ELIGIBILITY REQUIREMENTS FOR ISO PERSONAL AUTO POLICY

ELIGIBILITY REQUIREMENTS FOR ISO PERSONAL AUTO POLICY

(September, 2018)

 

 

The Personal Auto Policy (PAP) protects vehicles that meet certain criteria, mostly being a private passenger automobile, including pickups, vans, sports utility vehicles, hybrids and variations on these groups (such as crossovers).

Vehicle Type

A "private passenger auto" is a four-wheel motor vehicle that is not a truck. Vans and pickups that weigh 10,000 or less pounds are eligible for coverage as long as they are not used to deliver or transport goods.

Weighing less than 10,000 means that the vehicle has a Gross Vehicle Weight Rating (GVWR) of less than 10,000. GVWR refers to a combination of the vehicle’s weight plus the weight of all occupants (driver and passengers) and any cargo. This is based on the manufacturer’s statement.

There are exceptions:

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.

 

Example: Four co-workers commute together. The three who don’t have a car reimburse their fellow worker, who owns and drives the car, for gas and the cost of wear and tear. This arrangement is acceptable under the PAP program.

Vehicle Ownership

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 PP 03 23–Joint Ownership Endorsement. The form 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 that the policy provides for the autos described on the policy declarations. Also see paragraph below on rental vehicles. However, the PAP’s protection is on an excess basis if other sources of coverage exist.

Defining Eligibility

The PAP defines the following situations that are considered eligible for coverage if the indicated conditions are met:

1. The 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. A pickup, van or panel truck used in the business of the U.S. Government by a Government employee that  meets all the following criteria:

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

c. Coverage is limited by attachment of a PP 03 01–Federal Employees Using Autos In Government Business endorsement

Rental Cars

Car rental companies may contractually hold their renters responsible for 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? Under a Personal Auto Policy, Part D Physical Damage coverage 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 that states:

Coverage for damage to "non-owned autos" under the PAP is excess over any of the following:

·         Coverage provided by the owner (e.g., rental agency) of the non-owned auto

·         Other applicable physical damage coverage

·         Other source of recovery applicable to the loss

Note: One emerging issue that affects this portion of the PAP is the trend of car-sharing plans.

Cars in Trusts

Vehicles may be eligible when owned under a trust, depending on how the trust is arranged. Generally, arrangements that closely involve individuals who, otherwise, meet the policy definition as insureds are likely to be granted either full or limited coverage status. Protection of trustees typically is limited to incidents involving vehicle use directly related to trustee duties.

Endorsements

Endorsements may be attached to expand, restrict or otherwise modify coverage.

Related Article: Personal Auto Policy Endorsements