance policy. Although the policy text is relatively detailed, you may still find it challenging to comprehend. In such a case, it is always a good idea to seek customer service and contact your insurance broker for any help.

Final Thoughts

Policy documents, even though difficult to read, are very crucial and should be read through. They contain all details like terms and conditions, coverage details, exclusions, policyholder's details, possible add-ons, maximum sum assured, and so on, which a policyholder must be aware of.

Policy documents make you aware of the policy provider's obligations and your rights as the insured party in case of filing a claim.

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