Unit 6: Personal Lines: Automobile Insurance

What does a personal auto policy cover?

1) liability to protect the insured for their legal obligations to others; 2) medical coverages for the insured and their passengers; 3)physical damage to the insured's damaged auto.

What are some reasons permitted for canceling a policy in force 60 days or more, or if a renewal

Fraudulent claim Nonpayment of premium License or vehicle registration revoked or suspended By order of the Texas Department of Insurance

Joint Ownership

Joint ownership coverage provides for the insurable interest of multiple owners of a covered auto who are not married.

Amendatory Endorsement

Mandatory in TX bring the personal auto policy, which is used in almost all states, into compliance with Texas regulations when it is purchased by a Texas insured.

What does the Amendatory Endorsement Change?

Medical payments/limits of liability are expanded to prohibit duplicate payments for the same element of loss. Coverage for damage to the insured's auto excludes destruction or confiscation by government or civil authorities. The insurer is required to notify the insured of the initial settlement offer and also of the acceptance of any offer. Cancellation/nonrenewal provisions are revised to comply with Texas law.

Insured Duties After Loss

Notify insurer Notify police Exam under oath Proof of loss Cooperate with investigation

Towing and Labor Coverage

The endorsement pays up to $120 per disablement for towing costs and labor performed at the place of disablement. The cost of replacement materials is not covered.

Giving Notice

The insurer must give 10 days' advance written notice of cancellation to the insured and return any unearned premium on a prorate basis. The insurer may cancel for any underwriting reason in first 60 days on new business. The insurer must give 30 days' advance written notice to the insured for nonrenewal of a policy. There is no adjustment in the premium as the policy lasts until its natural expiration date.

Primary Purpose (TAIPA)

The primary purpose provides a means for obtaining auto insurance for persons who could not get it in the open (voluntary) market and have been rejected by two insurers.

Secondary Purpose (TAIPA)

The secondary purpose also provides a means for the equitable distribution of insureds to insurance companies for this type of business. Each member company receives the same percentage of this business as it writes in the open market. A member company is any insurance company authorized (i.e., licensed) to write auto insurance in Texas, except County Mutuals.

Miscellaneous Vehicles

This endorsement allows liability and physical damage to be added for a motor home, motorcycle, all-terrain vehicle, dune buggy, golf cart, or similar type of vehicle. Snowmobiles may not be insured under this endorsement.

Extended Nonowned Auto Coverage

for a named individual broadens coverage to include nonowned autos that are available for the regular use of the insured (e.g., a company car). This endorsement provides excess coverage over the vehicle owner's insurance.

What is an SR22

is a proof of financial responsibility form filed by the insurance company with the Texas Department of Public Safety (DPS). This verifies that a person carries the insurance meeting the minimum financial responsibility, and if the policy is ever cancelled, then the insurer must notify the Texas DPS.

What are the Limits of TAIPA?

minimum split limits of liability (bodily injury liability $30,000/$60,000 and property damage at $25,000) (combined single limits (CSLs) are not available); minimum personal injury protection (PIP) limits of $2,500 per person; and minimum uninsured/underinsured motorist coverage limits ($30,000/$60,000/$25,000). If insured declines PIP and UM/UIM, the insured must reject them in writing. Physical damage coverage (collision, OTC) is not available in TAIPA.

Texas Automobile Insurance Plan Association (TAIPA)

tend to be the higher risk customers; that is why these people have difficulty finding insurance in the open market. Therefore, only minimal coverages and limits are offered.