RMI - Chapter 20

Major changes since the 2005 PAP include:

 – Exclusions for car sharing

 – Using the auto as part of a Transportation Network Platform, such as Uber or Lyft

Eligible vehicles under the 2017 Personal Auto Policy include:

 – A four-wheeled motor vehicle owned or leased by the insured for at least 6 consecutive months

 – A pickup or van with a gross vehicle weight (GVW) rating of 10,000 pounds or less

•Autos covered by the policy include:

 – Any auto shown in the declarations page

 – A newly acquired auto

 – A trailer owned by the named insured

 – A temporary substitute vehicle, which is a nonowned auto or trailer used temporarily because of mechanical breakdown, repair, servicing, loss, or destruction of a covered vehicle

•Liability coverage (Part A) is the most important part of the PAP

It protects a covered person against a suit or claim arising out of the ownership or operation of a covered vehicle

How is coverage written under Part A: Liability?

Split limits: the amounts of insurance for bodily injury liability and property damage liability are stated separately(usually)

Single limits: applies to both bodily injury and property damage liability

•Liability coverage applies to:

 – The named insured and any resident family member

 – Any person using the named insured’s covered auto

 – Any person or organization legally responsible for any insured’s use of a covered auto on behalf of that person or organization

 – Any person or organization legally responsible for the named insured’s or family members’ use of any auto or trailer (other than a covered auto or one owned by the person or organization)

•The Liability policy also allows for certain supplementary payments including:

 – The cost of a bail bond, up to $250

 – Premiums on appeal bonds and bonds to release attachments

 – Interest accruing after a judgment

 – Loss of earnings, up to $250/day

 – Other reasonable expenses

Exclusions to the Liability coverage include:

 – Intentional injury or damage

 – Property owned or transported

 – Property rented, used, or in the insured’s care

 – Bodily injury to an employee

 – Use as a public or livery conveyance

Vehicles used in the auto business and Racing vehicles

Part A: Split limits of 100/300/50 means that you have:

– A maximum amount of $100,000 for bodily injury to each person for any one accident

 – A maximum amount of $300,000 for the bodily injury to all persons resulting from any one accident

 – A maximum amount of $50,000 paid for property damage resulting from any one accident

•If more than one liability policy covers a loss:

 – The insurer pays its pro rata share of the loss for an owned vehicle

 – The insurance coverage is excess over any other insurance for a nonowned vehicle

Medical payments coverage

•will pay all reasonable medical and funeral expenses incurred by an insured for services rendered within three years from the data of the accident

-coverage is not based on fault

Part B: The named insured and family members are covered:

While occupying any motor vehicle, or

•As pedestrians when struck by a motor vehicle

•Other persons occupying a covered auto are covered, but only in an owned vehicle

Part B: Exclusions to the coverage include injuries sustained:

 – While occupying a vehicle with fewer than four wheels

 – While operating the vehicle as a public or livery conveyance, or when logged into a transportation network platform

 – When the vehicle is used as a residence

 – When using the vehicle for business

 – When the vehicle is used without a reasonable belief of permission

 – When injuries are from a nuclear weapon or war

 – When the vehicle is competing in a race

Part B: If more than one auto policy covers a loss:

 – The insurer pays its pro rata share of the loss for an owned vehicle

 – The insurance coverage is excess over any other insurance for a nonowned vehicle

Uninsured Motorists coverage

•pays for the bodily injury caused by an uninsured motorist, by a hit-and-run driver, or by a negligent driver whose insurance company is insolvent

 – In some states, property damage is also covered

 – The uninsured motorist must be legally liable

 – The insurer’s maximum limit of liability for any single accident is the amount shown in the declarations

Part C: The claim is subject to arbitration if

•the insured and insurer disagree over the amount of damages

Part C: The coverage applies to:

 – The named insured and family members

 – Another person while occupying a covered auto

 – Any person legally entitled to recover damages

Part C: Coverage is excluded for many reasons, including:

 – The insured settles a claim without the insurer’s consent

 

Four groups of vehicles are considered to be uninsured vehicles:

 – A motor vehicle or trailer for which no bodily injury liability insurance policy applies at the time of the accident

 – An insured vehicle with less coverage than the amount required by the state’s financial responsibility law

 – A hit-and-run vehicle

 – A vehicle covered by an insurer that denies coverage or becomes insolvent

Underinsured Motorists

coverage can be added to the PAP by endorsement to provide more complete protection

 – Coverage is typically added as an endorsement

 – Some states make coverage mandatory, while others make it optional

Part D: Coverage for Damage to Your Auto

the insurer agrees to pay for any direct and accidental loss to a covered auto or any nonowned auto

Collision

•as the upset of your covered auto or nonowned auto or its impact with another vehicle or object

-are paid regardless of fault

other-than-collision loss is a loss due to the following perils:

 – Missiles or falling objects

 – Hail, water, flood, fire, windstorm

 – Theft or larceny

 – Explosion or earthquake

 – Malicious mischief or vandalism

 – Riot or civil commotion

 – Contact with a bird or animal

 – Glass breakage

nonowned auto

a private passenger auto, pickup, van, or trailer not owned by or furnished or made available for regular use of the named insured or family member, while it is in the custody of or being operated by the named insured or family member

– The coverage also applies to a temporary substitute vehicle

•Part D also pays for temporary transportation expenses

 – The expense must be the result of a covered loss

 – Coverage is subject to a daily and total limit

 – Coverage for towing and labor costs can be added by an endorsement

Part D: Exclusions to the coverage include:

– Use as a public or livery conveyance, or when logged into a transportation network platform, whether or not a passenger is occupying the vehicle

 – Damage from wear and tear, freezing, and mechanical or electrical breakdown

 – Radioactive contamination or war

 – Certain electronic equipment, such as radios

 – Tapes, records, and disks

 – Government destruction or confiscation

 – Trailer, camper body, or motor home

 – Racing vehicle

Part D: For a total loss,

the policy pays the actual cash value less the deductible

Part D: For a partial loss,

the policy pays only the amount necessary to repair or replace the damaged property of like kind and quality

Part E: Duties after an Accident or Loss

– Promptly notify the insurance company or agent

 – Cooperate with the insurer in the investigation

 – Send the insurer copies of any legal notices received in connection with an accident

 – Take a physical exam, if required

•The police must be notified if a hit-and-run driver is involved

•The insurer is allowed to inspect your vehicle if you are seeking coverage under Part D

Part F: Cancellation provision

•The named insured can cancel at any time by returning the policy to the insurer or providing written notice. If a policy has been in force for more than 60 days, the insurer can cancel only if:

– The premium has not been paid

 – The driver’s license of any insured has been suspended, or

 – The policy was obtained through material misrepresentation

Part F: Nonrenewal

•if an insurer decides to discontinue coverage, the insured must be given notice at least 20 days before the end of the policy period

Part F: Automatic termination

a policy is automatically terminated if the insured declines the insurer’s offer to renew

miscellaneous-type vehicle endorsement

•can be added to the PAP to insure motorcycles, mopeds, motor scooters, golf carts, motor homes, dune buggies, etc.

 – Does not cover snowmobiles

 – The liability coverage does not apply to a nonowned vehicle

 – A passenger hazard exclusion can be elected, which excludes liability for bodily injury to any passenger on a motorcycle