Auto Insurance Policy: What is it and what is it for?

It is generally believed that to be able to drive safely it is only necessary to have your driver’s license and registration card at hand; However, many other factors have to be considered, especially those that have to do with your safety and that of your family.

At Ahorra Seguros we are interested in you knowing all the characteristics of car insurance, for this reason, we explain what a policy is and what its importance is when contracting car insurance.

What is the Auto Insurance Policy?

The insurance policy is the contract between the insured and the insurance company that will provide the service and the financial support specified in this document, which establishes the rights and obligations of both parties in the use of this service.

In the specific case of the car insurance policy, it is the role granted as soon as an insurance package is contracted for any vehicle. The available information refers to the services and coverage that we are contracting, insurance amounts, the value of the car, deductibles, and any other essential concept to consider.

The insurance policy has legal validity to prove the contracting of the protection service for your car. You must know it in detail and carry it at all times while driving so that the service can be provided appropriately if you need it.

What is a car insurance policy made up of?

Auto insurance policies can vary by company and type of coverage, but generally contain several common components. Here are some typical elements you can find in an auto insurance policy:

• Policy Declaration: Basic information about the policy, including the insured’s name, address, type of coverage, and period of validity.
• Representations and warranties: Statements made by the insured regarding the accuracy of the information provided to the company.
• Coverages and limits: Details about the specific types of coverage included in the policy, such as liability, comprehensive coverage, collision, roadside assistance, etc.
  Maximum payment limits per event or policy period.
• Premiums: The amount of money the insured must pay the insurance company in exchange for coverage.
• Deductibles: The amount of money the policyholder must pay out of pocket before the insurance company begins to cover the costs.
• Conditions and exclusions: The conditions under which coverage will be provided or denied.
  Specific events or circumstances that are not covered by the policy.
• Endorsements: Specific modifications or extensions of basic coverage that may be added to the policy based on the needs of the insurer.
• Recovery Procedures: Information on how to file a claim in the event of an accident or loss.
• Cancellation and renewal: Conditions under which the policy can be canceled, as well as details on automatic renewal.
• Information about the insured vehicle: Details about the insured vehicle, including make, model, year, vehicle identification number (VIN), and any special features or modifications.

It is important to carefully review all of these elements and fully understand the terms and conditions of the policy before signing and accepting auto insurance. Additionally, it is advisable to review the policy periodically and update it as necessary to ensure it remains suitable for your changing needs.

Characteristics of the Insurance Policy

The auto insurance policy is the official document that shapes insurance agreements in which the rights and obligations of the insured and the insurer are established. This word comes from Italian which means “promise” and is the document that protects the relationship established between the client and the manager.

• It has legal and official validity
• Must be supported by both parties
• Includes information on the type of service that has been contracted
• Modifications can be made by making an insurance policy endorsement

What information does the Auto Insurance Policy contain?

The National Commission for the Protection and Defense of Users of Financial Services Condusef is the public body in charge of supervising the type of care and services provided by insurers. This institution regulates and guarantees that all companies that provide this type of service do so appropriately.

The purpose of explaining the data found in this document is to confirm that you have complete information. If you don’t have it, go to your insurer and have them explain why. They do not have to be in the same order as the list.

An insurance policy contains the following information:

• Policy number
• Name and address of the insured and insurance institution
• Validity (start and end of the contract)
• Premium: amount for coverage
• Total Premium: total amount to pay for protection
• Premium payment periodicity
• Vehicle Description
• Covered eventualities (contracted coverage)
• auto insurance deductible
• Sum insured (maximum amount covered in the event of an accident)
• Endorsement number (if applicable)
• Way to pay

How does an auto insurance policy work?

The Policy is delivered to you when you complete the contract for your auto insurance (or any other type of insurance you obtain).

This paper stipulates absolutely all the conditions of use, coverage, prices, and obligations, so you must make sure you read the most important fields and that everything matches what was agreed with your advisor or insurance agent.

The insurance policy has legal validity and has the function of not only informing you and being a record of the services you have contracted but also providing identification to the owner and the protected assets.

This is why you must carry the car insurance policy at all times, as well as know the assigned number and the name of the contracted package.

This will be requested from you the moment you have an accident of any type and need the assistance of an adjuster or compensation to be paid.

Consider that you must also carry other personal identification documents, such as your driver’s license, INE and circulation card.

What types of insurance policies exist?

The policy is not only for car insurance, as this same document will be issued for any other type of insurance provided by insurers in Mexico and the world.

The types of insurance policies that exist are:

• Life insurance
• Civil Liability
• Insurance of major medical expenses
• For SMEs
• Focused on the Home
• For Vehicles
• Retirement Insurance Companies
• Focused on Education
• International Insurance

These are some examples of the most requested insurance in our country and for which an official document is also issued with all the specifications of the service.

Know the General and Particular Conditions of the Insurance Policy!

Insurance policies are made up of 2 types of content: General conditions and particular conditions.

It is essential to know the difference and what the most salient points are to correctly understand the content of our contract and as such, how our insurance will work.

General conditions

The general conditions of the auto policy (or any other service) are those texts that insurance entities must use to specify the obligations and regulations by which the contract is governed.

These conditions of the insurance policy must include:

• Definitions of technical terms used in the document
• Details of the coverage and contracted services
• Details of exclusions or situations not covered
• Person, matter or property insured
• Obligations of the insured
• Limits of insured amounts
• Arbitration
• Effects of non-compliance with payment or regulations
• How to report an accident
• Cancellation requirements

Particular conditions

The particular conditions of the insurance policy are those that are responsible for detailing specific aspects that have to do with particular cases, such as beneficiaries, personal data, premium amounts, compensation, etc.

These particular conditions of the insurance policy are:

• Insurer information
• Contractor’s details
• Policy beneficiaries
• Coverage
• Amount or capital insured
• Cousin
• Validity
• Contract dates
• Payment Methods
• Deductible

Aspects that cannot be missing from your insurance policy

• The documents delivered must be divided into chapters, sections, or subsections, to facilitate their reading and they will try not to incorporate references to other documents. Otherwise, an explanation of the referenced text must be included.
• A legend indicating that the product has exclusions and limitations, and the place where they can be consulted.
• An annex to consult the meaning of non-commonly used abbreviations or indicate the place where it can be consulted, whether in print, electronic media, or through an annex registered in RECAS.
• A legend that invites the insured to consult the coverage, exclusions, and restrictions of their policy and the place where they can consult them.
• Insurer data, such as address, telephone number, and email.
• CONDUSEF contact information, such as address, telephone number, and email.
• The Advertising provided to the User regarding the products offered by insurance institutions must be clear, truthful, and timely, to promote a healthy understanding of insurance.
• Include in the general conditions, the release of responsibilities by insurance institutions, when non-compliance with said obligations is due to causes attributable to the insurance companies themselves.

Digital Insurance Policies: the ease of technology

Technology seems to have already reached all areas. Its facilities are of interest to large industries, and the insurance market is not far behind. The areas in which the technology has been introduced are contracting, accident reporting, and official documents, among others.

We are interested in official documents, particularly policies. The transformation in these is now to be digital. The facilities that such a transformation provides is that the worry of taking care of it disappears, having it on any mobile device, and that it can be reviewed at any time.

And having a digital insurance policy can raise several questions. The main one is, what if they ask me, what do I do? The answer is the same as if it were on paper, showing the document to the person requesting it, the change is the platform where the information is located, one is on paper and the other on a screen.

Security, too, may be of interest to you. We explain that each policy has a QR code, which makes it unique. Another point to add is that the policy is a guarantee document, for consultation, you cannot do much with it, other than review the data, that is why this document is sent to an address that you have provided.

The most common coverages in an Auto Insurance Policy

• Material damage: covers the cost of losses caused by an accident such as collisions, falling trees, or blasting, among others.
• For total theft of your car, in case your car is stolen, the insurer will provide you with a corresponding amount.
• Civil Liability: protects against material damage, bodily injury, or death that could be caused to third parties.
• The insured amount will be the maximum amount that they will pay you in the event of theft or total loss of the car. To determine it, you must know this: Invoice value: corresponds to the retail value and is indicated on the invoice issued by the automotive distributor. Commercial value: it is the highest value for the type and model of the vehicle.

Now not only does the car insurance policy protect you against crimes such as total theft, but you also have the support of the REPUVE auto system to prevent this crime.