INS 22 Assignment 3: Personal Auto Policy: Liability, Med Pay, and UM Coverage

Attachment

the act of seizing property to secure a judgment

the garage location is the place where the auto is principally parked overnight. This location is used for rating purposes when calculating the premium for the policy

Amy is completing an application for a PAP and is not sure how to answer the question regarding the garage location for her vehicle. Explain what this term means and how it's used on the PAP

is not entitled to uninsured motorist coverage because the definition of "uninsured motor vehicle" excludes any vehicle owned by a governmental unit or agency

An insured covers his own car with a PAP that includes uninsured motorist coverage. He is injured when a city-owned transit bus without liability insurance, bond or self-insurance in place causes a collision with the insured's vehicle. The insured

states can provide coverage as a supplement to the UM coverage in the PAP by using either a state specific UIM endorsement or a single, state-specific endorsement providing both UM and UIM overages that replaces the UM coverage of the standard PAP

Aside from using ISO's Underinsured Motorists Coverage Endorsement (PP 03 11), explain how states can provide UIM coverage as a supplement to the UM coverage in the Personal Auto Policy

when comparing the 2 policies, George can look at the dec page of each policy to review the dates of coverage, the descriptions of covered autos, limits of liability, endorsement listings, and premiums in order to determine whether any changes have been made and whether the information is accurate

At the renewal oh his policy, George switched insurers for the PAP covering his family's vehicle. Explain how George can use the Declarations page to compare the new policy with the policy from the previous insurer

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Becky owns an automobile insured with an unendorsed PAP. Her friend lets her drive his motorcycle, and rides on back as a passenger. Becky accidentally drives the motorcycle into a tree, killing her friend and injuring herself.The funeral for her friend costs $3,000. Becky's hospital bills total $3,000, and she has surgical bills of $4,000. As a result of this accident, the Part B- Medical Payments Coverage of Becky's PAP will pay

if Carol's damages amount to $100,000, her UIM coverage will not be triggered because her damages are less than Richard's limit

Carol and Richard each live in a state that applies a damages trigger to a UIM endorsement. Carol has an auto liability policy with a $75,000 UIM limit. Richard purchased auto liability coverage with a $125,000 single limit. Richard causes an auto accident in which Carol is injured - Explain how Carol's UIM coverage will be affected if her damages amount to $100,000

if Carol's damages amount to $200,000, her UIM coverage will be triggered because Richard's policy limit is less than Carol's damages

Carol and Richard each live in a state that applies a damages trigger to a UIM endorsement. Carol has an auto liability policy with a $75,000 UIM limit. Richard purchased auto liability coverage with a $125,000 single limit. Richard causes an auto accident in which Carol is injured - Explain how Carol's UIM coverage will be affected if her damages amount to $200,000

Part A provides liability coverage and protects the insurer against claims for bodily injury or property damage arising out of the operation of an auto. Part D of the PAP covers physical damage to a covered auto and includes a collision and other than collision coverages

Contrast the coverage provided under Part A of the PAP with the coverage provided under Part D

1. the named insured and "family members" are covered for their medical expenses if they are injured while occupying a motor vehicle or as pedestrians when struck by a motor vehicle designed for use mainly on public roads 2. any other person while occupying a covered auto

Describe the 2 classes of insureds covered by Part B of the Personal Auto Policy (PAP)

1. no bodily injury liability insurance or bond applies to the vehicle at the time of the accident 2. a bodily injury liability policy or bond is in force, but the limit for bodily injury is less than the minimum amount required by the state's financial responsibility law 3. the vehicle is a hit-and-run vehicle whose owner or operator can't be identified 4. a bodily injury policy or bond applies at the time of the accident, but the insurance or bonding company denies coverage or is or becomes insolvent.

Describe the 4 categories of criteria a vehicle must meet to be covered by Part C of the Personal Auto policy

the terms in the limit of liability provision are intended to prevent stacking. the terms state that the limits shown in the declarations are the most that will be paid regardless of the number of insured persons, claims made, vehicles or premiums shown in the declarations, or vehicles involved in the accident

Describe the Part C policy provision that is intended to prevent "stacking" of the UM payments under a policy that covers more than one car owned by the named insured

applies when a negligent driver is insured for at least the minimum required financial responsibility limits but the policy's liability limits are insufficient to pay the insured's damages

Describe the conditions in which underinsured motorists (UIM) coverage applies

the exclusion doesn't apply to the named insured and spouse occupying such a vehicle

Describe the exception to the PAP Part B Exclusion that eliminates coverage for injuries sustained by an insured while occupying a vehicle (other than a covered auto) that is owned by or available for the regular use of a family member

its important in understanding exclusions that apply to the coverage parts of the PAP

Describe the importance of the definition of "business" in the PAP

the liability limits of the other party's policy are less than the insured's UIM limits

Describe the key criterion that determines when a UIM endorsement with a limits trigger applies

the policy period starts at 12:01am standard time at the address of the policyholder on the date the policy becomes effective and ends at 12:01am standard time on the date the policy expires

Describe the policy period for a personal auto policy (PAP)

the definition of "leased vehicles" clarifies what the policy includes when it refers to an owned auto. A leased private passenger auto, pickup, or van is deemed to be an owned auto if it is leased under a written agreement for a continuous period of at least 6 months

Describe the purpose of the "leased vehicles" definition in the PAP

the cost of a bail bond is covered under the PAP's supplementary payments provision. The insurer agrees to pay up to $250 for the cost of a bail bond required because of an accident that results in bodily injury or property damage covered by the policy

Describe the situation in which an insurer would pay the cost of a bail bond for an insured under the PAP

for the driver of the nonowned vehicle, the driver's own PAP is excess over any other collectible auto insurance that pays medical or funeral expenses, including the PAP of the owner of the vehicle

Explain how a coverage issue is resolved in a claim from a driver who has Part B coverage under a PAP and who was injured while driving a borrowed vehicle whose owner also has Part B coverage under a PAP

the words "you" and "your" also include an unnamed spouse of the named insured- provided that the spouse is a resident of the same household. When an unnamed spouse of the named insured moves out of the household but remains married to the insured, the spouse is considered "you" for another 90 days or until the policy expires- whichever comes first. Coverage ceases if the spouse is named on another policy

Explain how the definition "you" and "your" provides coverage for a spouse of the named insured

is to exclude a loss exposure that should be covered by a commercial auto policy, such as a garage policy purchased by the owner of the business

Explain the intent behind the PAP exclusion that eliminates liability coverage for an insured while employed or engaged in the business of selling, repairing, servicing, storing, or parking vehicles designed for use mainly on public highways

the purpose of this exclusion is to protect the insurer's right to assert a subrogation action against the party who is legally responsible for the insured's injuries

Explain the purpose of the PAP Part C Exclusion that eliminates uninsured motorists (UM) coverage that the insured settles without the insurer's consent if such a settlement prejudices the insurer's right to recover payment

the insurer agrees to defend the insured and pay all legal costs the insured may incur in a liability suit- even if the combined costs exceed the limit of liability. In other words, the insurer is obligated to pay defense costs in addition to the policy limits

Explain what occurs if the cost to defend an insured under the Personal Auto Policy (PAP) exceeds the policy limit of liability

if the amount agreed on in arbitration exceeds the statutory limit, either party can demand the right to a trial within 60 days of the arbitrators' decision. Otherwise, the arbitrators' decision is binding

Explain whether a decision resulting from arbitration, the dispute resolution method designated by Part C of the PAP, is binding upon both parties when the amount of damages agreed on exceeds the minimum limit for bodily injury specified by the state's financial responsibility law

when a word or phrase is shown in quotation marks, this means that the definition for that work or phrase is included in the definitions section of the policy and that those definitions apply to the entire policy

Explain why some words or phrases included in the PAP are shown in quotation marks

the agreement and definitions page of the PAP includes a general agreement stating that the insurer is providing the coverage subject to payment of premium and to the terms of the policy. Definitions are also provided for words and phrases used throughout the policy

Identify the information contained in the agreement and definitions page of the PAP

include the insured's having multiple cards insured under the policy, passing a driver training or defensive driving course, achieving a good scholastic record, or having a vehicle with passive restraints or anti-theft devices

Identify the rating information found on the PAP dec page that may lead to reduced premiums

neither Dana or Louise would be included in the definition of family members under Janice's auto coverage because they don't reside in the same household as Janice. The PAP defines a family member as a person who is related to the named insured or spouse by blood, marriage, or adoption and who resides in the named insured's household

Janice lives in her own apartment and insures her car under a PAP. Her sisters, Dana and Louise, still live at home with their parents. Explain whether Dana and Louise are included as family members under Janice's auto coverage as defined in the PAP

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Jared had a personal auto policy with a single limit of $100,000 for bodily injury and property damage liability. He was found at fault for an accident by a court and a $95,000 judgment was entered against him. In addition, prejudgment interest of $10,000 was awarded. Since entry of judgment, $1,000 in post judgment interest has accrued. Jared earns $150 a day in salary and missed 5 days of work to attend the trial. His insurer spent $25,000 defending the lawsuit against Jared. What is the total that should be paid by Jared's insurer under his PAP?

Jerry's $10,000, Sally's $2,000

Jerry was driving his car that is insured with a PAP, with a $10,000 limit on medical payments coverage. Sally, his passenger, has her own car that is insured with a PAP with a $5,000 limit on medical payments coverage. Jerry rear-ended a bus, injuring Sally in the accident. Sally's medical expenses total $12,000. How much will each insurer pay?

the dec page of the PAP can include the name and mailing address of both the insurer and the named insured; the policy period; and the name and address of the producer, if applicable. It also may include a description of the covered autos, limits of liability, premium and rating information, and any endorsements added to the policy

List the information found on the Declarations page of an Insurance Services Office, Inc (ISO) Personal Auto Policy (PAP)

the description of the insureds autos usually includes the year, make, model, and vehicle identification number (VIN) of each covered vehicle. The description may also include the body type, annual mileage, use of the vehicle, and date of purchase

List the information that is included in the description of insured autos on the PAP

Megan is not entitled to UM coverage because of the Owned But Not Insured vehicle exclusion

Megan owns 2 cars, one that is insured with a PAP, and one that is not insured at all. While driving the uninsured car, she is injured in an accident with an at-fault uninsured driver. Megan makes a claim under her uninsured motorist coverage. Is Megan entitled to UM coverage?

$50,000 under Lamont's policy and $95,000 under Rosa's policy

Rosa's sedan is covered by a personal auto policy with split limits for liability coverage of 100/300/50. Rosa's friend, Lamont owns a sports car that is covered by a PAP with split limits of liability coverage of 25/50/10. Rosa borrowed Lamont's sports car and caused an accident with another vehicle driven by James. James and his passenger, Fred, were injured and they filed suit against Rosa. A court awarded $35,000 to James for his bodily injures and $110,000 to Fred for his bodily injuries. Which one of the following will be paid under each policy?

the PAP excludes liability coverage for bodily injury to an employee of an insured who is injured during the course of employment. Sara is employed by Charlie, the insured, and was injured during the course of her employment. However, an exception to this exclusion is injury to domestic employee in the course of employment when workers compensation benefits are not required. Therefore, despite the exclusion, Charlie's PAP should provide coverage for Sara's liability claim against him

Sara works as a maid for Charlie. Charlie insures his auto under a PAP. He asks Sara to accompany him to the grocery store. While en route, he drives the car into a pole, causing bodily injury to Sara. Workers compensation benefits are not required for domestic employees in the state where the accident occured. Explain what liability coverage Charlie has for Sara's claims against him

the negligent driver carries liability limits below the limits provided by the UIM coverage of the injured party

Some states' underinsured motorists coverage endorsement contains a "limits trigger." In states that apply the UIM limits trigger, UIM coverage applies when

the negligent driver carries liability insurance limits that are lower than the injured party's actual damages

Some states' underinsured motorists coverage endorsements contain a "damages trigger". In states that apply the UIM damages trigger, UIM coverage applies when

inter policy stacking

The application of 2 or more underinsured motorists coverage limits to a single auto accident because 2 or more separate policies apply is called

intrapolicy stacking

The application of 2 or more underinsured motorists coverage limits to a single auto accident because a single policy covers more than one vehicle is called

would not be eligible for medical payments under the PAP if injured while occupying a motorcycle on a public highway

Would an owner of a car insured with a PAP for which an insured selected and paid a premium for medical payments coverage be eligible for medical payments under PAP?

Uninsured motor vehicle

a land motor vehicle or trailer that is not insured for bodily injury liability, is insured for less than the financial responsibility limits, is a hit-and-run vehicle, or whose insurer denies coverage or becomes insolvent

Compensatory damages

a payment awarded by a court to reimburse a victim for actual harm

Named insured

a person, corporation, partnership, or other entity identified as an insured party in an insurance policy's declarations page

Vehicle Identification Number (VIN)

a unique number that is assigned to each vehicle and that identifies certain vehicles characteristicscoverage for direct and accidental loss or damage to a covered auto caused by collision with another object or by overturn

Arbitration

an alternative dispute resolution (ADR) method by which disputing parties use a neutral outside party to examine the issues and develop a settlement, which can be final and binding

PAP Coverages: Part D

coverage for damage to your auto compensates for physical damage to a covered auto and to certain non owned autos. Also referred to as physical damage coverage, Part D includes other than collusion and collision coverages. Some insured elect not to include physical damage coverage on their policies

Collison coverage

coverage for direct or accidental loss or damage to a covered auto caused by collision with another object or by overturn

Other than collision Coverage (OTC)

coverage for physical damage to a covered auto resulting from any cause of loss except collision or a cause of loss specifically excluded

PAP Coverages: Part E

duties after an accident or loss outlines the duties required to an insured after an accident or a loss, such as requirements for notifying the insurer of the details of any losses that happen

PAP Coverages: Part F

general provisions contains information such as how changes in the policy can be made, provisions for cancellation and termination of the policy, and descriptions of the policy period and territory

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

Prejudgment interest

interest that may accrue on damages before a judgment has been rendered

Postjudgment interest

interest that pay accrue on damages after a judgment has been entered in a court and before the money is paid

PAP Coverages: Part A

liability coverage protects the insured against claims or lawsuits for bodily injury or property damage arising out of the operations of an auto

PAP Coverages: Part B

medical payments coverage compensates for reasonable and necessary medical and funeral expenses because of bodily injury to the insured caused by an auto accident

Single-limits basis

one coverage limit that applies to all damages arising from bodily injury or property damage or both, resulting from a single accident

Split-limits basis

separate coverage limits that allow one limit for bodily injury to each person; a second usually higher limit for bodily injury to all persons in each accident; and a third limit for all property damage in each accident

Policy period

the time frame, beginning with the inception date, during which insurance coverage applies

PAP Coverages: Part C

uninsured motorists coverage pays damages if an insured is injured by an uninsured motorist, a hit-and-run driver, or a drive whose insurer is insolvent

Supplementary payments

various expenses the insurer agrees to pay under a liability insurance policy for items such as premiums on bail bonds and appeal bonds, loss of the insured's earnings because of attendance at trials, and other reasonable expenses incurred by the insured at the insurer's request