Chapter 12 - Personal Auto Policy

Part A - Liability Coverage - Supplementary Payments

- Cost of bail bonds - pays up to $250 for cost of bail bonds - Premium on appeal bonds and bonds to release attachments - Interest accruing after a judgment - Loss of earnings because of attendance at trials - Other reasonable expenses incurred a the insurer's request

Part C - Uninsured Motorists Coverage - Underinsured Motorists Cov

- Increasing number of people with a high limit UM coverage are involved with accident with drivers who have coverage slightly above the state minimum -Because these driver's have the state minimum, they are not considered uninsured motorists

Part C - Uninsured Motorists Coverage -- Exclusions

- Owned but not Insured Vehicles - Public or livery conveyance - Owned Vehicle with Primary UM Coverage on other policy - Claim settlement that prejudices Insurer's right of recovery - No benefit to workers compensation or disability benefits insurer - Punitive damages - Vehicles used without reasonable belief of being entitled

Part A - Liability Coverage - Limits of Liability

- PAPs are written on a split-limit basis with 3 types of limits -Bodily injury to each person -Bodily injury to all persons in each accident -property damage in each accident

Part C - Uninsured Motorists Coverage - Insuring Agreements

- types of expenses include - medical expenses, rehabilitation, lost wages Persons Covered: -named insured -any other person occupying covered auto -any person legally entitled to recover damages Criteria that determine what is an UM vehicle: - no bodily injury insurance or bond - bodily injury liability policy or bond is not in force - hit-and-run - if the bodily injury insurance company denies coverage or becomes insolvent Criteria that determine what is NOT an UM vehicle: - it is owned by, furnished, or available for regular use of you or any family members - it is owned by self-insurer - owned by government unit or agency - operated on rails or crawler treads - designed mainly for use off public roads while not on public roads - located for use as a residence or premises

Definitions - Covered Auto

-Any vehicle on the dec page -newly acquired auto -any trailer that ind does not own, while being used as a temp substitute for any other vehicle because other auto is: 1. breakdown 2. repair 3. servicing 4. Loss 5. Destruction - temporary substitute auto or trailer

Part D - Coverage For Damage to Your Auto - Limits of Liability

-Coverage for physical damage loss is the lower of either the actual cash value (ACV) of the damaged or stolen property or the amount necessary to repair or replace the property with other property of like kind and quality

Part A - Liability Coverage - Exclusions

-Intentional Injury - Property owned or transported - Property rented to, used by, or in the care of the insured - Bodily injury to an employee of an insured - Public or livery Conveyance - Garage business use -Other business use -Vehicles used without reasonable belief of being entitled -Nuclear energy liability loss - Vehicles with fewer than four wheels or designed for off-road use - Other vehicles owned by insured or available for insured regular use - Vehicles owned by or available for family member's regular use - Racing

Part D - Coverage For Damage to Your Auto - Insuring Agreement

-agreement to pay damages in loss -indicated whether or not insured has collision coverage, collision is defined in the PAP as the upset of or impact of "your covered auto" or "non- owned auto" with another vehicle or object -indicated whether insured as OTC coverage (physical damage not caused my a collision) -OTC is less expensive and has lower deductible than collision -OTC causes of loss include: a.missiles or falling object -fire -theft or larceny -explosion or earthquake -windstorm -hail, water, or flood -Malicious mischief or vandalism -riot or civil commotion -contact with a bird or animal -OTC covers any collision with a bird or animal z. breakage of glass; if glass is broken during a collision, insured can opt to have OTC cover it -states the coverages to a "non-owned auto" -Part D will cover a rented or borrow car that is not made for regular use -will also cover any auto or trailer that is being used as a temporary substitute because other auto or trailer is out of normal use -indicates deductible of policy

Rating Factors

-for liab cov. factors include: age, sex, marital status, driving record, vehicle use, annual mileage, territory of garage, and liab limits selected. Some states use number of years of driving experience instead of age - For physical damage, factors include: all of the above, plus the year, make, and model of the insured vehicle, and the deduct selected

Part A - Liability Coverage - Out of State Coverage Financial Responsibility Other Insurance

-if accident occurs in a state with high liability limits, the PAP automatically provides higher limits for that accident -provides proof of insurance 7. Other Insurance - addresses situation in which more than 1 policy covers a liability claim - if this occurs, each insurer pays its pro ratio share, refer to page 3.20 in book

Part A - Liability Coverage - Insuring Agreement

-states insurers duties to pay damages and defense costs - damages include: compensatory damages, punitive or exemplary damages - prejudgment interest - interest that may accrue on damages before a judgment has been rendered -defines the persons and organizations insured under Part A Four classes: - named insured and family members - any person using the named insured's covered auto, - any person or organization legally responsible for the acts of a covered person while using a covered auto - any person or organization legally responsible for the named insured or family members use of any auto or trailer

Part D - Coverage For Damage to Your Auto - -Transportation Expenses -Exclusions

-this is a coverage extension for substitute transportation costs incurred when a private passenger type auto has been stolen Exclusions: - Public or livery conveyance - Wear and Tear, Freezing, Breakdown, and Road Damage to Tires - Radioactive Contamination or War - Electronic Equipment - Media and Accessories - Government Destruction or Confiscation - Trailer, Camper body, or Motor Home - Non owned Auto Used without Reasonable Belief of Being Entitled - Radar and Laser Detection Equipment - Customizing Equipment - Nonowned auto Used in Garage Business - Racing - Rental Vehicles

Part F - General Provisions 1. Bankruptcy of Insured 2. Changes in Policy 3. Fraud

1. Bankruptcy of Insured -provisions states that if the insured declares bankruptcy or becomes insolvent, the insurer is not relieved of any obligations under the policy 2. Changes in Policy - policy can only be changed by endorsement from the insurer - increase/decrease in premium from change in policy can caused by: - the number, type, or use of insured vehicles - the operators using the insured vehicles - The place of principal garaging or insured vehicles - the coverage provided, deductibles, or limits of liability -another portion of this provision deals with the liberalization clause -this means a policy condition providing that if a policy form is broadened at no additional premium, the broadened coverage automatically applies to all existing policies of the same type 3. Fraud -provision says that no coverage exists for any insured that makes fraudulent statements in connection with a claim

Part F - General Provisions 4. Legal Action Against the Insurer 5. Insurer's Right to Recover Payment 6. Policy Period and Territory

4. Legal Action Against the Insurer -no legal action can be brought against the insurer until the insured has fully complied with all of the policy terms 5. Insurer's Right to Recover Payment - often called subrogation clause -insurer pays loss to an insured who is not at fault, insurer can go after the at-fault party for payment of loss 6. Policy Period and Territory -PAP only applies to accidents within the policy period

Part D - Coverage For Damage to Your Auto - -Payment of Loss - No Benefit to Bailee -Other Sources of Recovery -Appraisal

5. Payment of Loss -Insurer has option of paying for the loss in money or repairing or replacing the damaged/stolen property 6. No Benefit to Bailee - states policy will not benefit any bailee (person who assumes custody of the property of others for business) 7. Other Sources of Recovery - PAP will only pay its share of a loss if the loss is covered by other sources of recovery 8. Appraisal -if there's a disagreement between parties, an "umpire" comes in to see who is at fault

Part F - General Provisions 8. Transfer of Insured's Interest in the Policy 9. Two or More Auto Policies

8. Transfer of Insured's Interest in the Policy -states that the named insured's rights and duties under the policy cannot be assigned to another party without the insurer's written consent 9. Two or More Auto Policies - Provisions prevents staking

Part F - General Provisions - Termination

Contains four parts 1. Cancellation -if a new policy has been in force under 60 days, insurer can cancel by mailing cancelation to the insured, this gives the insurer 60 days to investigate whether the insured meets underwriting standards - if cancelation is for nonpayment, insurer must give at least 10 day notice -in all other cases, insurer must give 20 day notice -after the 60 days, insurer can only cancel policy for 3 reasons: -premium isn't paid -insured's driver's license is suspended or revoked - policy has been obtained by a material misrepresentation 2. Non-renewal -if policy period is less than six months, insurer has the right to nonrenew every six months, starting 6 months after effective date -if policy period is from 6 months to a year, insurer can non-renew at the end of the policy period - if policy period is 1 year or loner, insurer has the right to nonrenew at the anniversary of effective ate 3. Automatic Termination -if insured rejects renewal policy, the policy stops at the end of the period 4. Other Termination Provisions -Policy contains 3 additional termination provisions 1. Insurer may choose to deliver the cancelation notice rather than mail it 2. If policy is canceled, insured has right to refund 3. Effective date of cancellation stated in the notice becomes the end of policy period

Selected Endts - Extended Non-owned Coverage Named Non-Owner Coverage Auto Loan/Lease Coverage

Extended Non-owned Coverage - provides liability, medical payments for driver of vehicles furnished or made available for regular use of named insured Named Non-Owner Coverage- provides liability, medical payments, uninsured, and underinsured motorists coverages for drivers who do not own an auto but regularly driver another person's auto Auto Loan/Lease Coverage- Amends physical damage coverage for leased vehicles or vehicles with outstanding loan amounts to include an unpaid amount due on the lease or loan

Part E - Duties After an Accident or Loss

General Duties: -Provide prompt notice to the insurer -Cooperate with the insurer -Submit legal papers to the insurer -Submit to physical examination - Agree to examination under oath -Authorize release of medical records -Submit proof of loss Additional Duties for UM coverage: -Notify police -Submit legal papers Additional Duties for Physical Damage Coverage -Prevent further loss -Notify police -Permit inspection and appraisal

Selected Endts - Limited Mexico Coverage - Excess Electronic Coverage - Coverage for Damage to Your Auto -

Limited Mexico Coverage - Provides excess liability coverage over Mexican auto insurance for an individual who is involved in an accident in Mexico within 25 miles of border on a trip that is 10 days or less Excess Electronic Coverage - Increases the $1,000 limit that applies to electronic equipment installed in the vehicles in location not intended for that purpose by the auto manufacturer Coverage for Damage to Your Auto - Covers each described vehicle for a stated amount of insurance as indicated in the endorsement schedule that applies to collision and OTC losses

Selected Endts - Miscellaneous Type Vechile Endorsement - Snowmobile Endorsement Trailer/Camper Body Coverage Extended Non-owned Coverage

Miscellaneous Type Vechile Endorsement - Covers motor homes, motorcycles, and other vehicles with fewer than four wheels that are designed for off public road use Snowmobile Endorsement-coverage for snowmobiles other than vehicles propelled by an airplane-type propellers or fans Trailer/Camper Body Coverage-trailers or camper bodies, including related facilities or equipment

Definitions - Newly Acquired Auto

Two types of autos: -private passenger auto -pick up or van that no other insurance policy covers - must have Gross Vehicle Weight Rating of 10,000 pounds or less - can't be used for delivery or transportation of goods and materials, unless needed for business purposes, like farming or ranching Includes two stipulations for liability medical payments, uninsured motorists or any other PAP coverage except damage to your auto: - additional auto is automatically covered for fourteen days after insured becomes owner, the insured must request coverage - replacement auto is covered for remainder of the policy period even if the insured does not ask for coverage The two stipulations regarding damage to your car are: -if insured carries collision coverage or other than collision (OTC) coverage on at least one auto gets automatic coverage on a newly acquired auto for 14 days. -if insured does not have this coverage, they receive automatic coverage for 4 days subject to a $550 deductible