Auto Body Blog

Your Total Guide to Understanding Your Car Insurance Policy

Understanding your car insurance policy is essential but can be tricky for many drivers. There is a lot of jargon and specific aspects of car insurance that you should be aware of before getting behind the wheel. Whether your policy includes comprehensive car insurance or the minimum liability coverage, it can be hard to know what you need or are actually paying for. 

To make it as easy as possible to understand car insurance, this article will break down each page and section of your policy so you can reference your own if needed. Let’s start with the declaration page of a policy. 

Declaration Page

If there is one page of your car insurance policy you need to read, it’s the declaration page. It is an overview of your personal information, coverage included in the policy, and any coverage that has been declined. It will also include your payment information, such as your premium and deductible. 

Personal Information

Some personal information will be listed on the declarations page, so it’s always a good idea to make sure that information is correct and up-to-date. This will include your name, address, contact information, and possibly other information like your driver's license number.

Policy Number

Each policy is assigned a specific number to track coverage and file various claims. In most cases, the policy number remains the same as long as the policy is active. So each time you renew your car insurance policy, your policy number remains the same even if the policy period changes. 

Policy Period

The policy period is simply the dates that you are actively covered by insurance. Depending on the insurance company and the policy you are enrolled in, this period could be either six months or a full year. Some companies offer different policy periods, but most policies last six months to a year.


A premium is an agreed-upon amount you pay in exchange for coverage from the insurance company. Your premium can be paid upfront or in installments but needs to be paid during the policy period. Most policyholders choose to break the premium into monthly payments.


In addition to a policy premium, you will have a deductible. This is the amount of money you are required to pay out of pocket for repairs or other work on your vehicle before the insurance covers the rest. 

Most policies with a high deductible have a lower premium, and vice versa. For instance, if you pay a higher premium in monthly installments, your deductible will probably be lower. This means that while you may pay more monthly, you may pay less after an accident to cover the deductible. 

Once your deductible is met, the insurance company will cover all or a large percentage of the remaining cost. 

Insured Drivers

It is possible to have more than one driver on a policy. The person financially responsible for the insurance policy is called the policyholder, but other individuals can be on the same policy. The declarations page will include all the drivers covered by the policy.

Insured Vehicles

The declarations page will also identify all of the vehicles that are covered by the policy. It is important to make sure the correct vehicles are on the policy. Part of purchasing a new car is informing the insurance company to update the vehicle information. In some cases, this may mean changing the terms of your policy, including your premium and deductible. 

Schedule of Coverage

The rest of the pages in your car insurance policy detail the type of coverage in your policy and any additional information that applies to your policy or possible circumstances. 

Types of Coverage

When it comes to car insurance, there isn’t a one-size-fits-all policy. You don’t want to waste money on coverage that isn’t helpful or end up paying premiums for policies that don’t actually provide the coverage you need and are looking for. Here are some common types of insurance coverage. 

  • Liability

Liability coverage is meant to protect you from paying out of pocket for damages you cause. Depending on state laws, this can include bodily injury and property damage. Most states require all drivers to have a minimum of liability coverage in order to drive at all. However, this is not the case everywhere.

Even with liability coverage, there are situations in which this may not cover all expenses from a collision you cause. Liability limits detail how much your insurance will cover for each type of damage.

If you opt for your state’s minimum liability coverage and are at fault for an accident that results in totaling a cheaper car in good condition or severe injuries to the other driver or passengers, you could still be responsible for thousands of dollars after your insurance has reached the liability limits.

  • Collision

Many people choose to have collision coverage in addition to the required liability coverage. Collision coverage protects you from being completely financially responsible for damages to your vehicle in the event of an accident, whether you are at fault or not. Collision coverage can also cover damages from your car rolling or overturning on the road. 

  • Comprehensive Car Insurance

When you choose comprehensive car insurance, you enroll in coverage for almost any damages done to your car, even those not caused by collisions or being on the road. This includes damage from vandalism or theft, as well as natural disasters or animals.

  • Personal Injury Protection

Having Personal Injury Protection, sometimes also called Medical Payments Insurance, means that your insurance will cover medical expenses from collisions, no matter who is at fault. In some cases, this type of coverage can also cover lost wages or funeral expenses in the most extreme cases. 

  • Uninsured Motorist Coverage

But what if a driver hits your car and they are not insured to cover the costs of the damages? That is where uninsured motorist coverage comes into play. Enrolling in this type of coverage can increase your premium, but it can be helpful if you are in this difficult situation.

  • Surcharges

Car insurance companies use a variety of factors to determine your policy details, including your driving experience. If you receive a ticket or file a claim during the policy period, additional charges, called surcharges, are applied to your policy and required to be paid in order to continue coverage. 

  • Gap Insurance

Gap insurance does not apply to all drivers, but drivers should be somewhat familiar with the concept to understand car insurance fully. Adding gap insurance to your policy protects you if you get in an accident and owe a larger amount on your car than what it is actually worth. In most cases, this will mean your vehicle is totaled. 

Gap insurance will cover the difference between the market value of the vehicle and how much you finance the car for.

Rental Car Insurance

One important option to consider when choosing a policy is rental car insurance, or to be more specific, rental car reimbursement coverage. 

Having this type of coverage may increase your premium slightly, but means that your insurance policy will pay for a rental car while your personal vehicle is being repaired after a collision. This will be coordinated with a company contracted by your insurance, and will cover a vehicle in a similar price range to your car that is being repaired. 

Rental car reimbursement may not cover a replacement vehicle in all circumstances, though. In order to have the cost of the rental car covered, it needs to be part of an approved claim filed with the insurance company, and you must already be enrolled in comprehensive or collision coverage. If you only have liability coverage, rental car reimbursement is not included in your plan. 

Rental car reimbursement coverage is extremely important to have while your car is being repaired so that you are not left without a car or with the financial burden of high rental prices during your repair. If you are not at-fault in the accident, the responsible party’s liability insurance should, hopefully, cover the cost of the rental car. 

Pay attention to the terms of your policy and understand the difference between rental car reimbursement and rental car insurance. The term rental car insurance actually refers to a policy that protects you from financial liability if something happens to the rental car while you are driving it, whether that is during the time it takes to repair your vehicle or renting a car while on vacation. 

In many cases, if you have comprehensive or collision coverage as part of your insurance policy, the insurance company will extend similar coverage for your rental. You can also opt into rental car insurance through the rental car company at the time of the rental. 

Schneider Auto Body

Understanding your car insurance can be confusing and stressful. If you find yourself in a collision and need repairs for your vehicle, Schneider Auto Karosserie Body is here to help you get back on the road safely and quickly. 

We value our customer’s experience and will advocate for you with insurance companies to make the process as smooth as possible for you. Our team is ready to answer any questions you might have, so feel free to contact us anytime to get an in-person estimate.