Chapter 20 & 21

Auto Insurance Overview

• Focus on Personal Auto Policy (PAP) covering various aspects of auto insurance.

Coverage Parts of Personal Auto Policy

• Part A: Liability Coverage

  • Protects against legal claims arising from vehicle ownership/operation.
  • Covers damage and defense costs.
  • Limits:
  • Split Limits: $100,000 (per person BI) / $300,000 (per accident BI) / $50,000 (PD per accident).
  • Single Limit: $500,000 (overall).

• Part B: Medical Payments Coverage

  • Covers medical expenses incurred by insured persons from an accident (fault not considered).
  • Coverage range: $1,000 to $10,000 per person.

• Part C: Uninsured Motorists (UM) Coverage

  • Covers injuries caused by uninsured or hit-and-run drivers.
  • The driver must be legally liable for the coverage to apply.

• Part D: Coverage for Damage to Your Auto

  • Covers direct loss to covered cars.
  • Includes Collision and Other-Than-Collision (OTC) coverage.

Types of Vehicles Covered

• Eligible Vehicles Under PAP:
  • Private passenger auto, station wagon, SUV, truck/van (≤ 10,000 lbs, not for business use).

Definition of “Your Covered Auto”

• Includes:
  • Autos in declarations, newly acquired autos, owned trailers, temporary substitute vehicles.

Liability Coverage Details

• Most critical coverage in PAP protects against bodily injury and property damages.
• Example Scenario: Charlie's policy with $50,000/$100,000/$25,000 - total liabilities caused in an accident.

Minimum Liability Insurance Requirements by State

• States require minimum limits that vary significantly across the U.S. (e.g., California: $15,000/$30,000/$5,000; Georgia: $25,000/$50,000).

Exclusions in Liability Coverage

• Key Exclusions:
  • Intentional injury, vehicle used in business, fewer than four wheels, against owned property, etc.

Additional Coverage Provisions

• Out-of-State Coverage: Matches higher state minimums.
• Pro-rata share of coverage applies if more than one policy is active.

Part B: Medical Payments Coverage Restrictions

• Excludes:
  • Vehicles with < 4 wheels, public conveyance, or vehicles used for residence/work.

Uninsured Motorist (UM) Coverage

• Eligibility:
  • Named insured, family members, and legal entities.

Part D Detailed Coverages

• Types of Coverage:
  • Collision: Covers damage from accidents, regardless of fault.
  • Other-than-Collision: Covers damage from theft, vandalism, and natural disasters.

Exclusions for Damage Coverage

• Excludes:
  • Normal wear and tear, damage from personal usage, and specific vehicles like rentals.

Claims Handling in Part D

• Total loss paid at actual cash value (ACV).
• Partial loss covers repair/replacement with similar quality.

Duties Following an Accident (Part E)

• Notify insurer, cooperate in investigations, police involvement for hit-and-runs, and allow vehicle inspection.

General Provisions (Part F)

• Defines policy changes, fraud implications, coverage area (U.S. only) including specific periods of insurance.

No-Fault Insurance Overview

• Each party collects from their insurance, may involve Personal Injury Protection (PIP) for economic losses.

Factors Affecting Auto Insurance Rates

• Rating variables:
  • Location, driver profile (age, gender), vehicle use, driving record, and more.