Auto insurance policy: meaning and how to understand yours
Hi Conductor! Do you know what an insurance policy is and how it works?
No matter how careful a driver is, it is not always possible to get rid of some unforeseen circumstances such as floods, fires, theft, etc. Faced with this situation, hiring good insurance for your vehicle, in addition to avoiding problems, can make your life more peaceful.
However, before purchasing the service, you must be aware of each step of the procedure. To make a good contract, you need to choose your coverage and establish the value of the premium and the deductible.
The coverage is responsible for determining in which situations the insurer may be triggered. The premium amount refers to the price of the insurer’s service, and the deductible amount is the fixed price paid in cases of “unexpected occurrences” called claims.
Finally, all these processes are made official through the policy, which, as it is a document with many details, can generate doubts in some drivers. If you are one of those, read this article until the end to understand everything about your insurance policy number by Vehicle number documentation!
What is an insurance policy?
The policy is a document issued when you hire the services of an insurer to protect some good, which can be a product or service.
In the case of vehicle insurance, the document formalizes items such as the premium value and the car’s deductible, and determines the period in which the vehicle will be covered by the insurance.
In addition, the policy also formalizes the acceptance of risks by the insurer, after all in this type of service the insured has complete protection in cases of events already determined, such as theft or theft, for example.
What are insurance policies for?
This important document serves as a kind of “contract”. Therefore, it is a means of registering and formalizing a service, the policy also serves to list the rights and duties of both the insurer and the customer.
Therefore, details of the services are also specified, such as the type of coverage and insurance deductible. And, finally, the clauses that determine assistance, duration and value of the prize are available in the registry.
Therefore, the policy serves to protect you and commit the insurer to comply with the established agreement. If your car suffers a crash, for example, while you are insured, you have the rights stated in the document.
What is the difference between insurance and insurance policy
For some people it can be confusing to differentiate between insurance and insurance policy.
However, insurance is about the service itself. While the policy is the document issued when this work is hired.
Thus, when you refer to the vehicle protection service, you are talking about insurance. When you refer to the policy, you are talking about the record that formalizes this contract.
Types of auto insurance policy
Typically, policy categories vary according to the type of coverage, as if the insurance covers damage to third parties, it will have one policy category, and if the coverage is simple, it will have another type of coverage. To understand better, follow the topics:
- Multi-risk or comprehensive policy: this is one of the most used categories. Guarantees protection for the insured and the assets;
- Named risks policy: in this modality, there is only coverage for what is explicitly contained in the policy;
- Policy against damage to third parties: here the document also covers damage to third parties. This means that if you crash your car into the back of another vehicle, the policy guarantees reimbursement of the compensation that will be paid to the “victim” of the accident;
- Compulsory policy: the term compulsory means mandatory. Therefore, this type of document is used in cases such as DPVAT insurance, which is a legal obligation.
Finally, it is important to emphasize that the policies are also classified as open and closed. The open ones can change at any time, according to the needs of the insured. The closed ones do not offer this option. However, auto insurance policies are open ended and allow for amendment through endorsement.