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.
Limit of Liability
The limit of liability shown in the Declarations is the maximum the insurer will pay for each person injured in any one accident. This is the most the policy will pay regardless of the number of insureds, claims made, vehicles or premiums shown in the Declarations, or vehicles involved in the accident. If the loss is covered under more than one Part of the policy, payment will not be duplicated.
Other Insurance
If there is other applicable auto Medical Payments insurance, the insurer will pay only the proportion that its limit of liability bears to the total of all applicable limits. However, coverage for non-owned vehicles shall be excess over any other collectible auto insurance providing payment for medical or funeral expense.
Part C – Uninsured Motorists Coverage (UM)
Insuring Agreement
Part C – Uninsured Motorists Coverage (UM) provides insurance to insured persons injured in accidents that are caused by another party. The other party must be legally responsible for bodily injury to an insured that arises out of the ownership, maintenance, or use of an “uninsured motor vehicle.” If the other party is NOT legally responsible (or not at-fault), this coverage doesn’t apply.
The insurer will pay damages that an insured is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury. Unless the policy specifically states that Uninsured Motorist Physical Damage (UMPD) is also provided, this section of the policy only applies to bodily injury damages.
Insuring Agreement (continued) In addition to the definition of “insured” that applies to the entire policy, the definition of “insured” for UM means:
The named insured or any family member
Any person occupying a “your covered auto”
Any person who is entitled to recover damages because of bodily injury sustained by an insured and covered by the policy. For example, if Sue sustains bodily injury in an accident caused by an uninsured motorist, her children will be entitled to recover damages for loss of care when Sue is unable to care for them because she broke both her legs in the accident.
Insuring Agreement (continued) Part C – Uninsured Motorists Coverage contains a definition for “uninsured motor vehicle.” An uninsured motor vehicle is one that:
Doesn’t have insurance or a bond in place at the time of the accident.
Has insurance in place at the time of the accident. However, the bodily injury liability limits are less than those required by the financial responsibility or compulsory insurance laws in place in the state where the insured’s “your covered auto” is principally garaged.
Is a hit-and-run vehicle. The owner or operator of the vehicle can’t be identified AND must hit:
The named insured or a family member;
A vehicle occupied by the named insured or a family member; or
“Your covered auto.”
Has insurance, but the insurer either denies the claim or becomes insolvent.
Which of the following is covered under Part C – Uninsured Motorist Coverage?
Accident was caused by a hit-and-run driver
A hit-and-run vehicle can’t be identified and is therefore considered uninsured.
Insuring Agreement (continued) The following types of vehicles are NOT included in the definition of “uninsured motor vehicle”:
A vehicle that’s owned by the named insured or a family member OR a vehicle that’s furnished or available for the regular use of the named insured or a family member, such as a company car.
A vehicle that is owned or operated by someone who is self-insured, unless the owner or operator is or becomes insolvent.
A vehicle owned by any government agency.
A vehicle that operates on rails or crawler treads, such as a train or piece of mobile equipment like a bulldozer.
A vehicle designed mainly for use off public roads, such as a snowmobile or ATV.
A vehicle permanently located for use as a residence, such as a motor home or trailer in a campground.
An uninsured motor vehicle is any of the following, except:
A company car
Besides a company car, a vehicle owned by the insured or a family member, or a vehicle furnished or available for the regular use of the named insured or a family member, is not considered an uninsured vehicle.
Part C Exclusions
Coverage is NOT provided when any insured sustains bodily injury under the following circumstances:
An insured or family member is injured when occupying, or struck by, a vehicle owned by the named insured or a family member and the vehicle is not insured by this policy.
An insured or a legal representative settles an Uninsured Motorists Bodily Injury Liability claim and that settlement impairs the insurance company’s ability to recover payments made to any insured.
An insured is occupying a “your covered auto” while it is being used as a public or livery conveyance.
An insured is using a vehicle without a 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.
While insured by workers’ compensation or disability insurance. No payment will be made under this coverage for injuries that might benefit any insurer, or self-insurer, under any workers’ compensation or disability benefits law. This means that if workers’ compensation or disability insurance is in place, that coverage must pay before this coverage applies.
If the insured is legally responsible for punitive or exemplary damages, this coverage does not apply.
Limit of Liability
The limit of liability shown in the Declarations is the maximum the insurer will pay in any one accident. This is the most the insurer will pay regardless of the number of insureds, claims made, vehicles or premiums shown in the Declarations, or vehicles involved in the accident. If the loss is covered under more than one Part of the policy, payment will not be duplicated.
Other Insurance
If more than one policy is in place and provides UM, the total amount the insured may collect cannot exceed the highest limit applying to any one vehicle. For example, if the insured’s limits are 100/300 and the limits on the other policy are 50/100, the most the insured may collect is 100/300.
If the loss occurs while the insured is occupying a non-owned vehicle, the policy covering the non-owned vehicle is primary, and the insured’s coverage is excess. If more than one policy applies, the insurer pays only its share of the loss, which is the proportion that its limit of liability bears to the total amount of all applicable coverage.
Arbitration
If the insurer and the insured do not agree on the recovery of damages or the amount recoverable by the insured, each party may select an arbitrator (at each party’s expense) who then jointly select a third arbitrator (with the expense split equally by each party). A decision agreed upon by the arbitrators will be binding as to the insured’s entitlement to, and the amount of, damages.
