1. C HAPTER 10 A UTO I NSURANCE P ART I- VI

2. A GENDA Personal Auto Policy(PAP) Part A: Liability Coverage Part B: Medical Payments Coverage Part C: Uninsured Motorists Coverage Part D: Coverage for Damage to Your Auto Part E: Duties After an Accident or Loss Part F: General Provisions Insuring Motorcycles and Other Vehicles

3. P ERSONAL A UTO P OLICY B ASICS Which type of vehicle can be eligible for PAP? Eligible vehicles include : A four-wheeled motor vehicle owned or leased by the insured for at least six consecutive months. A pick-up or van with a gross vehicle weight rating of 10,000 pounds or less.

4. Your covered auto Autos covered by the policy include: 1. Any auto shown in the declarations Ex. Covered auto include a private passenger auto, station wagon, sport utility vehicle, pickup, or van owned by the named insured, and also a car leased for at least six months. 2. A newly acquired auto Ex. Private passenger auto or van is a covered auto if it is acquired by the named insured during the policy period. Two conditions for an acquired pickup or wan to be insured: 1- have a gross vehicle rating of 10,000 pounds or less, 2-must not be used to transport business materials unless the materials are related to the insured's business(e.g. Plumbers and electricians can transport their tools and materials in their vans and pickups still be insured under PAP).

5. 3- A trailer owned by the named insured A trailer is a vehicle designed to be pulled by a private passenger auto, pickup, or van and also includes a farm wagon or farm implement while being towed by such vehicles. Ex. You may be pulling a boat trailer that overturns and injures another motorist. 4-A temporary substitute vehicle A temporary substitute vehicle is a nonowned auto or trailer that you are temporarily using because of mechanical breakdown, repair, servicing, loss, or destruction of a covered vehicle.

6. S UMMARY OF PAP C OVERAGE The PAP consists of a declarations page, a definition page, and the following six parts: Part A: Liability coverage Part B: Medical payment coverage Part C: Uninsured Motorists coverage Part D: Coverage for damage to your auto Part E: Duties after an accident or loss Part F: General provisions

7. P ART A: L IABILITY C OVERAGE (PART I) Liability coverage (Part A) is the most important part of the PAP. It protects a covered person against a lawsuit or claim arising out of the ownership or operation of a covered vehicle.  Insuring Agreement - In the insuring agreement, the insurer agrees to pay any damages for bodily injury or property damage for which the insured is legally responsible because of an auto accident.

8. The coverage is usually written in split limits, where the amounts of insurance for bodily injury liability and property damage liability are stated separately. Example : Split limits of 250/500/100 mean that you have bodily injury coverage of $250,000 for each person, a maximum of $500,000 of bodily injury coverage per accident, and a maximum of $100,000 for property damage liability.

9. Example Bruce carries automobile liability limits of 25/50/10. He was just involved in an accident in which he was negligent. The two occupants of the other vehicle incurred $7,500 and $32,000, respectively, in bodily injury expenses. The damage to the other car, a Mercedes, was $16,000. How much will Bruce’s insurer pay for liability coverage and property coverage? A.$32,500-$10,000 B.$32,500- $16,000 C.$39,500-$10,000 D.$55,500-$16,000

10. P ART A: L IABILITY C OVERAGE Insured persons Four following groups are insured under the liability section of the PAP:  1-The named insured and any resident family member. A family member is a person related to the named insured by blood, marriage, or adoption who resides in the same household, including a ward of the court or foster child. -Husband, wife, and children are covered while using any auto, owned or non-owned. - If the children are attending college and are temporarily away from home, they are still covered under their parents 'policy.

11.  2-Any person using the named insured’s covered auto is also insured if that person can establish a reasonable belief that permission to use the covered auto exists. (any person who use the covered auto with the owner’s permission). Example: John may have permitted his girlfriend, susan, to drive his car several times over the past six months. If Susan takes John’s car with his express permission, she is covered under John’s policy as long as she can show a reasonable belief that John would have given her permission to use the car.

12.  3-Any person or organization legally responsible for any insured’s use of a covered auto on behalf of that person or organization. Example: Assume Mark drives his car on an errand for his employer and negligently injures another motorists. If the injured motorist sues Mark’s employer, the employer has coverage under Mark’s PAP.  4-Any person or organization legally responsible for the named insured’s or family members’ use of any auto or trailer (other than a covered auto or one owned by the person or organization). Example: Mark borrowed the car of a fellow worker to mail a package for his employer. If Mark negligently injures a person while using that car and the injured person sues Mark’s employer, the employer has coverage under Mark’s PAP.

13. P ART A: L IABILITY C OVERAGE The insurer also agrees to provide defense and pay all legal defense costs for claims covered by the policy.

14. P ART A: L IABILITY C OVERAGE Exclusions to the coverage include: Intentional injury or damage Example. a driver changes lanes without signaling in front of Richard’s car. The intentional damage to the other’s car is not covered by the Richard’s PAP. Property owned or transported Example. you and your friend are on the vacation together and the suitcase and camera of your friend may be damaged in an auto accident. The damage would not be covered under your PAP. Property rented, used, or in the insured’s care Example. you rent some skis that are damaged in an auto accident. The property damage is not covered under your PAP. Bodily injury to an employee Example. Bodily injury of the employee who is injured during the course of employment is excluded and should be covered under a worker’s compensation law.

15. Use as a public livery or conveyance Example. You use your car as a public taxi. Vehicles used in the auto business Example. You take your car to a garage for repairs. If a mechanic has an accident and injures someone while road testing your car, your PAP liability coverage dose not protect the mechanic and the loss should be covered under the garage liability policy. Vehicles with fewer than four wheels Example. Vehicles used for off public roads such as motorcycles. mopeds, motorscooters, minibikes, and trail bikes are excluded. The exclusion dose not apply if the vehicle is being used in a medical emergency or to any nonowned golf cart.

16. Vehicle furnished or made available for the insured’s regular use. Example. You can occasionally drive another person’s car and still have coverage under your policy. However, if the nonowned auto is driven regularly or is furnished or made available for your regular use, your PAP liability coverage does not apply. Your car.Porshe Friend’s car. Mazda Demio

17. P ART A: L IABILITY C OVERAGE Limit of Liability The PAP is typically written with split. The maximum amount paid for bodily injury to each person. The maximum amount paid to all persons per accident, and the maximum property damage are all shown in the declarations. Out-of-State Coverage If an accident occurs in another state, and the financial responsibility law in that state has higher liability limits than shown in the declarations, the PAP automatically provides the higher limits.

18. Other Insurance If more than one liability policy covers a loss: - The insurer pays its pro rata share of the loss for an owned vehicle. - The insurance coverage is excess over any other insurance for a nonowned vehicle. Example 22.1

19. E XHIBIT 22.1 P RIMARY AND E XCESS I NSURANCE