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Personal Auto Policy
The Personal Automobile Policy was introduced in 1977. It is written in the simplified terminology that has become common in the insurance field, but at the time of its introduction, it was considered a remarkable departure from the existing contracts. The policy has been revised several times, and the following discussion is based on 2005 edition.The cheap auto insurance is best for you.
The automobile insurance policy is one of the most complicated of all insurance contracts. The complicated nature of the contract results from the need to provide a contract that will provide coverage for different types of losses under diverse circumstances. The ownership or operation of an
Auto involves three types of loss:
1. Legal liability
2. Injury to the insured or members of the insured’s family
3. Damage to or loss of the auto itself
The Personal Auto Policy is a package policy, providing protection against all three of these types of loss. It may be used to provide liability coverage, medical payments coverage, uninsured motorist coverage, and physical damage insurance. It may be endorsed to provide no-fault benefits in those states where such laws exist. Besides covering various types of loss, the policy must provide protection in various situations.
Most people in our society operate autos, and often the vehicle being driven is not owned by the operator. Jones may borrow Brown’s car, and as we have seen, Brown may be held liable with Jones if the latter is negligent.cheap auto insurance It is, therefore, necessary to devise a contract that will protect the owner when someone else is operating his or her auto. In addition, it is desirable that the contract protects the insured when he or she is driving someone else’s car.
Both requirements add to the complexity of the contract. In addition, the broadness of coverage in a policy designed to meet these various situations makes insurers limit its availability to specific classes. Before turning to an analysis of the policy itself, we will briefly examine the eligibility rules of the PAP.
The PAP is available only to certain eligible classes of persons and to cover specified types of vehicles. First, the auto must be owned by an individual or by a husband and wife who are residents of the same household.2 Autos owned by partnerships, corporations, or by two or more individuals who are not resident relatives of the household are not eligible.cheap auto insurance For the purposes of eligibility and coverage, a vehicle that is leased under a written agreement for at least six months is treated as if it were owned. Furthermore, the auto must be of a specific type. The first class of eligible vehicles consists of private passenger automobiles, defined as “a four-wheel motor vehicle, other than a truck type, owned or leased under contract for a continuous period of at least six months.”
The vehicle may not be used as a public or livery conveyance, and it may not be rented to others. A pickup or van may also be eligible for coverage, depending on its size and use. The pickup or van must have a gross vehicle weight of fewer than 10,000 pounds and may not be used for the delivery or transportation of goods and materials. An exception to this “use” limitation permits delivery or transportation of goods or materials that are incidental to the business of installing, maintaining, or repairing furnishings or equipment, or use that is for farming or ranching. Finally, the PAP may be used to provide coverage on motorcycles, motor homes, golf carts and similar type vehicles, and snowmobiles. cheap auto insurance The vehicle must be owned by an individual, husband, and wife, or two relatives who are residents of the same household. A special endorsement is used to modify the coverage of the policy when it is used for these types of
The liability part of the PAP, designated Part A, provides the most important coverage of the policy.
It contains the liability insuring agreement, supplementary payments, liability exclusions, and special
conditions applicable to the liability coverage
Liability Insuring Agreement
The liability insuring agreement obligates the insurer to pay, up to the policy limit, damages for which any “insured” becomes legally responsible because of an auto accident. Coverage for bodily injury and property damage is provided with split limits, with separate per person and per accident bodily injury limits and a separate limit for property damage. cheap auto insurance The minimum limits available vary with the financial responsibility law of the state. In most states, the minimum bodily injury limits are $25,000/50,000, and the minimum property damage limit is generally $10,000 or $20,000, but these limits can be increased.
The bodily injury limits may be increased to $50,000/100,000, $100,000/200,000 or $100,000/300,000, $250,000/500,000 or higher. cheap auto insurance The property damage limit can be increased to $25,000, $50,000, $100,000, and higher. As in the case of most liability contracts, the insurer also agrees to defend
the insured but reserves the right to make any settlement it considers appropriate. The insuring agreement makes it clear that the company’s obligation to defend ends when the policy limits are exhausted.
Persons Insured under Liability Coverage
Since the policy agrees to pay sums an insured becomes
obligated to pay, the definition of insured is a critical determinant of coverage.A cheap auto insurance is for you.
The PAP defines an insured as follows:
“Insured” as used in this Part means:
1. You or any “family member” for the ownership, maintenance or use of any auto or trailer.
2. Any person using “your covered auto.”
3. for “your covered auto,” any person or organization but only with respect to legal responsibility.
Although the provision is written in simplified terminology, it considers a variety of situations and is therefore necessarily complex. A brief analysis of the definition should help simplify it. Initially, coverage is provided for “you” or any family member for the use of any auto or trailer. Reference to the policy definitions reveals that “you” means the named insured listed in the declarations and his or her spouse if a resident of the same household.
Furthermore, the policy definition of “you” includes a spouse who ceases to be a resident of the household for a limited period. This new provision is intended to eliminate short-term gaps in coverage arising from changes in relationships that existed under earlier forms. Coverage is provided for a spouse who leaves the residence for 90 days after changing residency or until he or she obtains a separate policy, or until the policy period ends, whichever comes first. The definitions section also indicates cheap auto insurance
Auto Insurance Coverage
For the named insured and resident relatives, coverage applies to any auto, which means both the auto designated as the covered auto5 as well as borrowed or rented non-owned autos.A cheap auto insurance is smart one..
There is no restriction on the type of auto that may be borrowed or rented and it could include, for example, a bus or truck. Although the definition of insured states that coverage applies to the named insured and resident relatives for any automobile, the contract must be interpreted as a whole, and this broad statement is subject to qualification by other provisions of the policy.
Certain types of autos are eliminated from coverage by the exclusions that will be discussed shortly. In addition, while the definition of insured does not refer to a requirement of permission, one of the exclusions (discussed shortly) eliminates coverage for anyone operating a vehicle without a reasonable belief that he or she is entitled to do so.A cheap auto insurance is very important. Persons other than the named insured and family members are covered while using the “covered auto” subject to the requirement that the use is with the reasonable belief that the person has a right to do so.
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