RMIN 4000 Ch. 20 & 21

All of the following would be considered an uninsured motorist EXCEPT: 1: a motorist who has less insurance than required by the state's financial responsibility law 2: an unidentified hit and run driver 3: a motorist who has enough insurance to meet the state's financial responsibility law, but not enough to fully reimburse the insured for her injuries 4: a driver whose insurance company is insolvent

#3: this is the definition of an underinsured motorist

Susan is critically injured by a hit-and-run driver while she is driving her car on a work-related errand. Her medical expenses, which total $50,000, are paid in full by her employer's worker's compensation policy. Her injuries are also covered under her personal auto policy's uninsured motorists coverage. Assuming she carried a $100,000 limit for uninsured motorists coverage, how much would Susan be paid under her personal auto policy?

$0! The Part C limit of liability provision states that the insurer will not pay any part of a loss that could be covered under a workers' compensation law.

Under Part B: Medical Payments coverage, limits typically range from...

$1,000 to $10,000 per person

Split limit example ($100,000/$300,000/$100,000)

$100,000 BI per person/$300,000 BI per accident/ $100,000 PD per accident

The insured, who carries $100,000 of underinsured motorists coverage, is involved in an auto accident. The other driver, who was at fault, carries the state's required limit of $50,000 of auto liability insurance. The named insured's damages for bodily injury are $65,000. How much will the insured's underinsured motorists coverage pay for this loss?

$15,000. Underinsured motorists coverage pays the difference between the at-fault driver's amount of liability insurance and the actual amount of the insured's BI damages. In this case, $65,000 - $50,000 = $15,000.

Manisha is liable for $60,000 in bodily injury damages due to an accident she caused while driving a car she borrowed from her neighbor. Manisha's personal auto policy has a $50,000 limit; the neighbor's policy has a $25,000 limit. How much would Manisha's personal auto policy pay for this loss?

$35,000 When the insured is driving a nonowned auto, the insured's policy is excess to other insurance. In this case, the policy will only pay the amount not paid by the neighbor's liability policy, or $35,000.

Beth had an accident in her car and is liable for damages of $60,000. She has a personal auto policy with a $50,000 single liability limit and other applicable liability insurance of $25,000. How much would the personal auto policy pay for this loss?

$40,000 The other insurance clause for liability insurance states that the company will pay only its share of a loss that is also covered by other insurance. This does not apply if the vehicle is not owned by the insured.

Other-than-collision (OTC) coverage

(also referred to as comprehensive (comp)) 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

Nusrut was injured when she lost control of her car and hit an embankment. Which part of her personal auto policy will cover her medical expenses? Part A—liability coverage Part B—medical payments coverage

*Part B*—medical payments coverage provides protection for the named insured, family members, and passengers in the named insured's auto for injuries received in an accident, regardless of who was at fault.

Under Part E, the insurer is allowed to inspect your vehicle....

*prior to repair/disposal* if you are seeking coverage under Part D

Part A: Liability Coverage

- *Most important part of the policy* - Protects a covered person against suit or claim arising out of ownership or operation of a covered vehicle - covered damages and defense costs - split limits ($100,000/$300,000/$100,000) vs Single Limit ($500,000)

Major Rating Variables for Personal Auto Insurance

- Garaging Location - Age, Gender, Marital Status - Vehicle Use - Driver Education - Good Student Discount - Number of vehicles - Limits - Deductible - Insurance score - Driving record - multi-policy discount

Truck or van

- Gross vehicle weight must be 10,000 pounds or less, - must not be used in business (with exceptions)

Exclusions to Medical Payments Coverage

- Occupying any vehicle with fewer than four wheels - Public or livery conveyance - Using the vehicle as a residence - Vehicle used during course of employment

Exclusions to Uninsured Motorists Coverage (Part C)

- Uninsured motor vehicles owned by the insured or a family member - The insured settles a claim without the insurer's consent - The vehicle is used as a public or livery conveyance - When workers compensation benefits are applicable - There is no reasonable belief the person is entitled to use the vehicle - No coverage for punitive damages

What 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

Definition of "your covered auto"

- any auto shown in the declarations - a "newly acquired auto" - a "trailer" owned by the named insured - a temporary substitute vehicle

Collision coverage examples

- car overturns on icy roads - car hits another car, telephone pole, tree, or building - you bang your car door against another car damaging your door

Part F: General Provisions Territory

- coverage in U.S., Puerto Rico, and Canada - this means no coverage in Mexico, Europe, etc.

Part E: Duties After an Accident or Loss, the police must be notified if:

- if a hit-and-run driver is involved - vehicle is stolen

Important Exclusions to Liability Coverage:

- intentional injury or damage - property owned or transported - property rented, used, or in the insured - used as a public or livery conveyance - vehicles used in a business - vehicles with fewer than four wheels - vehicles made available for your regular use

Diminution in Value (DIV)

- loss in market or resale value - may be owed depending on the state under Part D

Deductibles under Part D Loss Settlement

- may be different for comp and collision - some insureds prefer lower comprehensive deductibles due to glass claims

No-Fault Auto Insurance benefits restricted to economic loss:

- medical expenses - loss of earnings - essential services expenses (housework) - funeral expenses - survivors' loss benefits

Part F: General Provisions includes provisions related to:

- policy changes - fraud - suit against the insurer - policy period - policy termination

Part E: Duties After an Accident or Loss, the insured must:

- 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

(Part B - Part D) If more than one policy covers a loss (other insurance):

- 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 *non-owned* vehicle

Who has liability coverage in the PAP?

- 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

Who has uninsured motorists coverage under the PAP?

- the named insured and family members - another person while occupying a covered auto - any person legally entitled to recover damages (ex. surviving spouse)

Who has medical payments coverage under the PAP?

- the named insured and family members: - while occupying any motor vehicle - as pedestrians when struck by a motor vehicle - other persons occupying a covered auto are covered, but only in an owned vehicle

Under Part F, after 60 days, the insurer can cancel only if:

- the premium has not been paid - the driver's license of any insured has been suspended

Exclusions to Part D: Coverage for Damage to Your Auto

- use as a public or livery conveyance - damage from wear and tear, freezing, and mechanical or electrical breakdown - electronic equipment that is not permanently installed - trailer, camper body, or motor home - custom furnishings and equipment (coverage available through endorsement)

Under Part D of the personal auto policy, a temporary substitute auto is considered to be: 1. a nonowned auto 2. an uninsured auto 3. an owned auto 4. a covered auto

1. a nonowned auto Under physical damage coverage, a temporary substitute auto is considered to be a nonowned auto instead of a covered auto.

An assigned risk plan covers: 1. individuals who are uninsurable in the standard market 2. individuals who do not own their own autos 3. individuals who cannot afford standard rates 4. insurance companies for losses involving government-owned autos

1. individuals who are uninsurable in the standard market. Assigned risk plans insure motorists with poor driving records who are unacceptable risks for most insurance companies.

What is the estimated percentage of uninsured motorists in GA?

12%

Under Part B: Medical Payments coverage, coverage is rendered within _____ years from date of the accident

3

Medical payments coverage provides protection for all of the following EXCEPT: 1. the insured's family 2. passengers in the insured's vehicle 3. occupants of a vehicle that is struck by the insured's vehicle 4. the insured

3: occupants of a vehicle that is struck by the insured's vehicle Medical payments coverage provides protection for: - the named insured, - family members, and - passengers in the named insured's auto for injuries received in an accident, regardless of who was at fault. It is not a form of liability coverage for injuries sustained by passengers in another auto involved in an accident with the insured.

Modified No-Fault

Accident victims can sue if bodily injury exceeds a certain dollar amount or verbal threshold (death, dismemberment, etc.)

Pure No-Fault

Accident victims cannot sue at all, no payments for pain and suffering

(Part D Loss Settlement) For a total loss, ________ is paid

Actual Cash Value (ACV)

No-Fault Auto Insurance

After an accident involving bodily injury, each party collects from their own insurer regardless of fault

Ned loses control of his car and hits a parked car. Which coverage of Ned's personal auto policy will pay for the damage to the parked car? Part A—liability coverage Part D—coverage for damage to your auto

Because Ned was responsible for this loss, it is covered under his liability coverage. Part D—coverage for damage to your auto covers physical damage losses to the insured's car, NOT the other car.

PAP Part D

Coverage for damage to your auto

Part C: Uninsured Motorists (UM) Coverage

Covers bodily injury caused by an uninsured motorist, a hit-and-run driver, or a negligent driver whose insurance company is insolvent - Property damage may also be covered (depending on the state) - the uninsured motorist must be legally liable

Part D: Coverage for Damage to Your Auto

Covers direct and accidental loss to a covered auto or non-owned auto *includes collision and other-than-collision*

Part B: Medical Payments Coverage

Covers reasonable medical expenses (medical, surgical, x-ray, dental, &funeral) incurred by an insured in an accident *coverage is not based on fault* - covers medical services rendered within *3 years* from the date of the accident - Limits typically range from *$1,000 to $10,000* per person

Which of the following losses would be covered under Part D of the personal auto policy? 1. Custom carpeting that the named insured added to his van is damaged in a flood. 2. The insured's cell phone is damaged in a collision. 3. The insured's car is stolen on a cold winter day. The thieves run down the battery, then abandon the car in a field. Before the car is discovered, the battery freezes and is ruined. 4. When the insured fails to pay his taxes, the IRS confiscates his car and sells it.

Damage due to freezing is normally excluded under Part D. However, an exception is made when the damage results from the total theft of the auto.

PAP Part E

Duties after an accident or loss

PAP Part F

General Provisions

Nonrenewal

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

Public or livery conveyance

In case law, a method of transportation that is indiscriminately offered to the general public, such as a taxi or public bus

Personal Auto Policy (PAP) Part A

Liability Coverage

PAP Part B

Medical Payments Coverage

If the named insured acquires a new car that does not replace a previously insured auto, what must the insured do to obtain liability coverage for the auto under her Personal Auto policy?

Notify...within 14 days of purchase The personal auto policy considers newly acquired cars to be covered autos. How coverage applies depends on several factors, such as the policy coverage, whether or not the car is a replacement auto, and when the insurer is notified about the new car.

Several years ago, I was driving my car when a deer ran in front of me. As I was unable to avoid the deer, I collided with it and it caused a significant amount of damage to my car. The damage was covered under the "Coverage for Damage to Your Auto" part of my insurance policy. Which type of loss was this?

Other Than Collision (Comprehensive)

What is the most important part of the personal auto policy (PAP)?

Part A: Liability Coverage

Under No-Fault Auto Insurance, what is added to the policy?

Personal Injury Protection (PIP) endorsement

Which of the following losses would be paid under the other-than-collision coverage of the personal auto policy? 1. A radiator develops a leak after the car has 100,000 miles on it. 2. The insured's car is stolen and never recovered. 3. The insured's auto is damaged when it is hit by another car that runs a red light. 4. The insured's auto skids on icy pavement and flips over.

Stolen and never recovered. The answer involving the radiator leak is not correct because mechanical breakdown is excluded by the policy. The answers involving the auto flipping over and the auto being hit by another car are not correct because they are collision losses. The insured's car being stolen and never recovered would be covered under the other than collision coverage.

(Part D Loss Settlement) For a partial loss, what is paid?

The amount required to repair or replace the damaged property with like kind and quality

Which of the following losses could be paid under Uninsured Motorists coverage? Assume there are no endorsements attached to the policy. 1. Tabb, the insured, drives the wrong way down a one-way street and collides with another car. Tabb is seriously injured. The driver of the other car has no liability insurance. 2. Barb, the insured, is hit by a drunk driver who is uninsured. She is not injured, but her car is totaled. 3. Leslie, the insured, is injured when she is struck by a car that runs a red light. The driver has no liability insurance. 4. Bernard, the insured, is on his way to work when his vehicle is rear-ended by a car that was following too closely. Bernard suffers a back injury. The driver of the other car carries the minimum amount of insurance required in the state.

The answer choice involving *Leslie* could be paid under uninsured motorist (UM) coverage. In the choice which involves Tabb as the insured, this answer is incorrect because Tabb is at fault, so any UM coverage he may have would not apply. UM provides coverage for bodily injury, so the answer choice with Barb is incorrect because it involves property damage. The choice involving Bernard is incorrect because the at fault driver did carry the minimum required limits of liability insurance.

All of the following autos owned by the named insured could be covered under a personal auto policy EXCEPT: 1. a panel truck used to make deliveries for the insured's manufacturing business 2. a station wagon 3. a pickup truck used on the insured's farm 4. a Chevrolet sedan

The panel truck is not eligible because it is used for business purposes

Under Part D, what expenses might be added by endorsement?

Towing and labor

Underinsured motorists coverage may be abbreviated as...

UN or UIM

PAP Part C

Uninsured Motorists Coverage

Ma'Chelle was injured when she was struck by a car while walking across the street. The driver, who cannot be identified, left the scene of the accident. Would this loss be covered under Ma'Chelle's personal auto policy?

Yes, it would be covered under Part C—uninsured motorists coverage. A car operated by a hit-and-run driver who cannot be identified is considered an uninsured motor vehicle.

Automatic Termination

a policy is automatically terminated if the insured decline's the insurer's offer to renew

Non-owned auto coverage also applies to...

a temporary substitute vehicle

endorsement (insurance)

amendment that alters the terms of the contract either by expanding or restricting coverage

Under Part F, the named insured can cancel when?

at any time!

Part A: Liability Coverage covers...

damages and defense costs

Out-of-state coverage

if you drive into a state with higher minimum liability limits, your policy will automatically match those limits

Under Part C, the uninsured motorist must be...

legally liable

Underinsured motorists coverage is _______ coverage that can be added to PAP

optional

Gap insurance

pays the difference between the amount an insurer pays on a totaled car and the amount owed on the loan or lease; available by endorsement

What types of vehicles are covered by the PAP?

private passenger auto, station wagon, sport utility vehicle (SUV), truck or van

Under Part C, what may also be covered depending on the state?

property damage

Under no-fault auto insurance, motorists can still sue the negligent driver for:

property damage

Temporary transportation expenses

provides coverage for rental car usage (up to a daily and total limit) if covered vehicle is damaged due to comprehensive or collision loss

Compulsory Insurance Laws

require motorists to carry at least a minimum amount of liability insurance *before the vehicle can be licensed or registered*

Split limits

the amount of insurance for bodily injury (BI) and property damage (PD) are stated separately

Underinsured motorists coverage

the maximum amount paid is the underinsured motorist's coverage limit stated in the policy less the amount paid by the negligent driver's insurer *coverage differs depending on state*

Collision coverage

the upset of your covered auto or non owned auto or its impact with another vehicle or object *paid regardless of fault*

With no-fault insurance, injured motorists collect payment for their injuries from:

their own insurance company

Non-owned auto

vehicle not owned by or made available for the regular use of the named insured or family member

A collision damage waiver (CDW) may be unnecessary on a rental car if...

you carry collision and comprehensive coverage on your own car