Transcript General Nature of Homeowners Program

Overview of Automobile Coverages
1. Automobile liability coverage
2. Medical payments coverage
3. Physical damage coverage, comprehensive
and collision
4. Uninsured motorists coverage
29-1
General Nature of Personal Auto Policy
1. Designed to cover three types of loss:
• legal liability
• injury to insured or family members
• damage to the auto itself
2. Subject to limitations, the policy covers:
• others while driving the insured auto
• the named insured and family while
driving other autos
29-2
Personal Auto Policy Eligibility
1. Auto owned by individual or husband & wife
2. Private passenger automobile
3. Pickup, van, or panel truck that
• has a GVW of less than 10,000 lbs.
• is not used for delivery or transportation
of goods unless
• incidental to business of installing or
repairing furnishings or equipment
• for farming or ranching
29-3
PAP Policy Format
Part A
Liability
Part B
Medical payments
Part C
Uninsured motorist coverage
Part D
Coverage for damage to your auto
Part E
Duties after an accident or loss
Part F
General provisions
29-4
PAP Liability Insuring Agreement
1. Insurer promises to pay damages for “bodily
injury” or “property damage” for which any
“insured” becomes legally responsible
because of an auto accident.
• 2000 edition of the PAP is written with
split liability limits (e.g., 20/40/15).
2. Key elements in determining coverage, then,
are whether the individual is an “insured,”
and whether the auto being operated is a
covered auto.
29-5
“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 for acts or omissions of a
person for whom coverage is afforded under
this Part.
29-6
“Insured” as used in this part means:
4. For any auto or “trailer,” other than “your
covered auto,” any person or organization
but only with respect to legal responsibility
for acts or omissions of you or any family
member for whom coverage is afforded
under this part. This provision (B.4.) applies
only if the person or organization does not
own or hire the auto or “trailer.”
29-7
J. “Your covered auto” means:
1.
2.
3.
4.
Any vehicle shown in the Declarations.
A “newly acquired auto”.
Any “trailer” you own.
Any auto or “trailer” you do not own while
uses as a temporary substitute for any
other vehicle described in this definition
which is out of normal use because of its:
a. Breakdown;
b. Repair
c. Servicing;
d. Loss; or
e. Destruction.
This provision (J.4.) does not apply to Coverage
for Damage to Your Auto.
29-8
Newly Acquired Auto
Inclusion of a “newly acquired auto” in “Your Covered
Auto” provides coverage for new autos, but on a qualified
basis.
1. auto must meet PAP eligibility requirements
• private passenger auto or
• a pickup or van that does not exceed the gross
vehicle weight limitation and
• not used for delivery or transportation of goods
except as allowed by the eligibility requirements).
2. Separate provisions apply for coverages other than
physical damage and for the physical damage
coverages.
29-9
Newly Acquired Auto
3. For liability, medical payments, and
uninsured motorists coverages,
replacement autos are automatically
covered for the remainder of the policy
period, without notice to the insurer.
4. For additional vehicles, the insurer must be
notified and coverage must be requested
within 14 days of the date of acquisition for
these coverages.
29-10
Newly Acquired Autos - Physical Damage
Replacement and additional vehicles are
automatically covered for 14 days, for whatever
physical damage coverage is already provided
for at least one insured auto.
1. New auto has the broadest physical damage
coverage provided by the policy.
2. If policy does not include physical damage
coverage on any autos, newly acquired
autos are automatically covered for 4 days.
• $500 deductible.
• If coverage is not requested within grace
period, coverage begins when requested.
29-11
PAP Liability Exclusions
A.1.
A.2.
A.3.
A.4.
A.5.
A.6.
A.7.
A.8.
A.9.
intentional injury or damage
to property owned or being transported
care, custody and control
injury to employees
while used as a public or livery conveyance
non-family members employed in auto business
business use of trucks
being used without reasonable belief of permission
nuclear exclusion
29-12
Supplementary Payments
1. Cost of bail bonds required because of an accident
covered under the policy, up to $250
2. Premiums on appeal bonds to release attachments in
suits covered under the policy
3. Interest on judgments after judgment is entered
4. Loss of earnings up to $200 a day while attending
trials at company’s request
5. Other reasonable expenses incurred at the request of
the insurer
29-13
PAP Medical Payments Coverage
Medical payments insuring agreement agrees to
pay medical expenses for
1.
Insured and family if injured while
“occupying or struck by”
2.
Others: while “occupying”
29-14
Limitations on Medical Payment Recoveries
1. Medical payments reduced by liability and
UM payments.
2. Recipient agrees to apply payment against
judgment.
3. Excess over nonowned auto.
4. Subject to subrogation.
29-15
Uninsured Motorists Coverage
1. Pays what an uninsured driver’s insurance
company would have paid if he or she had
insurance.
2. Uninsured motorist defined
•
no insurance
•
hit-and run
•
insurer becomes insolvent
29-16
Underinsured Motorists Coverage
1. Mutually exclusive with uninsured motorist
2. Pays when other driver insured, but
inadequately
29-17
Physical Damage Insurance
1. Loss other than by collision-basically openperil excluding collision
2. Loss by collision
3. Physical damage: nonowned autos
• private passenger, pickup or vans
• not owned by or furnished for regular use
of named insured or family member
• includes temporary substitute auto
29-18
Physical Damage Exclusions
3 exclusions apply to nonowned autos.
• nonowned auto used without reasonable
belief of permission (7)
• nonowned auto used in auto business (11)
• loss to a rental vehicle if rental company is
precluded from recovery by state law or
rental agreement
29-19
Physical Damage Exclusions
6 exclusions apply to specific property
• sound systems unless permanent (4)
• electronic equipment (5)
• tapes, records, disks for (4) and (5) above
• camper bodies, trailers, motor homes not
listed in the policy (6)
• fuzz-busters (10)
• custom furnishings or equipment in pickup
or van (11)
29-20
Part E: Duties After an Accident or Loss
1. Give notice to insurer
2. Cooperate with insurer
3. Send notices of legal papers
4. Submit to physical examination
5. Authorize insurer to obtain records
6. Submit proof of loss when required
7. Notify police if a hit-and-run driver is
involved
8. Notify police if the car is stolen
29-21
Named Non-Owner Policy
1. Designed for persons who do not own an
auto, but want “drive other car coverage”.
2. Covers named insured only (even spouse
not included).
3. Coverage is excess over any insurance on
the non-owned auto.
29-22
Miscellaneous Type Vehicle Endorsement
Used with PAP to provide coverage on certain
recreational motor vehicles:
motor homes
motorcycles,
mopeds, motorscooters, motorbikes
go-carts
all-terrain vehicles
dune buggies
golf carts
antique autos
classic autos
29-23
Automobile Insurance Rating Plans
Most automobile insurance rating systems
begin with three basic factors
1. Age and sex of the driver
2. Use of the auto
3. Driver’s record
29-24
Automobile Rating System
Operator Classification
Adult Classifications
1.
Principal operator age 75 or over
2.
Principal operator age 65 to 74
3.
Principal operator age 50 to 64
4.
Only operator female, age 30 to 49
5.
All other adult operators
29-25
Automobile Rating System
Operator Classification
Youthful Operator Classifications
6.
Female under 25, not married, owner or principal
operator
7.
Male under 25, married
8.
Female under 25, not married, not owner or
principal operator
9.
Male under 25, not married, not owner or principal
operator
10.
Male under 30, not married, but is owner or
principal operator
29-26
Automobile Rating System
Use classification
1. Pleasure use
2. To and from work less than 15 miles
3. To and from work over 15 miles
4. Business use
5. Farm use
29-27
Driver and Use Rating Factors
Principal Operator
Pleasure Under
Use 15 mi.
Over Business Farm
15 mi.
Use Use
Age 75 & Over
Age 65 to 74
Age 50 to 64
1.00
.85
.80
1.05
.90
.85
1.15
1.00
.95
1.20
1.05
1.00
.85
.70
.65
Female, age 30 to 49
Other Adult Operator
1.00
1.00
1.05
1.05
1.15
1.15
1.20
1.20
.85
.85
29-28
Automobile Rating System
Youthful operator discounts
1.
Drivers training credit
2.
Good student discount
29-29
Sample: Youthful Driver Rating Factors
Youthful Operator
Unmarried F (Not O/PO)
Unmarried F (Not O/PO)
Unmarried F (O/PO)
Unmarried F (O/PO)
Unmarried M (Not O/PO)
Unmarried M (Not O/PO)
Unmarried M (O/PO)
Unmarried M (O/PO)
Married Male
Married Male
Age
Under 21
21 - 24
Under 21
21 - 24
Under 21
21 - 24
Under 21
21 - 24
Under 21
21 - 24
Pleasure or To Work or School
Farm Use
or Business Use
2.10
1.30
2.60
1.60
2.50
1.35
3.30
1.75
1.55
1.25
2.25
1.45
2.75
1.75
2.65
1.50
3.45
1.90
1.70
1.40
29-30
Safe Driver Rating System
Safe driver rating plan charges points for
violations and accidents
1. 40 point surcharge for 1 point
2. 50 additional point surcharge for second
point (+ 90 total)
3. 60 additional point surcharge for third point
(+150 total)
4. 70 additional point surcharge for fourth
point (+220 total)
29-31
Cost of Increased Liability Limits
BI Limits
Factor
$20,000/40,000
1.00
25,000/50,000
1.07
50,000/100,000
1.27
100,000/300,000
1.41
250,000/500,000
1.53
500,000/1,000,000
1.57
PD Limits
Factor
$15,000
1.00
25,000
1.02
50,000
1.05
100,000
1.10
250,000
1.17
500,000
1.19
29-32
Cost of Increased Limits
Medical Payments
$1,000 limit
2,000 limit
5,000 limit
=
=
=
$11
17
30
29-33
PAP Deductible Credits
Deductible
None
$50
100
200
250
500
1,000
Comprehensive
Collision
Percent of
Percent of
$100 Deductible $200 Deductible
118%
109%
100%
88%
83%
66%
49%
----105%
100%
98%
89%
74%
29-34
Auto Liability Insurance Requirements
1. As late as 1971, only three states had
compulsory auto liability insurance laws.
2. Currently, 40 states and the District of
Columbia have compulsory auto liability
insurance laws.
3. The remainder of the states have Financial
Responsibility Laws.
29-35
Financial Responsibility Laws
1. Despite widespread enactment of
compulsory auto insurance laws, most
states retained financial responsibility laws.
2. The laws require all parties involved in an
accident causing bodily injury or property
damage above a specified amount to show
proof of financial responsibility.
3. Sometimes called “free-bite” laws, because
proof of financial responsibility is required
only after an accident.
29-36
Financial Responsibility Laws
4. Financial responsibility is proved by a
certificate of insurance (SR-21) or by
depositing cash or securities with the state.
5. If proof cannot be provided, the individual’s
license will be revoked until proof of future
financial responsibility (SR-22) is provided.
29-37
Insurance for High Risk Drivers
Drivers who cannot obtain auto liability
insurance through normal market channels may
obtain coverage from an assigned risk plan or
alternate “shared market” mechanism:
• automobile insurance (assigned risk) plan
• reinsurance pool
• joint underwriting association
• Maryland State Auto Insurance Fund
29-38
Exhibit 11.1 Financial Responsibility and Compulsory
Auto Insurance Limits by State
29-39
Exhibit 11.2 Distribution of Bodily Injury
Premiums
29-40
Exhibit 11.3 Vehicle Insurance as a Share of Household
Income
29-41
Exhibit 11.4 Net Payment to Bodily Injury Claimants
by Attorney Representation
29-42
Criticisms of the Tort System as It Relates to
Automobiles
1. Many persons who are injured remain
uncompensated.
2. Amount of compensation depends on
attorney’s skill.
3. Traditional system is inequitable, overpaying
and underpaying.
4. Traditional system is too expensive.
29-43
No-Fault Concept
1. Under the no-fault concept, no attempt is
made to fix blame.
2. Each party collects for injuries sustained
from his or her own insurance company.
3. Under a pure no-fault system, the right to
sue would be abolished.
29-44
Types of Auto Reform Laws
1. Pure no-fault
2. Modified no-fault
3. Expanded first party
29-45
Typical No-Fault Benefits
1. Medical Expenses up to specified maximum.
2. Loss wages up to specified dollar maximum.
3. Loss of services (e.g., by homemaker) up to
specified dollar maximum.
29-46