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The automobile insurance policy currently in use, as provided by Ohio law, is described below. In general terms, a policy constitutes a contract by which a company promises to pay to, or on behalf of, an insured certain losses under specified conditions. The policy also provides certain services. Automobile insurance contracts generally spell out the dollar limits of coverage and the conditions applicable to a loss occurrence.
Note: This is a general description of coverages that vary based on your specific auto policy. It’s important to read the policy and discuss any limitations or exclusions with your insurance agent or company representative. Equally important is to know and understand your duties in the event of an accident or loss. Failure to comply with these duties could void coverage.
Contents of policy
Most automobile insurance policies are composed of several interrelated parts. These parts are: declarations, coverages, supplementary payments, definitions, exclusions and conditions.
In an effort to help insurance consumers to better understand their policies, policy language has been simplified. Most policies are divided into separate parts, with each part indicating the amounts of coverage and conditions that apply to a given type of protection.
Whatever format is used, the intent is the same—to specify the maximum amount of coverage provided, when the coverage applies, the limitations to a given type of coverage and what is not covered.
A brief explanation of each section follows.
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, dollar limitations on various types of coverage, descriptions of vehicles covered, deductibles, policy dates indicating the time period in which coverage is provided, any endorsements that modify the basic coverages and, if applicable, the names of any other organization or person to whom payment is to be made in the event of a loss (e.g., bank with loan).
Coverages: Each automobile insurance policy provides several types of coverage, and each, when purchased, has a specific function. Common coverages are:
Supplementary 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. Most policies cover up to $200 a day for actual lost wages if attending a hearing or trial at the company’s request.
It is important to note that such expenses are an important benefit to policyholders. To illustrate, a basic and very important provision of automobile liability insurance contracts is the promise of the insurance company to “pay for damages for bodily injury or property damage for which any insured is legally responsible because of an accident. In addition to our (the insurance company’s) limit of liability, we will pay all defense costs we incur.” Thus, coverage for legal expenses is a direct benefit to policyholders, expenses they would incur if it were not for the insurance policy.
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.”
Exclusions: Each coverage section in a policy includes 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. You may be able to “buy back” coverage for certain exclusions by adding endorsements to the policy. Policyholders should pay special attention to these sections and should be aware that the policy does not cover all things under all circumstances.
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.
Under Ohio law, the minimum amounts of liability insurance that satisfy financial responsibility law requirements are:
If you feel that these limits are not sufficient, you may purchase higher amounts. Many companies also offer policies providing a single limit of liability—such as $35,000 or $100,000—that covers both Bodily Injury and Property Damage Liability.
Ohio’s financial responsibility law
The financial responsibility (FR) law, which took effect October 1953, is NOT a compulsory automobile insurance law. No motorist is forced to buy auto liability insurance. The law DOES require drivers to be insured or have other arrangements to pay for injuries or damages they cause in the event of a crash. The law provides protection against irresponsible drivers.
Stricter penalties for violators of the FR law were legislated during 1994. As of October 20, 1995, this law requires law enforcement officials to ask for proof of financial responsibility when a motorist is stopped for any moving violation, accident or a vehicle safety inspection. The law requires insurance companies to issue auto insurance identification cards to policyholders, which suffices as proof of financial responsibility.
As an additional enforcement measure, the Ohio BMV enacted a mail-in random verification program in December 1998. Those receiving the mailing are also required to provide proof of FR.
For further information regarding the law and its penalties, see the section titled “Ohio’s Financial Responsibility Law.”