Car Insurance - Understanding your policy documents

An auto insurance policy is a legal contract that binds the insurer to provide certain benefits to the insured under pre-defined circumstances for a specific price or premium. The contract is usually very specific, and is hence written in a very detailed manner using legal terminology. It is important to understand so as to avoid coverage gaps or misinterpretations in the event of an accident.

There are four sets of documents that elaborate the terms and conditions of your car insurance,

  • The insurance policy
  • The endorsements page
  • The declarations
  • The exclusions from policy

Information regarding your coverage, your deductibles, exclusions and other special conditions are all contained in this documentation.

Primary Insurance Policy:

This is a printed copy of your insurance that you receive when you purchase the policy. It is a comprehensive document that lists all coverages such as general liability, comprehensive coverage, underinsured motorist, etc. It should be noted that this document lists all possible coverages offered by your insurer, even if you haven’t purchased them.

The insurance policy document clearly defines who the insured is, the conditions that contribute to a valid claim and the circumstances under which the insurance company will not pay for a claim, i.e., exclusions.


A collection of additional documents that you receive along with the insurance policy are the endorsements. The primary policy created by the insurance company will be provided to the insured, irrespective of the state in which he lives. But the regulations pertaining to auto insurance policies vary between states. Hence, car insurance providers include endorsements that add certain conditions or remove some from the provisions of the main policy document. These changes ensure that your insurance abides by the local state regulations.

For instance, if your primary insurance policy document mandates you to report a claim within 90 days, but your state allows a minimum of 120 days for reporting, you will be provided an endorsement with your primary policy. This endorsement declares that residents of your state can report a claim within 120 days, as opposed to the 90 days mentioned in the policy document.

The primary policy document is not regularly updated by most insurance providers. In order to provide updates as per local insurance laws, insurance companies send their customers additional endorsements several times a year. Hence, it is important to carefully read your endorsement document and stay updated of the changes that were made to the primary policy.


The primary policy and endorsements documents provide a detailed description of all the coverages offered by your insurance company. The declarations page is the one that specifies the coverages that have been purchased by you and the associated restrictions. Although this page varies from state to state, it usually contains the following information,

  • The name of the insured and the vehicles that are covered by the policy
  • Type of coverages that pertain to each vehicle under the insurance policy
  • The limitations of each coverage
  • The premium for each coverage
  • The endorsements, surcharges and discounts, as applicable
  • Amounts of deductibles

Deductibles refer to the minimum amount of damages that your vehicle should have suffered before you are compensated by the insurance policy. For example, if your comprehensive insurance policy has a deductible of Rs. 1000, you will be paying the first Rs. 1000 for any damages incurred to the vehicle in an accident. After you have paid this amount, your policy will compensate you for all the remaining dues till the limit of your insurance coverage is reached.

Deductibles lower the premiums on auto insurance policies. Hence, a higher deductible provides you a lower insurance premium, and vice versa.

Exclusions section:

Exclusions are scenarios that the car insurance policy does not cover; examples of these are as follows,

  • Damages caused by a car that was driven without the permission of the owner.
  • Liability for a driver without a valid driver’s license.
  • Damages to the car from terrorist activities, war, etc.

In effect, an individual, non-commercial car insurance policy will exclude coverage if the vehicle is used for commercial purposes, business requirements, as a rental vehicle or for any anti-social activities. If a car is to be used for business or commercial purposes, a separate insurance policy needs to be purchased that covers commercial vehicles.

Selecting proper coverages and levels is an important part of getting your car insured. So it is important to read your insurance documentation to understand what is included in it and what isn’t. All policies have a “Definitions” section that clarifies the terms and legal language used in the policy. You can refer to this section to understand terminologies or contact your insurer for further clarifications.

While you read the policy document, keep an eye out for phrases such as “except”, “however”, “does not apply to”, etc. as these are usually followed by explanations that need to be specifically noted. Moreover, if you find that you are underinsured, you need to upgrade your insurance immediately for the protection of your assets in the event of an accident.

GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017

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