Why Liability & Who is Covered?

Why do customers need liability coverage?

As you reviewed earlier, liability coverage pays money to cover damage to property or injury to others as a result of an auto accident. Auto Liability Insurance: •Pays on behalf of the insured the money damages they are legally responsible to pay others for bodily injury or property damages. •Pays for defense costs against claims or suits for such damages.

Condition - Other Insurance

Assume for a moment that you are not feeling well and that you ask a co-worker to drive you to a walk-in clinic at the end of your shift. Your co-worker drives you in your car so you can get home later. Your co-worker causes an accident on the way to the clinic, causing injuries and property damage. Whose insurance will pay for the resulting liability claims? Your policy will pay. If/once limits are exhausted, the co-workers insurance would be expected to respond. The reason for this, is that: • The vehicle owner's policy is always primary, the driver's policy, if any, is always excess. • If the claim is higher than the policy limits on the primary policy, they will look to the other insurance to make up the difference. You should be careful about loaning your car to others. Your insurance is still primary if they cause an accident while driving your vehicle.

Temporary Substitute Auto

Auto or trailer you are using as a temporary substitute because of breakdown, repair, servicing, loss, or destruction.

Supplementary Payments

Bail Bonds: The auto policy will pay up to $250 for the cost of Bail Bonds required because of an accident that results in bodily injury or property damage covered by the policy. This also includes incidents for related traffic law violations. This clause in the policy only pays for the cost of Bail Bonds, not the traffic fines that are involved. Appeal Bonds and Interest: The auto policy will also pay the premiums on Appeal Bonds and interest accruing after a judgment is entered in any suit the insurance company defends on your behalf. So if you were involved in an auto accident and the other party that you injure places a lawsuit against you, your insurance company will defend and pay the cost of the lawsuit. If the company loses the lawsuit, they can elect to appeal (which they have the right to do). However, in order to appeal the judgment, the insurance company must post an Appeal Bond guaranteeing that should it lose the appeal, they will go ahead and pay the judgments plus any Accrued Interest on the judgment. Loss of Earnings: The insurance company will pay up to $200 per day for your lost earnings if they require your attendance at hearings or trials. They will not pay for other income you lose, but will pay other reasonable expenses you incur at their request

Occupying

In, upon, getting into, onto, out of, or off of a vehicle. Example: High school senior gets on the hood of a friend's car to celebrate graduation and gets seriously injured.

No-Fault & Out of State Liability

No fault insurance laws often require that injury costs be paid first from the individual's own policy under their no-fault or personal injury protection.

No-Fault Coverage

No-fault insurance covers damages incurred to a policyholder in an accident, regardless of who's at fault. Essentially, this eliminates the need for a driver to go after another party's insurance company in order to be reimbursed for damages that the other person caused This type of coverage is only required in some states by law; when present, these no-fault plans are not standardized and laws vary by no-fault state. No-fault laws were developed to address the backlog of court cases to determine who is at fault in a car accident. No-Fault Requirements No-Fault Coverage is currently required in the following states: 1.Florida 2.Hawaii 3.Kansas 4.Kentucky 5.Massachusetts 6.Michigan 7.Minnesota 8.New Jersey 9.New York 10.North Dakota 11.Pennsylvania 12.Utah

You/Your

Refers to the named insured and resident spouse.

Family Member

Relatives, wards, and foster children in the household of the named insured.

How are Limits Applied?

Split Limits of Liability Auto insurance policies usually state the liability limit in terms of how much they will pay for injuries to any one person, how much to all injured persons in an accident, and a separate limit for any property damage the policyholder may cause. Example: 30/60/25 •$30,000 per person for bodily injury •$60,000 per occurrence for bodily injury •$25,000 per occurrence for property damage Assume that you carry split liability limits of 30/60/25. You are driving down a busy road with your kids in the backseat fighting again and you become distracted, not noticing that the car in front of you has stopped for a red light. You hit the brakes too late and strike the vehicle causing damage to your car; the other driver's car is also damaged and he is complaining of knee and chest pain. The other driver takes you to court and is awarded a $130,000 judgment for medical costs and pain and suffering. How much will your auto policy pay for his injuries? (ANSWER: $30,000 in Bodily Injury for that one person; you would then be personally liable for $100,000 beyond what the insurance policy would cover.) Note that: •Limits apply only to damages •Full limits are available for each occurrence/accident •Liability will only apply to damages they are legally liable for •Defense costs and other supplementary payments are paid as additional insurance •Even if you had 3 accidents in the same year, you would have the same liability amount available to you for each occurrence Combined Single Limit of Liability Example: $85,000 (60K + 25K) •Lump sum coverage •No person limit •Property damage not shown as separate limit Under a policy with a Combined Single Limit (CSL), a lump sum of coverage is used to pay for both bodily injury and property damage combined. There is no per person limit and the property damage is not shown with a separate limit. In order for a CSL policy to cover a loss sustaining $60,000 in Bodily Injury and $25,000 in Property Damage the policy would need a minimum limit of $85,000.

The Most We Will Pay

The Part A limit of liability is the most the company will pay for all the damages resulting from any one auto accident, regardless of the number of insureds, claims filed, vehicles listed on the policy, or vehicles involved in the accident

Who is Covered?

Well, a number of people can be covered including: •The Named Insured and family members using the vehicle; •Anyone given permission to use the vehicle; and, •Anyone legally responsible for the acts or omissions of anyone insured under the auto policy, but only to the extent they would have defended you anyway. An example of this last item could include a situation in which you are on a company errand with your vehicle when you cause an accident. Your auto policy would defend you and your company if they are also sued.

Aggregate Limits

another term to learn - Some policy coverages will stipulate the aggregate limit. Generally this refers to the limit for all losses during the policy period to the specified aggregate limit. It may also refer to a cap on the claim payment for an individual loss. For example, some states offer customers the option to choose how they would like to allocate their No-fault Coverage (Personal Injury Protection) benefits on the auto policy. Currently the PA auto policy allows customers to buy a 'bundle' of benefits that will include caps on certain individual benefits like medical expenses, work loss, funeral expense and a death benefit. However, the amount you collect is still limited by the aggregate limit for Personal Injury Protection coverage stated in the policy