chapter 20

ppt 1

overview of personal auto policy

• the 2017 personal auto policy (PAP) is widely used throughout the united states

• the 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 include:

  • a four wheeled moto vehicle owned or leased by the insured for at least 6 consecutive months

  • a pickup or van with a gross vehicle weight rating of 10,000 pounds or less

• autos covered by the policy include:

  • any auto shown in the declarations page

  • a newly aquired auto

  • a trailer owned by the named insured

  • a temporary aubstitutw vehicle, which is a nonowned auto or trailer used temporarily because of mechanical breakdown, repair, servicing, loss, or destruction of a covered vehicle (a loaner car)

part A: liability coverage

• 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

  • the coverage is usually written in split limits, where the amounts of insurance for bodily injury liability and property damage liability are stated separately

  • coverage can also be written with a single limit, which applies to both bodily injury and property damage liability

• liability coverage applies to:

  • the name insured and any resident family member

  • any person using the named insured covered auto

  • any person or organization legally responsible for any insureds use of a covered auto on behalf of that person or organization

  • any person or organization legally respobsible for the named insureds or family members use of any outo or trailer (other than a covered auto or one owned by the person or organization)

• the insurer agrees to provide defense and pay all legal defense costs for claims covered by the policy (for which a covered driver is determined to be negligent (at fault))

• the policy also allows for certain supplementary payments including:

  • the cost of a bail, up to $250

  • premiums on appeal bonds and bonds to release attachments

  • interest accuring after a judgement

  • loss of earnings, up to $250/day

  • other reasonable expenses

• exclusions to the coverage include:

  • intentional injury or damage

  • property owned transported

  • property rented, used, or in the insureds care

  • bodily injury to an employee

  • use as a public or livery conveyance (i.e. taxi)

    • this exclusion was broadened to exclude liability while the covered auto is used as part of a transportation network platform, an online or digital network designed to connect passengers with drivers for pre-arranged transportation for a fee (i.e. uberf/lyft)

  • vehicles used for business

  • using a vehicle without reasonable belief the person is entitled to do so

  • vehicle covered under special nuclear energy contacts

  • vehicle with fewer than four wheels

  • vehicle furnished for the insureds regular use

  • vehicle owned by, furnished, or made available for the regular use of any family member

  • racing vehicle

• the PAP policy is typically written with split limits

• split limits of 250/500/100 means that you have:

  • the maximum amount of $250,000 for bodily injury to each person for any one accident

  • maximum amount of $500,000 for the bodily injury to all persons resulting from any one accident

  • a maximum amount of $100,000 paid for property damage resulting from any one accident

• if an accident occurs in another state, and the financial responsibility law in that state has higher liability limits than shown in the declarations, the PAP automatically provides the higher limits

• 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

part B: medical payments

• medical payments coverage will pay all reasonable medical and funeral expenses incurred by an iknsured for services rendered within three years from the date of the accident

  • coverage is not based on fault

• the named insured and family members are covered:

  • while occupying any motor vehicle, or

  • as pedistrians when struck by a motor vehicle while crossing nutwood

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

• exclusions to the coverage include injuries sustained:

  •