Chapter 6 - Auto Insurance Flashcards
When must motor vehicle owners show proof of financial responsibility?
When requested by a law enforcement officer When involved in an accident When renewing drivers license When getting a safety inspection When renewing a vehicle registration
Texas Motor Vehicle Safety Responsibility Act (1982)
Requires all owners of motor vehicles to prove financial responsibility in the event of an accident.
Law requires owners to maintain limits of 30/60/25 or 85 for a combined single limit.
Insurance companies provide ID cards to show this proof.
Surety bonds, self-insurance certificate issued by the DPS or State Treasurer or a deposit of cash in the amount of $85,000.
SR22
Usually required for no insurance or DWI violations.
A document that the insurance company files with the state to provide proof that a operator has insurance.
If the policy is canceled, the insurance company must notify the state. The state responds by suspending the operators driving license.
Texas Automobile Insurance Plan Association
Assigned risk
Provides insurance to those who in good faith are entitled to automobile liability insurance, but are unable to obtain it through authorized insurance carriers.
Individuals must have been rejected by at least 2 insurance companies in the voluntary market.
Insurers are only required to write he following min/max limits of liability: 30/60 BI 25 PD 2.5 PIP per person 30/60 uninsured motorist BI 25 uninsured motorist PD
Rate are higher than voluntary market.
What does the declarations section of the Personal Auto Policy (PAP) do?
identifies the insured
Describes the insured auto(s)
Lists attached endorsements
Summarizes coverages, limits and premiums
Other items are the insurer, policy number and policy period
What does the definitions section of the policy do?
Clarifies terms used in the policy to ensure the policy is not ambiguous.
Who is the “named insured”?
Includes spouse, if a resident relative
What is a “family member”?
A person related by blood, marriage, or adoption who lives in the household.
What does “occupying” mean?
In, upon, getting in, out, on or off the auto
What does “trailer” mean?
A vehicle designed to be pulled by a covered auto
What does “your covered auto” mean?
- Vehicle(s) listed in the decorations
- Trailer(s) owned by the insured
- Newly acquired additional vehicle (automatic coverage for 30 days with the broadest coverage currently listed on the declarations)
- Newly acquired replacement vehicle (all liability coverages are automatic for remainder policy period. Physical damage coverages have a 30 day limit)
- Vehicle or trailer used as a temporary substitute due to breakdown, repair, servicing, or loss of covered auto (borrowed vehicle or rented car)
What does “owned” mean?
Vehicle owned by insured, spouse, co-owned with a resident relative, or a long term lease
What does “non-owned” mean?
A vehicle owned (titled) by someone else, but used by our insured within the scope of the owner’s permission and. It used by our insured on a regular basis.
What is a “temporary substitute”?
A vehicle that takes the place of the insured’s regular auto when it is disabled.
Personal Liability
Liability coverages apply if a covered person becomes legally responsible for bodily injury or property damage as the result of an auto accident.
Does NOT cover the insured.
Who is covered while driving a covered auto on a personal policy?
Named insured, resident spouse, and resident family members
Any person who has a reasonable belief they have permission
Exclusions to Liability Coverage on a personal auto policy
- Intentional injury
- Property damage to property in the care, custody or of the insured with the exception of damage to a landlord’s residence garage or non-owned auto used by a covered person such as a rental car or borrowed vehicle.
- Injury to a employee with the exception of a domestic employee
- Vehicles with less than four wheels
- Owned vehicles not listed on the policy and owned for more than 30 days
- Used for business purposes unless listed on policy
- Racing
Supplementary Payments
Paid in addition to the limits of liability.
Some of these benefits are:
Defense costs
Premium on bonds
$200 per day for loss earnings of the insured is required to appear in court.
Out of state coverage
If a covered auto is operated out of state, the PAP automatically provides the minimum liability requirements for that particular state.
Liability limits will never decrease, can only increase.
Medical Payments Coverage
Provides for medical and funeral expenses for the insured, family members, and passengers while occupying a motor vehicle or as a pedestrian when struck by a vehicle.
Must file claim within 3 years from date of accident.
Minimum coverage is $500 and is applied on a per person basis.
What does Personal Injury Protection (PIP) provide?
Benefits to covered persons in a vehicle or as a pedestrian, including passengers within the insured vehicle without regard to fault or negligence. Coverage is provided on a per person basis for:
- Medical, rehabilitation or funeral expenses incurred with 3 years of the accident
- 80% of actual income lost if an income producer or reimbursement of essential services usually performed by the injured person if they are not an income producer.
PIP Option Form on personal auto policies
Insurance companies must offer PIP on Personal Auto Policies (PAP).
Must sign a option form to not have it.
