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Insurance Adjusting > 3/C - Personal Auto > Flashcards

3/C - Personal Auto Flashcards

1
Q

The PAP (Personal Auto Policy)

A

A policy that combines liability insurance with other optional coverages

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2
Q

PAP Eligibility

A

PAP policies can cover:

  • Individuals and residing family members
  • People driving car with owner’s permission
  • Four-wheeled vehicles under 10,000 lbs

Remember: insurable interest is required (i.e. auto owners, lessors, or lenders).

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3
Q

PAP Coverage

A 
What is covered?
The PAP will indemnify for:
- Property damage 
- Bodily injury
- Legal defense

PAPs will not pay punitive damages.
Insurer must defend policyholder against liability claims, in or out of court.

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4
Q

PAP Sections

A
  • Declarations Page
  • Six Sections:
    a. Part A Liability
    b. Part B Medical Payments
    c. Part C Uninsured Motorist
    d. Part D Coverage for Damage to Your Auto
    e. Part E Duties After an Accident or Loss
    f. Part F General Provisions
  • Endorsements
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5
Q

Declarations Page

A
  • Named insured’s name and address
  • Policy period
  • Applicable insurance coverages and their limits
  • Deductible
  • “Loss payees” (all parties to be indemnified when losses occur)
  • Make, model, and VIN of insured automobiles
  • Endorsements added to the policy
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6
Q

How Deductibles Work

A

Auto Insurance Deductibles:

  • Fixed: one specific, predetermined amount
  • Per Claim basis: insured is responsible for paying this amount on every claim

Note: Deductibles typically only apply to Collision and Comprehensive coverages, not Liability.

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7
Q

You, Us, Family Member

A

You, Your
- The named insured and the insured’s spouse living in the same household

We, Us, Our
- The insurer providing the policy

Family member
- Any relation of the insured who lives in the insured’s household

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8
Q

Owned, The Use of, Occupying

A

Owned
- A car that the insured owns or has leased for 6 months

The Use of
- Any activity involving the car

Occupying
- Being in or on a vehicle, getting in or out, getting on or off, sitting on, or leaning against the vehicle

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9
Q

Bodily Injury, Property Damage

A

Bodily Injury

  • Bodily harm, sickness, or disease, or the resulting death
  • Does not include mental distress or psychological trauma

Property Damage

  • Destruction of, or physical damage to, tangible property
  • Includes the loss of use of damaged property
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10
Q

Business, Trailer

A

Business
- A trade, profession, or occupation

Trailer
- A vehicle designed to be towed

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11
Q

Your Covered Auto

A
  1. The car specified on declarations page
  2. A newly acquired auto
  3. A trailer that the insured owns
  4. A temporary substitute for car or trailer listed on dec page, due to:
    a. breakdown
    b. repair
    c. servicing
    d. loss
    e. destruction
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12
Q

Newly Acquired Auto

A

Any new or used vehicle that the insured gets during the current policy period
A “newly acquired auto”:
- Must weigh less than 10,000 lbs
- May not be covered under another insurance policy
- May not be used for the transport of goods and materials (with some exceptions)
- Automatically gets the broadest coverage provided to any one car listed in policy

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13
Q

Adding Newly Acquired Autos

A

Reporting (according to the standard PAP):
Insured has 14 days to report newly acquired auto.

However: most states and insurers actually require that you report any new auto within 10 to 30 days

Comprehensive and Collision coverage:

  • Can be added within 4 days of getting new car
  • Automatically applies for first 4 days with $500 deductible

Note: These grace periods can vary by insurer.

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14
Q

Auto Liability Coverage

A

Part A - Liability Coverage

  • Not for insured’s own injuries or damages
  • Covers the insured’s liability for the injuries or property damage of others
  • Defense in court is included, if necessary
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15
Q

Insuring Agreement

A

Establishes what the insurer will do for the insured if the insured becomes liable for losses:

  • Pay liability costs, up to policy limits
  • Covers injury or damage caused by “your covered auto” or any car the insured drives with permission
  • Settle or defend liability lawsuits
  • Insurer reserves the right to settle liability cases out of court
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16
Q

Covered Person

A
  1. The named insured and family members living in the same household
  2. Someone using covered auto with permission
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17
Q

Primary vs. Secondary Coverage

A
  • Coverage is “primary” if it involves a car the insured owns.
  • Coverage is “secondary” if it involves a car the insured does not own.
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18
Q

Out of State Provision

A

If you meet your home state’s requirements, it is assumed you meet the requirements of any other state.

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19
Q

Part A - Supplementary Payments

A
  • Assist policyholder with a variety of accident-related expenses
  • Not subject to liability limits

May include:

  • Lost wages (due to court hearings): up to $250/day
  • Expenses due to insurer’s request such as retrieving accident reports or records, copy fees
  • Bail bonds: up to $250
  • Accrued interest after a judgment is entered
  • Premiums on appeal bonds and attachment bonds
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20
Q

Exclusions

A

Auto Liability coverage does NOT include:

  • Intentional damage or injuries (e.g. vehicular assault)
  • Property owned or being transported by the insured
  • Damages incurred under the scope of employment, except domestic employees ineligible for workers’ comp
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21
Q

Exclusions, Cont’d

A

Auto liability coverage also excludes:

  • Properties rented to or used by the insured (not including rented dwellings or private garages)
  • Hired vehicle transporting people or goods (i.e. taxis)
  • Company-owned business vehicles
  • Damages or injuries caused while repairing, servicing, parking, or storing vehicles (i.e. mechanics, valets, vehicles released to storage facility)
  • Vehicles taken without permission
  • Damages or injuries arising from or related to a flying car
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22
Q

No-Fault Insurance

A
  • Designed to indemnify the insured for his own injuries, regardless of fault
  • Covers bodily injury only (usually not property damage)
  • Mandatory in some states
23
Q

Part B - Medical Payments

A
  • Provides coverage for the insured
  • Pays medical expenses of the insured et al, no matter who caused them
  • Applies when anyone considered an insured under the policy is occupying or struck by auto or trailer designed for public roads
  • Includes vehicle-pedestrian accidents
24
Q

Part B - Insuring Agreement

A
  • Says the insurer will pay for medical and funeral costs when an insured (i.e. anyone considered insured under the policy) is injured in an auto accident
  • Covers eligible medical payments for up to three years
  • Applies a single limit for each person per incident

Common limits: $500, $1,000, $2,000, $5,000, etc.

25
Q

Covered Person

A

“Insured”

  1. The named insured or a family member
  2. Any person occupying “your covered auto”
26
Q

Common Exclusions to Medical Payments

A
  • Accidents where an insured is occupying a vehicle with fewer than four wheels
  • Autos rented or leased for hire
  • Autos used without permission (or reasonable belief of permission)
  • Commercial vehicles covered by a Business Auto Policy (BAP)
  • Vehicles located for use as a residence
  • Injuries sustained under scope of employment (if covered by Workers’ Comp)

Medical payments begin only after Personal Injury Protection (PIP) coverage is fully exhausted.

27
Q

Part C - Uninsured/Underinsured Motorist Coverage

A
  • Covers bodily injuries caused by people with insufficient or no insurance
  • Coverage for physical damage can be added by endorsement
28
Q

Who Counts as Uninsured?

A

Uninsured Motorist (UM):

  1. Driver with no liability insurance
  2. Driver whose insurer won’t pay
  3. Hit-and-run driver
Underinsured Motorist (UIM):
Driver who does not have enough insurance to pay for all damages
29
Q

Part C - Insuring Agreement

A

Insurer agrees to pay for an “insured’s” injuries or damages caused by driver of an uninsured vehicle.

“Insured”:

  • The named insured or a family member
  • Anyone in a “covered auto” with permission
30
Q

Exclusions to UM/UIM Coverage

A
  • The insured’s own auto that is not listed in the policy
  • Government vehicles
  • Off-road vehicles (but only while not on public roads)
  • Vehicles used as a premises
  • Covered autos that are rented or used for hire (although the interpretation of this phrase varies)
  • Cars used without reasonable belief that permission was granted
31
Q

Part D - Damage to Your Auto

A
  • Also called “Physical Damage”
  • Protects the insured’s financial interest in her car
  • Two types: Collision and Other Than Collision
  • Often required by finance companies
32
Q

Part D - Collision

A
  • Pays for damage to insured’s vehicle caused by collision or rollover (a car that has been tipped or rolled over is known as an “upset vehicle”
  • Applies even when insured is at-fault
  • Includes “your covered auto” and any “non-owned” car the insured is driving (unless the insured borrows it frequently: then it is not covered)
33
Q

Payment After a Collision

A
  • Total damage: insurer pays ACV of the car at the time of collision
  • Partial damage: insurer pays to repair the car with similar materials
  • Transportation (car rental) expenses: $30/day, up to $900 (previous versions of the policy offered lower amounts: $20/day, up to $600)
34
Q

Part D - Other Than Collision

A
  • Also called Comprehensive Coverage
  • Covers damages not caused by collision or overturn
  • Essentially “open-peril” coverage, minus exclusions
35
Q

Comprehensive Coverage Covered Perils

A
  • theft
  • hail, water, or flood
  • windstorm
  • fire
  • vandalism
  • explosion
  • earthquake
  • riot/civil unrest
  • missiles or falling objects
  • contact with birds or animals
36
Q

Payment After a Loss

A

Same as Collision Coverage:

  • Total damage: insurer pays ACV of the car at the time of collision
  • Partial damage: insurer pays to repair the car with similar materials
  • Transportation (car rental) expenses: $30/day, up to $900
37
Q

Exclusions for Damage to Your Auto

A
  • Normal wear and tear
  • Freezing
  • Mechanical or electrical breakdown
  • Tire damage
  • Government or civil confiscation
  • Losses to non-owned autos taken without permission
  • Losses involving any racing or speed event or facility
  • Stereo equipment and electronics (unless permanently installed, then subject to limits)
  • War and nuclear events
38
Q

Personal Injury Protection (PIP)

A

Features of Personal Injury Protection:

- Covers injuries to the insured et al caused by an accident, no matter who was at fault

39
Q

Advantages of No-Fault PIP

A
  • Fewer lawsuits
  • Helps contain rising automobile insurance costs
  • First party rather than third party claims
  • Quicker reimbursements
  • Pays up to the policy limit without recourse
40
Q

Who is Covered?

A

PIP pays for the bodily injuries of:

  • The insured and members of household, whether in the insured’s or another vehicle
  • Children of the insured while on a school bus
  • Certain passengers without their own PIP
  • Licensed drivers who drive the insured’s vehicle with permission
41
Q

Coverage Details

A

After a covered accident, PIP will pay:

  • Medical costs, sometimes up to a set percentage
  • Lost wages (percentage of wages before injury)
  • Medical transportation expenses
  • In-home caregivers
  • Death benefits
42
Q

Primary vs. Excess

A
  • PIP is primary coverage
  • Medical Payments is secondary: it pays after PIP is exhausted
  • PIP restricts insured’s right to go to court
43
Q

Part E: The PAP - Duties After an Accident or Loss

A
  • Report all accidents
  • Cooperate with insurer’s investigation, settlement, and any court proceedings
  • Promptly send the insurer copies of all pertinent legal papers
  • Submit to a physical exam if insurer requests
  • Submit to exam under oath (EUO) and verify that your statements are true and accurate
  • Authorize the insurer to obtain medical reports
  • Authorize the insurer to obtain other pertinent records
  • Provide proof of loss if insurer requests
  • Give a recorded statement whenever reasonably requested by the insurer

The insured has additional duties if policy includes:

  • Part C-Uninsured/Underinsured Motorist
  • Part D-Damage to Your Auto
44
Q

Additional Duties for UM/UIM Claims

A
  1. Notify the police in the event of hit-and-run

2. If filing a lawsuit, forward legal documents to the insurer

45
Q

Additional Duties for Collision or Comprehensive Claims

A
  1. Protect covered vehicles from further loss
  2. Promptly notify the police in the event of theft
  3. Allow insurer to inspect and appraise damaged vehicles
46
Q

Policy Period and Territory

A

PAP coverage only applies to accidents and losses that occur:
- During the policy period
- Within the United States, its territories and possessions include Guam, Puerto Rico, military bases, embassies, etc.
- During shipment between ports in the policy territory
Mexico is not part of the policy territory.

47
Q

Changes to Policy

A

Policy cannot be changed or waived without a written and signed endorsement.
Insurer may increase premiums immediately for:
- Changes to the number, type, or use of automobiles
- Changes in coverage, deductibles, or limits
- Address changes
- Changes in covered persons

For policies spanning more than one year, insurers may annually review the premium rate for the following year.

48
Q

Insurer’s Rights to Recover Payment

A
  • Enforces subrogation
  • If insured is paid by both the insurer and at-fault party, excess funds must be paid back to the insurer

Subrogation does not apply to Part D Physical Damage.

49
Q

Suspension of Insurance

A

Lets the insured suspend coverage and premium payments for a specified period of time.

50
Q

Towing and Labor

A
  • Pays for towing expenses, plus labor charges from the scene of the damage
  • Per occurrence limit
51
Q

Extended Non-Owned Coverage

A
  • Liability and medical payments coverage for non-owned vehicles
  • Covers non-owned vehicles carrying people or property for a fee
  • Coverage only applies to the named insured
52
Q

Customized Equipment

A

Provides extra coverage for valuable equipment that is not covered in standard policy

53
Q

Miscellaneous Vehicle Coverage

A

Lets the policyholder add specialized vehicles to the policy, such as motorcycles, motorhomes, mopeds, etc.

54
Q

Non-Owner Coverage

A

Provides liability, medical payments, and UM/UIM insurance for people who have no car, but who often borrow other people’s vehicles

Insurance Adjusting (46 decks)

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