Chapter 6 Personal Auto Flashcards
Personal Auto Policy
Part A Liability Coverages Part B Medical Payments Part C Uninsured Motorist (UM) Part D Coverage for Damage to Your Auto Part E Duties After an Accident or Loss Part F General Provisions ------------------------------------ PLUS ------------------------------------ Selected Endorsements
The Personal Auto Policy was designed to provide insurance for eligible vehicles that are owned by one or more individuals. Eligible vehicles are private passenger vehicles including cars, SUVs, passenger vans, and pickups with a gross vehicle weight of 10,000 pounds or less.
The primary use of eligible vehicles must be personal, although incidental business use is allowed—e.g., making sales calls. Delivery or commercial use of an eligible vehicle renders it ineligible for the personal auto policy and requires it to be insured on a business auto policy.
Match the parts of a Personal Auto Policy with the correct coverages
Part A
Liability Coverage
Part D
Coverage for Damage to Your Auto
Part B
Medical Payments
Part F
General Provisions
Part C
Uninsured Motorist
Part E
Duties After an Accident or Loss
Definitions
The Personal Auto Policy defines words and phrases used throughout the policy. It should be noted that a private passenger vehicle will be deemed to be owned by a person if it’s leased under a written agreement for a continuous period of at least 6 months. Some of the definitions are listed below.
You and Your – The named insured listed in the declarations, and the spouse if a resident of the same household. The named insured should always be the person or persons to whom the vehicle is titled and registered, unless it’s a leased vehicle.
Private Passenger Auto – Shall be deemed to be owned by a person if the auto is owned or leased under contract for a continuous period of at least 6 months.
Bodily Injury – Bodily harm, sickness, or disease, including death that results.
Business – Includes trade, profession, or occupation. The courts have determined that business activities have two components: they are continuous in nature and offer the opportunity for profit.
Family Member – A person related to the named insured by blood, marriage, or adoption who is a resident of the named insured’s household. A family member includes a ward or foster child.
Occupying – Means in, upon, getting in, getting on, getting out, or getting off a vehicle.
Property Damage – Physical injury to, destruction of, or loss of use of tangible property.
Trailer – A vehicle designed to be pulled by a private passenger auto or a pickup or van. Trailer also includes a farm wagon or farm implement while it’s being towed by a private passenger auto pickup, or van.
A private passenger auto includes a leased vehicle as long as the lease contract is continuous for how many months duration?
6
Match the following terms and definitions as defined under Your Covered Auto
Temporary substitute
Any auto or trailer that is non-owned while being used in place of an insured vehicle which not available because of breakdown, repair, servicing, loss, or destruction
Newly acquired auto
A vehicle for which the insured becomes the owner during the policy period and may be a replacement or additional vehicle
Declared auto
Any vehicle shown in the Declarations
Trailer
A vehicle designed to be pulled by a private passenger auto, pickup, or van
Your Covered Auto – If a vehicle meets any of the following four definitions, it is a “your covered auto.”
Any vehicle shown in the Declarations A newly acquired auto Any trailer that the insured owns Any auto or “trailer” the named insured doesn’t own while being used as a temporary substitute for any other vehicle described in this definition, which is out of the normal use because of: Breakdown Repair Servicing Loss Destruction
A temporary substitute is NOT a “your covered auto” under Part D – Coverage for Damage to your Auto.
A ____________vehicle is a covered vehicle when Your Covered Auto is being repaired due to a covered loss.
A temporary substitute
is also covered if the vehicle is out of normal use due to breakdown, servicing, loss, or destruction.
A ____________vehicle is a covered vehicle when Your Covered Auto is being repaired due to a covered loss.
A temporary substitute
is also covered if the vehicle is out of normal use due to breakdown, servicing, loss, or destruction.
Newly Acquired Auto – Any of the following types of vehicles for which the insured becomes the owner during the policy period:
A private passenger auto
A pickup or van, for which no other insurance policy provides coverage, if the auto:
Has a gross vehicle weight of 10,000 pounds or less.
Is not used for delivery or transportation of goods and materials, unless such use is incidental to the insured’s business of installing, maintaining, or repairing furnishings or equipment, For example, if the insured is a plumber; he may use his pickup or van for the transportation of his tools.
For all coverages EXCEPT Part D – Coverage for Damage to your Auto, coverage begins on the date the named insured becomes the owner.
If newly acquired auto is an additional vehicle, the insured must report to the insurer within 14 days.
A replacement auto for another with all coverages except collision and comprehensive (other than collision) is covered for liability and medical payments for the remainder of the policy period, even if the insured does not report the replacement.
Under Part D, Coverage for Damage to your Auto automatic coverage begins on the date the named insured becomes the legal owner of the vehicle.
The insured must report the newly acquired auto to the insurer for coverage to continue. If the insured doesn’t report as required, coverage ends after either 4 or 14 days.
If the Declarations page indicates that either Collision or Other than Collision coverage applies to at least one vehicle, the insured has 14 days to report for either coverage to apply. Automatic coverage ends after 14 days if the insured doesn’t report.
If the Declarations page indicates that NO Collision or Other than Collision coverage applies to at least one vehicle, the insured has 4 days to report for coverage to apply. Automatic coverage ends after 4 days if the insured doesn’t report.
Under Part D, Within how many days must an insured report the purchase of a new vehicle that is replacing an existing vehicle covered by collision coverage?
14
If a vehicle covered by Part D coverages is replaced by a new car with the same coverage, the policy will automatically extend coverage for 14 days
Part A - Liability Coverage
Insuring Agreement
The insurer will:
Pay damages for bodily injury or property damage for which any insured becomes legally responsible.
Settle or defend any claim or suit asking for such damages.
Pay all defense costs it incurs, in addition to the liability limits. The insurer’s duty to settle or defend ends when the limit of liability is exhausted.
The insurer will not defend or settle any suit or claim that is not covered under this policy. The policy defines insured in Part A as:
The named insured or any family member for the ownership, maintenance, or use of any auto.
Any person using the covered auto with permission.
A person or organization, for “your covered auto,” if legally responsible for an insured.
Supplementary Payments
In addition to the limit of liability, the insurer also makes other payments:
If a bail bond is required because of an accident, the policy will pay up to $250 for the cost of the bail bond so long as the accident resulted in a covered bodily injury or property damage claim.
If defending a suit, the insurer will pay premiums on appeal bonds and bonds to release attachments.
Any interest that accumulates after a judgment has been entered will also be paid by the insurer if it defends a suit.
The policy pays up to $200 a day for loss of earnings because the insurer requests attendance at hearings or trials. This does not include loss of other earnings.
The policy will also pay for reasonable expenses incurred at the insurer’s request. This does NOT include traffic fines.
Each of the following is a Part A – Liability Coverage Supplementary payment, except:
Payment for all defense costs
Payment for all defense costs is part of the Part A – Liability Coverage Insuring Agreement, which also includes payment for bodily injury or property damage for which the insured is legally responsible.
Part A Exclusions
Liability coverage is not provided for any insured who:
Intentionally causes bodily injury or property damage.
Causes property damage to property he or she owns or is transporting.
Causes property damage to property rented to, used by, or in the care of that insured. An exception exists for damage to a residence or private garage—this is the care, custody, or control exclusion.
Is responsible for causing bodily injury to an employee (of that insured) during the course of employment by that insured.
Owns or is operating a vehicle while it’s being used as public or livery conveyance (meaning it has been hired out to the general public). A vehicle used in a share-the-expense car pool is not considered a public or livery conveyance.
Is employed or engaged in the business of selling, repairing, servicing, storing, road testing or parking motor vehicles. An exception exists if the vehicle is being used by an insured, a family member, or a partner or employee of these. For example, Mary’s son is a mechanic. If he’s test-driving Mary’s car and crashes it, the exception to the exclusion applies—meaning he has coverage. However, if his co-worker crashes Mary’s car, the exception doesn’t apply because the co-worker is not related to Mary, nor is he her partner or employee.
Is using a vehicle while employed or engaging in business. However, a coverage giveback applies to private passenger autos, pickups, vans, and owned trailers used with such vehicles.
Is using a vehicle without the reasonable belief that he or she is entitled to drive it. Family members always have a reasonable belief of entitlement to drive a “your covered auto” under this coverage.
Part A Exclusions (continued)
Liability coverage is not provided for the ownership, maintenance, or use of:
Vehicles that have fewer than four wheels, such as motorcycles
Vehicles designed mainly for use off public roads, such as snowmobiles or ATVs. An exception applies for off-road vehicles used by an insured in a medical emergency, “trailers,” or non-owned golf carts.
Vehicles owned by the insured that are not insured on this policy OR not owned by the insured, but are furnished to the insured or available for the insured’s regular use, such as a company car
Vehicles owned by a family member that aren’t insured by this policy OR not owned, but are furnished to a family member or available for the family member’s regular use, such as a company car
Vehicles located inside a racing facility for the purpose of competing, practicing, or preparing for a race or speed contest
Determine which of the following is a coverage or an exclusion under Part A Liability Coverage
Coverages
Property damage for which the insured is legally responsible
Bodily injury damage for which the insured is legally responsible
Loss of the insured’s earnings (up to a specified limit) because of attendance at a trial
Defense costs incurred to defend or settle any suit or claim for damages
Exclusions
Bodily injury caused by the insured to an insured’s employee during the course of employment
Property damage to property owned by the insured
Damage caused while operating a motorcycle
Property damage or bodily injury intentionally caused by the insured
The limit of liability is the most paid by the insurer regardless of all of the following, except:
amount of surcharges to be applied to policy
The amount of surcharge to be applied to the policy is not linked to the limit of liability
Out of State Coverage
When a “your covered auto” is being driven outside the state in which it is principally garaged (and also within the coverage territory), Part A – Liability Coverage extends to provide coverage as required by the financial responsibility or compulsory insurance laws of that state or Canadian province. For example, if the insured’s policy doesn’t provide Personal Injury Protection (PIP) coverage and the state in which the vehicle is being driven requires it, the insured’s personal auto policy will provide PIP coverage at required limits while the insured is in that state.
Financial Responsibility
When the policy is certified as future proof of financial responsibility, the policy shall comply with the law to the extent required.
Other Insurance
If other auto liability insurance is in place at the time of the loss, the personal auto policy will only pay its share of the loss. That share is the proportion the policy’s limit bears to all insurance in place. For example, if the policy provides $100,000 of property damage liability insurance and another policy also provides $100,000 of property damage liability insurance, the insured’s policy will only pay ½ of the liability loss. Because the total insurance in place is $200,000 and the limit of liability provided by the insured’s policy is $100,000, the insured’s policy pays ½ of the total insurance in place.
This policy pays liability losses on an excess basis for non-owned vehicles. For example, the covered loss involves a car the insured borrowed from his neighbor. The insurance in place on the neighbor’s car must pay first (it’s primary insurance) and then this policy will pay (it’s excess insurance).
Part B – Medical Payments Coverage
Insuring Agreement
The insurer will pay reasonable expenses incurred for necessary medical and funeral services caused by an accident, sustained by an insured, and incurred within 3 years of the accident. Unlike Liability Coverage, Medical Payments Coverage does NOT require an insured to be legally responsible for causing injuries. The policy defines insured in Part B, as:
The named insured or any family member occupying any auto; or as a pedestrian when struck by a motor vehicle designed for use mainly on public roads. These vehicles do NOT have to be owned by the insured and include any type of trailer.
Any other person, such as a passenger, while occupying the insured auto.
A Medical Payments claim will be paid by the insurer within how many months from the date of the occurrence?
36
A Medical Payments claim will be paid within 3 years for reasonable expenses for medical and funeral expenses regardless of fault.
Part B – Exclusions
Although legal liability on the part of an insured is not required for Medical Payments Coverage to apply, bodily injury sustained by an insured is NOT covered under the following circumstances when an insured:
Is occupying a vehicle with fewer than 4 wheels.
Is occupying a vehicle being used as a public or livery conveyance. A share-the-expense car pool is NOT public or livery conveyance.
Is occupying any vehicle that is located for use as a residence or premises—for example, living in one’s car or a permanently located motor home or trailer used as a residence.
Sustains bodily injury in the course of employment and workers’ compensation benefits are either required or available.
Is occupying or struck by a vehicle owned by the insured that is not a “your covered auto” and is either owned by the insured OR furnished to the insured, or available for the insured’s regular use, such as a company car.
Is occupying or struck by a vehicle owned by a family member that is not a “your covered auto” and is either owned by a family member OR furnished to a family member, or available for the family member’s regular use, such as a company car.
Is using a vehicle without having a reasonable belief that he/she is entitled to drive the car.
Is using a vehicle while engaged in business; however, a coverage giveback applies to private passenger autos, pickups, vans, and owned trailers used with such vehicles. This exclusion applies to the business use of trucks and other commercial vehicles.
Injuries sustained because of, or as a result of, any type of war or nuclear hazard or action.
Injuries sustained when occupying a vehicle located inside a racing facility for the purpose of competing, practicing, or preparing for a race or speed contest.
Which of the following uses of a vehicle is not excluded under the Medical Payments coverage?
Insured uses a truck for incidental purposes
Bodily injury sustained by an insured isn’t covered if the insured is using a vehicle while engaged in business. However, a coverage giveback applies to private passenger autos, pickups, vans, and owned trailers used with such vehicles. This exclusion applies to the business use of trucks and other commercial vehicles.
