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Auto insurance is a contract between a policyholder and an insurance company. This contract states that the policyholder agrees to pay a premium while the insurer agrees to pay losses covered by the policy.

The policy contract generally consists of six sections explaining coverage:

1. Declarations: The declarations section serves to personalize the policy by listing the pertinent information described in the policy, including the insured's name and address, the policy number, the type of policy, etc.

2. Coverages: Each automobile insurance policy provides several types of coverage, and each, when purchased, has a specific function.

Bodily Injury Liability – This protects a policyholder against the financial consequences arising from injury to someone from an automobile accident for which the policyholder is legally to blame.

Property Damage Liability – This coverage is similar to bodily injury liability coverage, except that it protects a policyholder against a claim for damage to another automobile or other property.

Medical Payments – Medical pays for medical or funeral expenses, up to the amount of insurance you purchase, for the insured and others injured or killed while riding in the car, no matter who caused the accident. It also covers the policyholder and resident members of their family if struck by a car as a pedestrian or if riding in another car.

Uninsured Motorists/Underinsurance Motorists/Uninsured Motorists Property Damage (UM/UIM/UMPD) – These coverages provide injury or property coverage to the insured driver when involved in an accident caused by the owner or operator of an uninsured vehicle, underinsured vehicle or a hit and run.

Collision – This coverage pays for damage to the policyholder’s car caused by impact with another object or an overturn, regardless of who is at fault.

Comprehensive – This is a catch-all coverage that pays an insured for damage to their car caused by something other than collision or upset. Perils covered under "other than collision" may include fire, theft, tornadoes, etc.

3. Supplemental Payments: This provides for payment over the limits of liability noted in your policy for expenses incurred by the insurance company, all costs taxed against you in a court suit, attorney's fees, bail bonds (up to a certain amount) and related costs. It also covers reasonable expenses you incur at the request of the company.

4. Definitions: This section of the insurance policy defines the various terms used in the policy. It explains such terms as who is covered by the contract and what the company describes as the "covered auto."

5. Exclusions: Exclusions clarify the intent of the insurance policy by explaining the situations in which the policy will not cover you or the insured vehicle. Consumers may be able to "buy back" coverage for certain exclusions by adding endorsements to the policy. Policyholders should pay special attention to this section and should be aware that the policy does not cover all things under all circumstances.

6. Conditions: This section establishes the conditions that must be present or complied with by the company and/or the insured. Examples of conditions include time-period restrictions, duties in the event of a claim, proof of loss, cancellations, etc.

The BMV's Electronic Insurance Forms Submission Program (EIFS): Frequently Asked Questions