While motorists have little control over escalating fuel prices, you may be able to save money by simply reviewing your auto insurance policies. Use these tips from the National Association of Insurance Commissioners (NAIC) to help understand standard policy terminology — which may help cut costs in your coverage.
An Auto Insurance Policy
The policy you receive from an auto insurance company will have several parts.
- The declarations/information page includes the policy number, the effective dates, the details of the cars covered on the policy, the lienholder (if you have a loan on the car), the coverages, coverage limits, your premium, risk classifications and any discounts or surcharges. It is also going to list where the car is garaged and contact details for your company and agent, if you have one. The coverage names, limits and descriptions will vary depending on the state.
- The personal auto policy or policy form. This will be several pages long and will detail in specific language what is covered, how those coverages are defined, the conditions of the policy and if there are any exclusions. This may also include state exception pages that revise/change/modify the policy form. Some companies customize their policy forms to match the coverages in a specific policy, while others list all available coverages. Your declarations/information page details which coverages were purchased.
- At least one copy of an insurance card should be included as proof of coverage. Keep this in the car.
What to Look for on a Declarations or Information Page
Go here to see an example declarations/information page.
1. Personal Information – Verify the address listed on the policy is correct. Parking your car in a garage, or even parking it off the street can mean lower premiums. Notify your agent if there has been parking changes since the policy was written.
2. Year, Make, Model, Vehicle Identification Number (VIN) – How much you pay is heavily based on the car you drive so make sure this information is accurate. If your declarations or information page is wrong, it could also cause problems if you file a claim. Do not get caught by increases when trading in your car. Call your agent for a quote before you buy.
3. Lienholder Information– If you obtained a loan to purchase your car, the lienholder will likely require that it be listed on the policy. If you have paid off the loan, call your agent to have the lienholder removed. Your agent or insurance company may ask for a copy of the new title (without the lienholder listed) or other proof you paid off the loan.
4. Coverages – For an overview of your coverage choices go to InsureUonline.org and click on your life situation. The auto tab includes explanations of the different coverages and some tips on evaluating your auto insurance needs. You can also download the NAIC Consumer’s Guide to Auto Insurance here.
5. Collision – The higher your deductible, the lower your premium. However, since this is the amount you have to pay if the car is damaged in an accident, make sure you will be comfortable paying the amount.
6. Comprehensive – This is sometimes referred to as “Other Than Collision” coverage. It is possible that removing the comprehensive and/or collision coverage from a policy could save some money. Before you decide to cancel comprehensive coverage weigh the value of the car and the cost to replace or repair it against what you would save in premium costs.
7. Premium – The amount of premium you are charged generally depends on a number of factors. You can find out more about the factors your company may use to determine your premium here. If you have questions about how your insurer determines your rates and what steps you can take to improve your risk profile, contact your insurance agent or insurer.
8. Discounts – When looking at your declarations or information page, you may see discounts listed at the bottom of the page. Typically, the company has included any discounts in the premium amount listed. Check the list of discounts to see what was included in your overall premium. Check here for a list of discounts typically available. If you think you are eligible for a discount you are not receiving, review with your insurance agent or insurer.
9. Agent Contact Details – If you have an agent, their name and contact information will likely be listed on your policy. You can always contact your insurance company directly if you have any questions.
Other Things to Know About Your Auto Insurance
When it comes to the premium you pay for auto insurance, you should also check.
- Drivers – The individuals listed as drivers on your policy may or may not be listed on the declarations or information page, but these people can make a big difference in how much you are paying for insurance. The driver considered the highest risk by your insurance company will generally be used to figure your household premium. Review who is listed as the principal driver on each vehicle to ensure you are correctly rated.
- Driving record – A speeding ticket or an accident can increase your premium from term to term. However, after a period of time those violations will fall off your record. It is a good idea to know what is on your driving record and how long it might affect your premium. Talk with your agent if you have a ticket or accident that is several years old.
- Claims history – When you apply for a policy or when a current policy is renewed, it is normal for an insurance company to check the driver’s claims history. For new customers, companies often run a Comprehensive Loss Underwriting Exchange (C.L.U.E.), Colossus, or similar report. This information is used to help determine the cost of insuring your vehicle. Ask your agent or insurance company how long claims will adversely affect your premium.
- Credit history – In some states, a credit-based insurance score can be used as a factor to determine your premium. It is a good idea to check your credit report occasionally to ensure the information is correct. If there is incorrect information, check with the credit reporting company about how to amend it and then ask for a review of your premium.