Auto Policy Coverage and Exclusions - Learn to Read and Interpret Key Sections of Your Policy

The auto policy exclusions are perhaps the number one way insurance companies confuse an insured regarding what is and what is not covered. Often, they exclude coverage simply because an exclusion is commonly applied, but fail to read your specific auto policy. To complicate matters, what can and cannot be excluded by law tends to be misunderstood and somewhat of an obscure subject.

To understand what is excluded, an insured must first understand what coverages he or she has purchased. Not having coverage is a completely different legal scenario than having coverage, but having a situation where an exclusion apply. Therefore, it is important for an insured to understand exactly what coverages they have and what they mean. If they have coverage, it tends to act as a "blanket" covering any "loss" as it is specifically defined. An exclusion will make "holes" in that blanket to disallow coverage. However, exclusions do have exceptions that tend to re-establish the coverage.

The main coverages found on personal auto policies are liability, collision, and comprehensive. There is uninsured motorist coverage that may also be added to the auto policy.

Liability coverage will protect an insured for damages caused to a third party. Damages may be personal injury or vehicle damages.

Collision protects an insured for the damages caused to that insured's vehicle that are directly related to the loss or accident.

Comprehensive is going to cover damages caused to the insured's vehicle, but typically this coverage applies to those things that are not defined or considered a collision (i.e. vandalism). For example, if a tree falls on top of it or a fire starts on the flooring. It is very important first then to determine what part of the policy you are reading. Are you seeking coverage for your auto? If you were, then you would not want to be reading the section of liability coverage because that coverage only applies for third parties.

It is important to note here that an insured would want to read the first part of the policy, which sets out the standard terms and conditions and only then an insured would want to analyze the coverage section. If the terms and conditions, define any terms, those definitions will be critical when determining coverage or applying an exclusion.

Insureds must remember that the number one issue most injury atto
eys have is that insurance adjusters often either do not read the policy or misinterpret the actual terms (they tend to interpret the terms to benefit their employer and not the consumer). Most adjusters know the auto policy well; however, they fail to look at the actual policy the carrier issued. This is very problematic as the meaning of one word (and vs. or) can change the entire interpretation of coverage and exclusions. Therefore, it is critical that an insured seeking coverage (or being denied a claim because of the application of an exclusion) request and reads the actual policy terms.

Adjusters tend to talk about policies, coverages, and exclusions, as general terms with rule applicability. Most of them fail to actually acquire the specific policy sold to the insured to verify the terms.