Personal Automobile Policy
What is Covered
The PAP liability coverage protects against damages to third parties that
the insured is legally obligated to pay. An injured person in many states
is often entitled to benefits, regardless of whether the operator of the
automobile was at fault.
PAP coverage is for the ownership, maintenance or use of the
automobile designated in the policy. The basic auto policy also includes
the following coverages:
Other Drivers and Interests - The Automobile policy covers the named
insured, spouse, resident family members and also any other person
who operates the car with the insured's permission (discussed below
under OTHER DRIVERS AND INTERESTS).
Non-owned Car - The PAP also covers, under specified conditions, the
named insured, spouse, and members of the family residing in the
household, while operating any other automobile (discussed below
under NON-OWNED CAR).
Temporary Substitute Automobile - The PAP also covers an automobile
temporary substituted by the insured for the one designated in the
policy. (The conditions of this coverage will be discussed below under
TEMPORARY SUBSTITUTE AUTOMOBILE.)
Newly Acquired Automobiles – The Personal Auto Policy also provides
coverage for automobiles acquired by the insured during the term of his
policy (further discussed below under NEWLY ACQUIRED
AUTOMOBILES).
Trailers - The PAP also applies to trailers that are designed to be pulled
by a private passenger automobile or a pickup or panel truck or van (the
term "trailer" also includes farm equipments that are towed). It should be
noted that coverage provided for trailers through endorsements to the
PAP is usually limiting when compared to a trailers policy.
Loading and Unloading - The term "auto accident" will cover the loading
and/or unloading of the insured automobile.
Other Drivers and Interests – The personal automobile policy provides
coverage for accidents arising out of the operation of the insured vehicle
by the named insured, resident spouse and family members, or by any
other person who reasonably believes that he is entitled to use the
vehicle. The 06 98 edition of the PAP was rewritten so any family
member of an insured who uses the insured vehicle is assumed to have
the named insured's permission. The latest edition also extends the
coverage for an insured's spouse. In the event that a named insured
and his or her spouse becomes legally separated, the spouse leaving
the household will remain covered for 90 days or until coverage is
provided by a new policy, whichever occurs first. The PAP also
provides coverage to any person or organization legally responsible for
the use of the insured vehicle. For example, if an insured injures
someone while driving his automobile in the course of his work, the
injured party may sue the insured and his employer. Subject to the policy
limits, the policy will cover the insured as well as the employer to the
extent that each is held liable for the accident. It should be noted that
coverage is not really provided for the employer, but rather for the
named insured's legal liability which arises out of a "use" of the insured
automobile. Depending upon the loss circumstances, after paying a
claim, the insurance company may be in a position to seek
reimbursement from the employer.
The PAP excludes coverage for a person or organization, including its
agents or employees (for example, an insured's full-time gardener), who
runs or operates an automobile repair shop, public garage, sales
agency, service station or public parking place. An exception is made
for any resident of the named insured's household, or a partnership that
includes the named insured or any member of his household or for any
partner, agent or employee of such resident or partnership while using a
covered vehicle.
Severability of Interests - The term "insured" refers to "the insured
against whom a claim is made" and is used severally, not collectively.
However, the policy’s exclusions and conditions are individually applied
to each insured. Thus, an insured who is named in an automobile liability
policy may assume status as either an insured or a claimant under his
own policy.
EXAMPLE: Joseph is riding in his own automobile as a passenger while it
is being driven by his friend Kyle. Kyle runs a red light and gets into an
accident. Joseph, the named insured, suffers injuries and files a claim
against Kyle under his own policy. In this case, Joseph is a claimant
under his own policy.
EXAMPLE: Jim has a PAP policy insuring his two cars, a Toyota and a
BMW. His brother, Kevin, who is a resident in the same household, is one
day driving the Toyota and crashes into the BMW in the driveway. Jim
threatens to sue Kevin. Since Kevin does not own the BMW, and it was
not in his care or custody at the time of the accident, he is protected as
the driver of the Toyota under his brother’s policy.
The issue of severability also applies to the particular use of an insured
automobile at the time of a covered accident.
EXAMPLE: Mark owns a minivan that is insured under a Personal
Automobile policy. He uses the minivan only for pleasure. His wife, Mary,
is paid for using the same minivan to drive several children to and from
school. While on his way to meet a friend to play tennis, Mark hits another
car and is sued. Despite the exclusion in the policy of "livery" use, Mark
may be covered, since he was not using the car for livery purposes.
Non-Owned Car - The policy will cover the insured, the insured’s spouse
and resident relatives while driving other vehicles (with certain
limitations). Similarly, the policy will cover persons or organizations
legally responsible for the insured’s use of such other vehicle, except
one which is owned or hired by the person or organization.
EXAMPLE: An employer calls his sales representative at home and asks
him to see a customer. The sales representative’s wife has taken the family
vehicle, so the employee borrows a neighbor’s automobile. While on the
way to see the customer, the sales rep hits a pedestrian. The injured
pedestrian sues the sales rep, his employer, and the car's owner. The sales
rep's Personal Automobile policy will provide coverage to the sales rep
and the employer, to the extent that each is liable.
Had the employer provided with the vehicle to the sales rep for the trip,
the employer would not be covered under the sales rep’s PAP, since the
vehicle was owned/hired by the employer.
What is Covered
The PAP liability coverage protects against damages to third parties that
the insured is legally obligated to pay. An injured person in many states
is often entitled to benefits, regardless of whether the operator of the
automobile was at fault.
PAP coverage is for the ownership, maintenance or use of the
automobile designated in the policy. The basic auto policy also includes
the following coverages:
Other Drivers and Interests - The Automobile policy covers the named
insured, spouse, resident family members and also any other person
who operates the car with the insured's permission (discussed below
under OTHER DRIVERS AND INTERESTS).
Non-owned Car - The PAP also covers, under specified conditions, the
named insured, spouse, and members of the family residing in the
household, while operating any other automobile (discussed below
under NON-OWNED CAR).
Temporary Substitute Automobile - The PAP also covers an automobile
temporary substituted by the insured for the one designated in the
policy. (The conditions of this coverage will be discussed below under
TEMPORARY SUBSTITUTE AUTOMOBILE.)
Newly Acquired Automobiles – The Personal Auto Policy also provides
coverage for automobiles acquired by the insured during the term of his
policy (further discussed below under NEWLY ACQUIRED
AUTOMOBILES).
Trailers - The PAP also applies to trailers that are designed to be pulled
by a private passenger automobile or a pickup or panel truck or van (the
term "trailer" also includes farm equipments that are towed). It should be
noted that coverage provided for trailers through endorsements to the
PAP is usually limiting when compared to a trailers policy.
Loading and Unloading - The term "auto accident" will cover the loading
and/or unloading of the insured automobile.
Other Drivers and Interests – The personal automobile policy provides
coverage for accidents arising out of the operation of the insured vehicle
by the named insured, resident spouse and family members, or by any
other person who reasonably believes that he is entitled to use the
vehicle. The 06 98 edition of the PAP was rewritten so any family
member of an insured who uses the insured vehicle is assumed to have
the named insured's permission. The latest edition also extends the
coverage for an insured's spouse. In the event that a named insured
and his or her spouse becomes legally separated, the spouse leaving
the household will remain covered for 90 days or until coverage is
provided by a new policy, whichever occurs first. The PAP also
provides coverage to any person or organization legally responsible for
the use of the insured vehicle. For example, if an insured injures
someone while driving his automobile in the course of his work, the
injured party may sue the insured and his employer. Subject to the policy
limits, the policy will cover the insured as well as the employer to the
extent that each is held liable for the accident. It should be noted that
coverage is not really provided for the employer, but rather for the
named insured's legal liability which arises out of a "use" of the insured
automobile. Depending upon the loss circumstances, after paying a
claim, the insurance company may be in a position to seek
reimbursement from the employer.
The PAP excludes coverage for a person or organization, including its
agents or employees (for example, an insured's full-time gardener), who
runs or operates an automobile repair shop, public garage, sales
agency, service station or public parking place. An exception is made
for any resident of the named insured's household, or a partnership that
includes the named insured or any member of his household or for any
partner, agent or employee of such resident or partnership while using a
covered vehicle.
Severability of Interests - The term "insured" refers to "the insured
against whom a claim is made" and is used severally, not collectively.
However, the policy’s exclusions and conditions are individually applied
to each insured. Thus, an insured who is named in an automobile liability
policy may assume status as either an insured or a claimant under his
own policy.
EXAMPLE: Joseph is riding in his own automobile as a passenger while it
is being driven by his friend Kyle. Kyle runs a red light and gets into an
accident. Joseph, the named insured, suffers injuries and files a claim
against Kyle under his own policy. In this case, Joseph is a claimant
under his own policy.
EXAMPLE: Jim has a PAP policy insuring his two cars, a Toyota and a
BMW. His brother, Kevin, who is a resident in the same household, is one
day driving the Toyota and crashes into the BMW in the driveway. Jim
threatens to sue Kevin. Since Kevin does not own the BMW, and it was
not in his care or custody at the time of the accident, he is protected as
the driver of the Toyota under his brother’s policy.
The issue of severability also applies to the particular use of an insured
automobile at the time of a covered accident.
EXAMPLE: Mark owns a minivan that is insured under a Personal
Automobile policy. He uses the minivan only for pleasure. His wife, Mary,
is paid for using the same minivan to drive several children to and from
school. While on his way to meet a friend to play tennis, Mark hits another
car and is sued. Despite the exclusion in the policy of "livery" use, Mark
may be covered, since he was not using the car for livery purposes.
Non-Owned Car - The policy will cover the insured, the insured’s spouse
and resident relatives while driving other vehicles (with certain
limitations). Similarly, the policy will cover persons or organizations
legally responsible for the insured’s use of such other vehicle, except
one which is owned or hired by the person or organization.
EXAMPLE: An employer calls his sales representative at home and asks
him to see a customer. The sales representative’s wife has taken the family
vehicle, so the employee borrows a neighbor’s automobile. While on the
way to see the customer, the sales rep hits a pedestrian. The injured
pedestrian sues the sales rep, his employer, and the car's owner. The sales
rep's Personal Automobile policy will provide coverage to the sales rep
and the employer, to the extent that each is liable.
Had the employer provided with the vehicle to the sales rep for the trip,
the employer would not be covered under the sales rep’s PAP, since the
vehicle was owned/hired by the employer.
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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)
Non-Owned Car coverage is excess insurance
over any insurance covering the borrowed vehicle
itself. In the original example above, the sales rep
who borrowed his neighbor’s vehicle is covered
as an additional insured under his neighbor’s
automobile liability insurance policy. The sales rep’
s liability for the accident will, therefore, be
covered under his neighbor’s policy. The sales rep’
s own policy will provide protection only if the
neighbor is uninsured, or if the neighbor’s policy
liability limits are not enough to pay for the liability
imposed by the accident. If the neighbor’s vehicle
is uninsured, the sales rep’s policy will provide
coverage only for the salesman and his employer,
but not the owner of the vehicle. In both cases,
the sales rep’s policy is secondary insurance. It
will pay only any damage in excess of the amount
afforded under the neighbor’s policy.
If the neighbor’s policy carried a liability limit of
$50,000, the liability limit on sales rep’s PAP was
the same amount, and the judgment awarded to
the pedestrian hit by the salesman was $60,000,
the neighbor's policy would pay its full limit of
$50,000; the salesman's policy would come into
play and pay the remaining $10,000. If the award
in this case was $30,000, the neighbor’s policy
would pay for the entire loss.
Non-Owned Car Exclusions - The Personal
Automobile policy is not intended to cover vehicles
that are furnished or available for an insured’s use
on a regular basis. The policy specifically
excludes any other vehicles owned by the insured
or a member of his household because such cars
should have their own insurance policies. A Non
Owned Cars exclusion exists for any vehicle other
than a temporarily substitute vehicle (discussed
later under TEMPORARY SUBSTITUTE
AUTOMOBILE) owned by or furnished for use on a
regular basis by the insured or a member of his
household other than a domestic servant.
The policy also excludes all vehicles used in the
insured’s business or occupation other than
private passenger cars. Finally, no coverage is
extended for any accident as a result of the
operation of an auto repair shop, public garage,
sales agency, service station or public parking
facility (such incidences should be covered by a
commercial auto policy).
Extended Non-owned Coverage - The PAP may be
endorsed to cover the insured’s liability while
driving a non-owned automobile which is
furnished for his use on a regular basis, e.g., a
company vehicle.
Temporary Substitute Automobile - If the
automobile described in the policy is withdrawn
from service while it is being repaired or serviced,
or during a period when it has been stolen or
wrecked, the policy covers the use of any other
car which is being used temporarily as a substitute
for the original vehicle described in the policy,
provided the insured does not own the substitute
vehicle. Notice to the insurance carrier of the
automobile substitution is not required and no
additional premium will be charged.
Newly Acquired Automobile - If the car described
in the policy is traded for a different vehicle, the
newly acquired one is automatically insured
without notice to the insurer. If the insured or his
spouse purchases a new automobile in addition to
the one already insured in the policy, similar
automatic coverage is extended to the new
vehicle, but only if the insurer insures all of the
vehicles owned by the insured on the date of
taking possession of the new car, and provided
notice is given to the insurer within 30 days of the
acquisition of the new car. However, no
automatic coverage would be extended if the
insured’s spouse owns a car insured with another
insurance company, and acquires an additional
vehicle. It can be seen that an insured having only
one car will be covered under his policy for any
additional vehicle he acquires. If he has two or
more cars when he takes delivery of the new
vehicle, this newly acquired automobile is covered
only if the first two automobiles were insured with
the same insurance company. Furthermore, the
new car will get the broadest coverage afforded
in the policy on any vehicle insured under the
policy. The policy premium will be increased, as
the hazard covered under the policy has been
increased by the addition of a new automobile.
Liberalization Clause - If an insurer revises its
automobile insurance policies to provide broader
coverage than afforded under its old policies, the
broader coverage applies automatically to all of its
existing policies then in force in the state without
additional premiums.
Non-Owned Car coverage is excess insurance
over any insurance covering the borrowed vehicle
itself. In the original example above, the sales rep
who borrowed his neighbor’s vehicle is covered
as an additional insured under his neighbor’s
automobile liability insurance policy. The sales rep’
s liability for the accident will, therefore, be
covered under his neighbor’s policy. The sales rep’
s own policy will provide protection only if the
neighbor is uninsured, or if the neighbor’s policy
liability limits are not enough to pay for the liability
imposed by the accident. If the neighbor’s vehicle
is uninsured, the sales rep’s policy will provide
coverage only for the salesman and his employer,
but not the owner of the vehicle. In both cases,
the sales rep’s policy is secondary insurance. It
will pay only any damage in excess of the amount
afforded under the neighbor’s policy.
If the neighbor’s policy carried a liability limit of
$50,000, the liability limit on sales rep’s PAP was
the same amount, and the judgment awarded to
the pedestrian hit by the salesman was $60,000,
the neighbor's policy would pay its full limit of
$50,000; the salesman's policy would come into
play and pay the remaining $10,000. If the award
in this case was $30,000, the neighbor’s policy
would pay for the entire loss.
Non-Owned Car Exclusions - The Personal
Automobile policy is not intended to cover vehicles
that are furnished or available for an insured’s use
on a regular basis. The policy specifically
excludes any other vehicles owned by the insured
or a member of his household because such cars
should have their own insurance policies. A Non
Owned Cars exclusion exists for any vehicle other
than a temporarily substitute vehicle (discussed
later under TEMPORARY SUBSTITUTE
AUTOMOBILE) owned by or furnished for use on a
regular basis by the insured or a member of his
household other than a domestic servant.
The policy also excludes all vehicles used in the
insured’s business or occupation other than
private passenger cars. Finally, no coverage is
extended for any accident as a result of the
operation of an auto repair shop, public garage,
sales agency, service station or public parking
facility (such incidences should be covered by a
commercial auto policy).
Extended Non-owned Coverage - The PAP may be
endorsed to cover the insured’s liability while
driving a non-owned automobile which is
furnished for his use on a regular basis, e.g., a
company vehicle.
Temporary Substitute Automobile - If the
automobile described in the policy is withdrawn
from service while it is being repaired or serviced,
or during a period when it has been stolen or
wrecked, the policy covers the use of any other
car which is being used temporarily as a substitute
for the original vehicle described in the policy,
provided the insured does not own the substitute
vehicle. Notice to the insurance carrier of the
automobile substitution is not required and no
additional premium will be charged.
Newly Acquired Automobile - If the car described
in the policy is traded for a different vehicle, the
newly acquired one is automatically insured
without notice to the insurer. If the insured or his
spouse purchases a new automobile in addition to
the one already insured in the policy, similar
automatic coverage is extended to the new
vehicle, but only if the insurer insures all of the
vehicles owned by the insured on the date of
taking possession of the new car, and provided
notice is given to the insurer within 30 days of the
acquisition of the new car. However, no
automatic coverage would be extended if the
insured’s spouse owns a car insured with another
insurance company, and acquires an additional
vehicle. It can be seen that an insured having only
one car will be covered under his policy for any
additional vehicle he acquires. If he has two or
more cars when he takes delivery of the new
vehicle, this newly acquired automobile is covered
only if the first two automobiles were insured with
the same insurance company. Furthermore, the
new car will get the broadest coverage afforded
in the policy on any vehicle insured under the
policy. The policy premium will be increased, as
the hazard covered under the policy has been
increased by the addition of a new automobile.
Liberalization Clause - If an insurer revises its
automobile insurance policies to provide broader
coverage than afforded under its old policies, the
broader coverage applies automatically to all of its
existing policies then in force in the state without
additional premiums.
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