Personal Automobile Policy
Hazards Not Covered
Herein below we shall look at only those exclusions that apply to
the liability portion of the Personal Automobile policy. It should
be noted that special exclusions apply to some of the specific
coverages under the Personal Auto policy. The exclusions
applicable to the specific sections of the policy are discussed, in
each instance, under the coverage itself.
Public or Livery Conveyance - The Personal Automobile policy
liability section specifically excludes coverage under any of its
provisions while the vehicle is used as a public or livery
conveyance. Any passenger transportations for hire, or renting
of the vehicle to others for their use, automatically suspends
coverage under the policy.
Car-pooling or other "share-a-ride" arrangements by a group of
employees riding to work are not considered to be carrying
passengers for hire, even though the passengers may
contribute to the expenses of the ride.
Liability of an Insured to His or Her Employees - This exclusion
is not unlike the one found in most forms of liability insurance.
Domestic servants are exempted from the exclusion, unless
they are covered under a Workers Compensation Law. In other
words, while injuries to the insured’s other employees are not
covered under his automobile liability policy, domestic servants
are covered under the policy, unless they are entitled to benefits
under a Workers Compensation Law. This liability policy also
does not provide coverage for injuries to the domestic
employees who are not eligible under a Workers Compensation
Law if Workers Comp insurance coverage has been provided for
them.
Liability for Property in Insured's Care - With two exceptions to be
discussed below, the personal auto policy does not provide
coverage for properties owned by, rented to, in the care of or
being transported by the insured. This exclusion is quite similar
to that incorporated in most forms of liability insurance.
It should be noted that this exclusion will apply whether the
property is in the insured’s care (as when he is in possession of
the property of others) or is the property of a passenger. Thus, if
an insured has borrowed an iPod which he is carrying in his car
and the car is in an accident with another vehicle and the iPod is
damaged, he may be held liable to the iPod owner for the
damage if it is proven that his negligence contributed to the
cause of the accident. The PAP policy will not cover such liability,
since the property was in the possession of the insured.
Similarly, if an insured backs his vehicle into his home,
regardless if it is owned or rented by the insured, the Automobile
Liability policy does not cover the damages. With the exception
of properties owned by, rented to, in the charge of, or transported
by the insured, the Property Damage (PD) portion of the
Automobile Liability policy will cover the insured’s liability for
damages to properties of others.
This exclusion also will apply to property owned by, rented to, in
the charge of or transported by all persons included as an
insured under the policy. Thus, if the insured lends his car to his
sister, damages to properties of the sister are not covered, since
she is driving the insured’s vehicle with his permission. The
sister is deemed to be included as an additional insured.
An exception to this exclusion is made for the insured’s liability
for damage to a residence or a private garage. A second
exception extends to a private passenger car, trailer, pickup
truck, or van, provided such auto is not owned by, furnished or
available for the regular use of any family member resident in
the household.
Vehicle Furnished for Regular Use - The PAP policy excludes
liability coverage for the ownership or use of any vehicle, other
than the one stated in the policy, owned by or furnished for the
regular use of the insured. The reason for such exclusion is that
an individual is responsible for insuring all vehicles he owns or
uses on a regular basis. In the situation of a vehicle furnished
for the insured’s regular use, primary coverage should be
provided by that vehicle’s owner.
Collision Coverage on Rented Cars - Until recently, car owners
who carried collision insurance on a private passenger vehicle
were covered for damage to a rented vehicle. Vehicles which
they rented on a regular or frequent basis were excluded
coverage.
The collision coverage for occasionally rented vehicles is still
part of many personal auto policies, but some insurers have
started to eliminate this coverage extension. Many car rental
agencies will sell collision insurance to renters as well as offer
a collision waiver endorsement to them. If a car renter chooses
to waive this coverage, and the rented vehicle is in an accident,
the renter may be liable for the damage UNLESS his or her own
personal automobile policy covers such loss. Of course, there’s
still a question of having to pay any deductible.
The premium for the additional coverage offered by car rental
agencies is usually expensive. It is always prudent an individual
renting an automobile to inquire about his own automobile
insurance policy to make sure that there is coverage for the
rented vehicle. Once a renter knows about the coverage under
his auto policy, he can make the decision to accept or reject the
rental company’s offer for coverage.
LOUISIANA - The Louisiana Insurance Department issued an order to
all insurance companies admitted to do business in the state, that it
considers all physical damage coverages under automobile policies
transferable to rental cars rented by an insured.
Vehicles with Fewer Than Four Wheels - Motorcycles,
snowmobiles, recreational vehicles, segways, mopeds, and
similar vehicles having fewer than four wheels are specifically
excluded from PAP coverage.
Intentional Injury - Like any other liability policies, the Personal
Automobile policy does not cover any person’s liability for
injuries inflicted intentionally. Note that this exclusion includes
losses that are unintentional from the driver’s standpoint, but
which results from an intentional act.
Example: Susan, while driving her car, sees her friend, Sam, and
playfully chases him. Sam would easily outrun the car, but then he trips
and Susan hits him. Susan did not intend to cause injury to Sam, but
the loss would not be covered because it arises out of an intentional act.
Hazards Not Covered
Herein below we shall look at only those exclusions that apply to
the liability portion of the Personal Automobile policy. It should
be noted that special exclusions apply to some of the specific
coverages under the Personal Auto policy. The exclusions
applicable to the specific sections of the policy are discussed, in
each instance, under the coverage itself.
Public or Livery Conveyance - The Personal Automobile policy
liability section specifically excludes coverage under any of its
provisions while the vehicle is used as a public or livery
conveyance. Any passenger transportations for hire, or renting
of the vehicle to others for their use, automatically suspends
coverage under the policy.
Car-pooling or other "share-a-ride" arrangements by a group of
employees riding to work are not considered to be carrying
passengers for hire, even though the passengers may
contribute to the expenses of the ride.
Liability of an Insured to His or Her Employees - This exclusion
is not unlike the one found in most forms of liability insurance.
Domestic servants are exempted from the exclusion, unless
they are covered under a Workers Compensation Law. In other
words, while injuries to the insured’s other employees are not
covered under his automobile liability policy, domestic servants
are covered under the policy, unless they are entitled to benefits
under a Workers Compensation Law. This liability policy also
does not provide coverage for injuries to the domestic
employees who are not eligible under a Workers Compensation
Law if Workers Comp insurance coverage has been provided for
them.
Liability for Property in Insured's Care - With two exceptions to be
discussed below, the personal auto policy does not provide
coverage for properties owned by, rented to, in the care of or
being transported by the insured. This exclusion is quite similar
to that incorporated in most forms of liability insurance.
It should be noted that this exclusion will apply whether the
property is in the insured’s care (as when he is in possession of
the property of others) or is the property of a passenger. Thus, if
an insured has borrowed an iPod which he is carrying in his car
and the car is in an accident with another vehicle and the iPod is
damaged, he may be held liable to the iPod owner for the
damage if it is proven that his negligence contributed to the
cause of the accident. The PAP policy will not cover such liability,
since the property was in the possession of the insured.
Similarly, if an insured backs his vehicle into his home,
regardless if it is owned or rented by the insured, the Automobile
Liability policy does not cover the damages. With the exception
of properties owned by, rented to, in the charge of, or transported
by the insured, the Property Damage (PD) portion of the
Automobile Liability policy will cover the insured’s liability for
damages to properties of others.
This exclusion also will apply to property owned by, rented to, in
the charge of or transported by all persons included as an
insured under the policy. Thus, if the insured lends his car to his
sister, damages to properties of the sister are not covered, since
she is driving the insured’s vehicle with his permission. The
sister is deemed to be included as an additional insured.
An exception to this exclusion is made for the insured’s liability
for damage to a residence or a private garage. A second
exception extends to a private passenger car, trailer, pickup
truck, or van, provided such auto is not owned by, furnished or
available for the regular use of any family member resident in
the household.
Vehicle Furnished for Regular Use - The PAP policy excludes
liability coverage for the ownership or use of any vehicle, other
than the one stated in the policy, owned by or furnished for the
regular use of the insured. The reason for such exclusion is that
an individual is responsible for insuring all vehicles he owns or
uses on a regular basis. In the situation of a vehicle furnished
for the insured’s regular use, primary coverage should be
provided by that vehicle’s owner.
Collision Coverage on Rented Cars - Until recently, car owners
who carried collision insurance on a private passenger vehicle
were covered for damage to a rented vehicle. Vehicles which
they rented on a regular or frequent basis were excluded
coverage.
The collision coverage for occasionally rented vehicles is still
part of many personal auto policies, but some insurers have
started to eliminate this coverage extension. Many car rental
agencies will sell collision insurance to renters as well as offer
a collision waiver endorsement to them. If a car renter chooses
to waive this coverage, and the rented vehicle is in an accident,
the renter may be liable for the damage UNLESS his or her own
personal automobile policy covers such loss. Of course, there’s
still a question of having to pay any deductible.
The premium for the additional coverage offered by car rental
agencies is usually expensive. It is always prudent an individual
renting an automobile to inquire about his own automobile
insurance policy to make sure that there is coverage for the
rented vehicle. Once a renter knows about the coverage under
his auto policy, he can make the decision to accept or reject the
rental company’s offer for coverage.
LOUISIANA - The Louisiana Insurance Department issued an order to
all insurance companies admitted to do business in the state, that it
considers all physical damage coverages under automobile policies
transferable to rental cars rented by an insured.
Vehicles with Fewer Than Four Wheels - Motorcycles,
snowmobiles, recreational vehicles, segways, mopeds, and
similar vehicles having fewer than four wheels are specifically
excluded from PAP coverage.
Intentional Injury - Like any other liability policies, the Personal
Automobile policy does not cover any person’s liability for
injuries inflicted intentionally. Note that this exclusion includes
losses that are unintentional from the driver’s standpoint, but
which results from an intentional act.
Example: Susan, while driving her car, sees her friend, Sam, and
playfully chases him. Sam would easily outrun the car, but then he trips
and Susan hits him. Susan did not intend to cause injury to Sam, but
the loss would not be covered because it arises out of an intentional act.
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MY Insurance Agency
The materials on this website are meant to
be informative in nature. Due to the ever
changing and varying state laws, and the fact
some insurers offer coverage in slightly
different forms from the Insurance Services
Office (ISO) standard forms, we cannot
guarantee the accuracy of the materials on
this page.
be informative in nature. Due to the ever
changing and varying state laws, and the fact
some insurers offer coverage in slightly
different forms from the Insurance Services
Office (ISO) standard forms, we cannot
guarantee the accuracy of the materials on
this page.
(Continued from left column)
FOR HOW MUCH
The coverage limit listed policy declaration is
the maximum that will be paid out in any
single accident for bodily injury (BI) and
damage to property (PD). The limits are
commonly expressed on a split basis, with a
maximum amount available per person, per
accident for bodily injury and a separate
maximum amount per accident for property
damage, e.g. 25/50/10, which means
maximum coverage afforded is $25,000 per
injured person, $50,000 per accident for
bodily injury, and $10,000 for property
damage. However, coverage may also be in
the form of a combined single limit that
applies to both BI and PD resulting from the
same accident, e.g. $100,000 combined
single limit for both BI and PD.
Two or More Autos - If the named insured
has two or more vehicles insured with the
same insurer, only the highest limit will apply
in the event of an accident involving more
than one of the cars, even if separate
policies were purchased. Like other liability
policies, the Personal Auto form provides for
supplemental benefits.
Other Insurance - If there exists another
liability insurance applicable to the loss, the
personal auto policy pays only its pro rata
share, based on the ratio of its limits to the
total coverage limits under both policies.
Example: Lisa is found liable for bodily injury in the
amount of $30,000 as a result of an auto accident.
Lisa's personal auto policy has a coverage limit of $
50,000 and another liability policy that has a
$100,000 limit. Both policies are available to pay
for the incident. Because of her policy's “other
insurance” condition, the maximum coverage
available under Lisa’s personal auto policy is
$10,000 (1/3 of $50,000 damage), because her
auto policy’s pro rata share of total coverage is
only 33.3% ($50,000 of a total of $150,000
available coverage).
FOR HOW MUCH
The coverage limit listed policy declaration is
the maximum that will be paid out in any
single accident for bodily injury (BI) and
damage to property (PD). The limits are
commonly expressed on a split basis, with a
maximum amount available per person, per
accident for bodily injury and a separate
maximum amount per accident for property
damage, e.g. 25/50/10, which means
maximum coverage afforded is $25,000 per
injured person, $50,000 per accident for
bodily injury, and $10,000 for property
damage. However, coverage may also be in
the form of a combined single limit that
applies to both BI and PD resulting from the
same accident, e.g. $100,000 combined
single limit for both BI and PD.
Two or More Autos - If the named insured
has two or more vehicles insured with the
same insurer, only the highest limit will apply
in the event of an accident involving more
than one of the cars, even if separate
policies were purchased. Like other liability
policies, the Personal Auto form provides for
supplemental benefits.
Other Insurance - If there exists another
liability insurance applicable to the loss, the
personal auto policy pays only its pro rata
share, based on the ratio of its limits to the
total coverage limits under both policies.
Example: Lisa is found liable for bodily injury in the
amount of $30,000 as a result of an auto accident.
Lisa's personal auto policy has a coverage limit of $
50,000 and another liability policy that has a
$100,000 limit. Both policies are available to pay
for the incident. Because of her policy's “other
insurance” condition, the maximum coverage
available under Lisa’s personal auto policy is
$10,000 (1/3 of $50,000 damage), because her
auto policy’s pro rata share of total coverage is
only 33.3% ($50,000 of a total of $150,000
available coverage).
Continue on right column ...