When you first buy auto insurance, the insurance company should send you a complete copy of your policy. Your auto insurance policy is a contract made up of several parts, including the application and binder, the policy declarations, the policy jacket, and the endorsements.
The application is your first inquiry and request for coverage with your insurance carrier. You must be entirely honest and forthright in all insurance applications. Under North Carolina law, a material misrepresentation in the application allows the insurance carrier to cancel the policy retroactively and avoid coverage. Thus, if a material misrepresentation in the application is revealed after an accident occurs, you could be left holding the bag on all victim claims and for your own injuries and vehicle damage.
A “material misrepresentation” is the misstatement of any fact on the application, which, if provided truthfully, would have affected the rates/premiums. Many variables can affect premiums. Thus, please always disclose all information fully and honestly when applying for insurance. Otherwise, the coverage you pay for could vanish after an accident occurs.
If you do not purchase insurance directly from the insurance carrier, you will be working with an independent agent. Agencies are great to deal with, as they can provide price quotes for multiple carriers simultaneously. Even if the agent is not a direct employee of the insurance carrier, he or she can still place coverage. In these cases, the agency can bind the insurance carrier to the obligation to provide insurance. Since a policy has not yet been written, the interim policy document is called a binder. A valid binder is the same as a valid existing auto policy.
The “policy declarations” or “declarations page” is the front page of a full auto policy. This is the easiest place to review all coverage choices and premiums. Your policy declarations will provide a quick snapshot of the following information:
- name of insured driver(s)
- address where policy is issued and the principle address where insured vehicles are garaged
- identification of every individual vehicle insured on the policy
- for each insured vehicle, identification of which coverages were purchased and the total coverage limits available for each accident
- list of all endorsements that add unique coverages to your policy or that modify the policy jacket to meet recent changes in law.
Your policy declarations page is the very best way to identify payment sources available after an accident.
The policy jacket is a bound booklet that contains the complete North Carolina form auto policy. Our insurance commissioner considers all policy language and approves the forms that can be utilized. Thus, the policy jackets for all auto policies sold by all insurance carriers are identical. While they may vary slightly in look and feel, the language describing and limiting all coverage types is the same. The North Carolina Department of Insurance provides a full copy of the standard auto policy and an excellent consumer’s guide to the current North Carolina auto policy at www.ncdoi.com.
Endorsements are typically found behind the policy jacket, and they contain additions and revisions to the policy jacket. Insurance laws often change in North Carolina. Further, the insurance commissioner’s office frequently passes regulations governing insurance coverage options. Endorsements will identify modifications to the policy jacket that bring your policy into compliance with current North Carolina insurance law.
Addendums are another type of endorsement, and they typically provide optional types of coverage that are described within the standard policy jacket. For example, towing and labor, accidental death and dismemberment, and rental reimbursement coverages are typically identified and described in the endorsements to your policy.