Insurance for personal automobiles, like other types of insurance, is constantly changing. It has to, because the events that the policy needs to respond to also change. There have been minor changes to the policy over the past few years. Most of these changes have been made were the result of court rulings or in some cases changes in definitions. The basic coverages have not changed. Below is an explanation of the coverages in the Personal Auto Policy.
The Personal Auto Policy provides coverage for Liability and Physical Damage for eligible persons and vehicles. Specifically, the Personal Auto Policy coverage sections consist of Part A -Liability Coverage, Part B – Medical Payments Coverage, Part C – Uninsured Motorists Coverage and Part D – Coverage for Damage to Your Auto. Each coverage part has its own insuring agreement, exclusions, limit of liability and other insurance provisions. This format evolved due to the ISO goal to constantly clarify the coverage intent of its policy forms. In this case, a longer policy is a necessary evil since the pre-Personal Auto Policy form style of having key provisions apply to several coverage parts became increasingly vulnerable to misinterpretations. The latest edition of the PAP is more complex as it appears to be striving for more clarity by adding wording to several exclusions and definitions. In particular, this applies to the exclusions for coverage to sound reproducing equipment and the definition for newly acquired autos.
Liability pays damages for bodily injury or property damage for which the insured becomes legally liable because of an accident. Besides payment for bodily injury and property damage, the policy also considers damages to include prejudgment interest and defense costs. This section also provides supplemental protection including the cost of bail bonds, loss of earnings and other reasonable expenses. The maximum daily coverage for loss of earnings was substantially increased and now it is a more realistic coverage supplement. Part A excludes coverage for intentional acts, damage to property owned or controlled by the insured, bodily injury occurring in the course of work and several other situations.
Medical Payments Coverage pays for reasonable expenses incurred for necessary medical expenses and/or funeral services due to bodily injury. The BI must involve an insured and be due to a covered accident. A different definition of insured applies to this part. Coverage is provided to an eligible insured as either a vehicle occupant or as a pedestrian. Coverage under Part B also extends to passengers in the covered auto. The exclusions are for losses involving vehicles with less than four wheels, vehicles used as a residence, a public or livery conveyance, vehicles owned by or available for the regular use by any insured. Losses occurring during employment, while operating a vehicle without permission, involving an insured’s business and several other situations are also excluded. The Limit of Liability section explains that the limit shown in the policy declarations is not affected by the number of insured persons, claims made, vehicles and premiums shown in the declarations, as well as the number of vehicles involved in a given accident. It also states that duplicate payments will not be made under the same policy. The duplication wording is used in several areas of the Personal Auto Policy.
This section’s insuring agreement promises to pay for bodily injury suffered by an insured which arises out of the negligent party’s ownership, operation or maintenance of an uninsured motor vehicle. This coverage “floats” with family members in any vehicle in which they are riding. Some types of damages that are paid from this coverage are lost wages, medical expenses, rehabilitation expenses or pain and suffering.
The insuring agreement states that coverage under this part takes care of “collision” and “other than collision” damage to any “covered auto” shown in the declarations. The policy defines collision as damage caused by your vehicle being upset (turned over, moved, etc.) or by the impact with another vehicle or object. Other than “collision” is defined as damage from falling or flying objects, fire, theft, explosion, earthquake, windstorm, vandalism, riots, birds/animals, broken glass, hail, water or flood. A coverage extension called Transportation Expenses is available under this part; it is extended to a non owned car or trailer which takes the place of a covered auto that’s inoperable because of theft, breakdown or destruction. The replacement vehicle is covered as a temporary substitute auto. The policy pays for daily expenses up to $20, up to a total of $600 caused by a loss of use of a covered auto due to collision, other than collision, or the legal liability for loss of use expenses to the non owned vehicle’s owner. The expense coverage is available after 48 hours for a theft loss and after 24 hours for any other eligible cause of loss. In either case, coverage ends when the covered car is again available or a settlement has been paid. Exclusions. No coverage exists for cars used to carry persons or goods for sale, for damage caused by wear and tear, freezing, breakdown or road damage to tires. Other excluded causes of loss include radiation/nuclear accidents, war, civil upheavals and loss to electronic entertainment equipment. Certain exceptions apply to such equipment that’s installed in a certain way or which perform certain functions. Unfortunately, you’re also out of luck if the loss is caused by confiscation from the government. Damage To Your Auto are losses to owned camper bodies and trailers that aren’t listed on the declarations, non owned autos used without permission, awnings, radar/laser detectors, custom furnishings/equipment for pickups or vans, non owned vehicles used in personal auto sales, repairs, storing or parking or other excluded businesses or vehicles used in races.
Now that the PAP has explained what it is responsible for, it is time to tell an insured about her or his duties. Briefly, an insured must tell the company details about any accident/loss and cooperate in the process, including any legal action. An insured must also be willing to undergo physical exams, take oaths, give permission to seek medical and other relevant records, give proof of loss, make police reports, protect and preserve property and submit property to inspections and appraisals.
Generally, the Personal Auto Policy is designed to cover private passenger autos which include vans and pickup trucks; but the latter automobile types must be under 10,000 pounds gross vehicle weight. Qualifying vehicles must be owned either individually or jointly. Eligible joint ownership is restricted to two or more residents or relatives. The Personal Auto Policy must be endorsed in order to properly protect the interest of non related residents who jointly own a vehicle.
Of course, the actual rating of personal auto insurance depends strictly upon an individual company. Historically, age, marital status, location, use of the vehicle, violations and losses are the areas used to generate a auto rate. Recently, companies have also added insurance scoring (which looks at various factors provided by credit collection agencies) to determine the likelihood of a auto loss.