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Eligibility Requirements The Personal Auto Policy (PAP) is meant to provide coverage for private passenger automobiles that meet certain criteria, mostly being a private passenger automobile, including pickups, vans, and sports utility vehicles and the variations on these groups. Vehicle type A "private passenger auto" is a four wheel motor vehicle that weighs 10,000 or less pounds. Cars, vans, Sports Utility Vehicles (SUVs), and pickups which weigh 10,000 or less pounds are eligible for coverage as long as the other criteria are met. The weight limitation is for Gross Vehicle Weight Rating (GVWR). GVWR refers to a combination of the vehicle's weight plus the weight of all occupants (driver and passengers) and any cargo. Insurance Services Office (ISO) offers the Personal Auto Policy (PAP) as the standard form for insuring private passenger autos in most jurisdictions. Eligible persons A PAP may be written on a specified auto basis for qualifying vehicles owned by an individual or by a husband and wife residing in the same household. (The marital status of non-related individuals sharing a common household is determined by statute in most territories.) Personal autos owned by a trust are eligible. Earlier rules stated that the vehicles had to be owned by both the trust and the named insured; the current rules have been revised so that if the title of an otherwise eligible vehicle under the rules of the Personal Vehicle Manual (PVM) is transferred to a trust, the vehicle is eligible for coverage if three conditions are met. First, the grantor of the trust must be an individual or a husband and wife and the only named insured in the declarations. Second, all vehicles insured on the policy must be owned by the trust. Third, vehicles owned by a trust in which the grantor is a corporate entity are not eligible under the Personal Auto Program, but may be insured under a commercial auto policy. Trust endorsement must be attached to the policy. A PAP can be written for someone who owns no autos by attaching a named non-owner coverage endorsement to the policy. Eligible vehicles Qualifying vehicles are four wheel (at least) motor vehicles of the private passenger type owned by the insured or leased under a written six-month (or longer) continuous contract. A vehicle rented to others or used as a public or livery conveyance is not eligible. Pickups and vans are also eligible for a PAP; indeed, both vehicles are included in the definition of covered auto found on the policy. There are some restrictions, however; the pickup or van must have a gross vehicle weight rating of 10,000 pounds or less. The term "gross vehicle weight rating" is the term used in the Federal Vehicle Safety Standards, so ISO has adopted this wording. Additionally, in the revised Personal Vehicle Manual (PVM), rule 1.A.2. states that a pickup or van will be considered a private passenger auto if it has a gross vehicle weight rating greater than 10,000 pounds, provided that a symbol is displayed in the Symbol and Identification Section. Pickups or vans must not be used for the delivery or transportation of goods and materials. The exceptions to this limitation on use are for the use that is incidental to the named insured's business of installing, maintaining, or repairing furnishings or equipment (for example, an electrician's van or a plumber's van), or for use in farming or ranching. Although the PVM declares that vehicles with a gross vehicle weight rating over 10,000 pounds are eligible for coverage, note that the definition of a "newly acquired auto" still limits coverage to a pickup or van with a gross vehicle weight rating of 10,000 pounds or less. This could cause a serious coverage gap should an insured replace one one-ton pickup with another and assume there is coverage. Vehicle use Coverage doesn't apply to any auto rented to others or used as a public or livery conveyance for passengers. An auto is not a public or livery conveyance when it is used occasionally in the familiar car pool or share-the-expense arrangement. Owned vehicles The automobile must be owned by an individual or owned jointly by either relatives or resident individuals. Non-related resident joint owners should attach the Joint Ownership Endorsement PP 03 23, which extends all coverages under the PAP to named joint owners. An automobile is considered to be owned if it is owned or leased under contract for a continuous period of at least six months. A motor vehicle owned by a farm family co-partnership or farm family corporation is covered. This is the case if it is principally garaged on a farm or ranch and otherwise meets the occupation and use conditions described in this section for other eligible autos. Non-owned vehicles Temporary substitutes for covered autos (including substitutes for covered trailers) are eligible for the broadest protection the policy provides for autos described on the policy declarations. Also see paragraph below on rental vehicles. The PAP defines the following situations which are considered eligible for coverage if the indicated conditions are met: 1. The revised definition of "your covered auto" provides coverage for additional or replacement pickups and vans meeting a weight limitation (less than 10,000 pounds) and used in business (except for freight or delivery-type businesses). 2. For liability coverage only, a pickup, van, or panel truck used in the business of the U.S. Government by a government employee and: a. is owned by an individual or by a husband and wife who are residents of the same household; b. is not customarily used in any other occupation, profession, or business of the insured other than farming, ranching or artisan use; and c. coverage is limited by attachment of a Federal Employees Using Autos In Government Business (PP 03 01) endorsement. Rental cars Car rental companies contractually hold renters responsible for smaller (usually less than $1,000) collision losses to the rental cars. Their contracts usually include an option for the renter to get full coverage by buying a collision damage (or deductible) waiver. Car renters are often confused about how their insurance might apply to such losses and if they should buy the collision waiver. Professional advice commonly given to consumers is that it's easier to pay the additional charge. The waiver avoids any dependence upon their own policy and avoids the possible interruption of a short trip or vacation by leaving the rental car company responsible for all claims, big and small. But what happens if the renter's obligation for the basically uninsured amount under the agreement has not been waived? A Personal Auto Policy, Part D- Coverage for Damage to Your Auto would respond in the absence of "full coverage" arranged by the rental company. A rental car qualifying as a "non-owned auto" has the broadest coverage applicable to any of the insured's "covered autos." A temporary substitute for a "covered auto" has the same physical damage coverage applicable to that car. Based on the assumption that various sources of recovery are available to respond to damages to rental cars, the PAP contains language that has a contingency for a situation involving existing coverage. Under Part D-Coverage for Damage to Your Auto; there is the "Other Sources of Recovery" provision which reads: Coverage for damage to "non-owned autos" under the PAP is excess over any:
'05 Change: The latest edition of the PAP includes a clarification of its other coverage provisions. The new wording explains that the excess coverage status also applies to vehicles that are temporary substitutes for covered autos. Additional coverage by endorsement Subject to the availability of endorsements in the state and their use by the company involved, endorsements may be attached to expand or otherwise modify coverage. |
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Not only are policy forms, clauses, rules and court decisions constantly changing, but forms vary from company to company and state to state. This material is intended as a general guideline and might not apply to a specific situation. The authors, LunchTimeCE, Inc., CEfreedom, and CEfreedom and Kruise, and any organization for whom this course is administered will have neither liability nor responsibility to any person or entity with respect to any loss or damage alleged to be caused directly or indirectly as a result of information contained in this course.
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