6.1 Personal Auto Policy Structure and Eligibility
Key Takeaways
- The ISO Personal Auto Policy (PAP), current edition PP 00 01, is the standard contract for private passenger autos and is built from Declarations, Definitions, six numbered Parts (A-F), and endorsements.
- Eligibility is limited to private passenger autos, pickups/vans under 10,000 lbs GVWR not used for delivery, owned by an individual or married couple (or co-owned natural persons via endorsement).
- The defined 'insured' differs by Part: 'you' (named insured plus resident spouse) and 'family member' (resident relative by blood, marriage, or adoption) carry coverage across multiple vehicles.
- A 'newly acquired auto' gets automatic coverage, but the reporting window depends on whether it is additional (continues broadest coverage) or a replacement (must be reported to keep physical damage).
- The PAP is a divisible, modular contract: each Part has its own insuring agreement, exclusions, and limit, so a single accident can trigger several Parts at once.
The ISO Personal Auto Policy
The Personal Auto Policy (PAP) is the Insurance Services Office (ISO) standard contract for insuring private passenger vehicles. The current ISO form is PP 00 01, and most state-specific versions are amendments to it. Exam questions assume the ISO PAP unless a state form is named.
The PAP is a modular, divisible contract. It is assembled from these building blocks:
| Component | Function |
|---|---|
| Declarations | Names insured, described autos, limits, premium, mortgagee/lienholder, policy period |
| Definitions | Key terms in quotation marks ('you', 'your covered auto', 'family member') |
| Part A | Liability Coverage (third-party BI/PD) |
| Part B | Medical Payments Coverage |
| Part C | Uninsured/Underinsured Motorists |
| Part D | Coverage for Damage to Your Auto (physical damage) |
| Part E | Duties After an Accident or Loss |
| Part F | General Provisions |
Because each Part has its own insuring agreement, exclusions, and limit, a single accident can collect from several Parts at once — Part A pays the other driver, Part D pays to fix your car, and Part B pays your passengers' medical bills.
Eligible Vehicles
The PAP is designed for private passenger autos. A vehicle qualifies as 'your covered auto' if it is one of the following:
- Any vehicle shown in the Declarations.
- A newly acquired auto (subject to reporting rules below).
- A trailer the named insured owns.
- A temporary substitute — a vehicle used because a covered auto is out of service due to breakdown, repair, servicing, loss, or destruction.
To be eligible at the underwriting level, the vehicle is generally:
- A four-wheel private passenger auto, or
- A pickup or van with a Gross Vehicle Weight Rating (GVWR) under 10,000 lbs, not used to deliver or transport goods/materials (other than incidental farming or business use shown on the Dec).
The vehicle must be owned by an individual or a married couple. Two or more natural persons who are not married may co-own a covered vehicle only via the Joint Ownership Coverage endorsement (PP 03 34). Vehicles owned by a corporation, partnership, or LLC are not eligible — those need a Business Auto Policy.
A pickup truck has a GVWR of 9,400 lbs and is used by the named insured for personal errands. It is owned jointly by two unmarried roommates. Without any endorsement, is it eligible as a 'your covered auto'?
Who Is an Insured
The PAP does not have one universal definition of 'insured' — the protected persons differ by Part. Two defined terms drive most coverage:
- 'You' / 'your': the named insured shown in the Declarations and the resident spouse (if a resident of the same household).
- 'Family member': a person related to the named insured by blood, marriage, or adoption who is a resident of the household, including a ward or foster child. A college student living away from home is usually still a resident.
Under Part A liability, an 'insured' includes: you and any family member (for any auto), any person using your covered auto, and any person/organization legally responsible for a covered auto's use by you or a family member. Notice the breadth: a family member is covered while driving anyone's car, not just the described auto.
Trap: the difference matters
- A resident relative = family member = broad portable coverage.
- A non-resident guest is an insured only while using your covered auto — not while driving their own car. Examiners test the residency requirement constantly.
Newly Acquired and Temporary Substitute Autos
When the insured buys another car, the PAP grants automatic coverage, but the rules differ by acquisition type:
| Situation | Coverage granted | Reporting window |
|---|---|---|
| Additional auto (you now own more cars than on the Dec) | Broadest coverage you carry on any owned vehicle | Report within 14 days |
| Replacement auto | Same coverage as the car replaced | Report within 14 days only if you want Part D physical damage with no other physical-damage car on the policy |
Worked timing example. You own one insured car with full coverage and buy a second (additional) car on the 1st. It automatically receives your broadest coverage. If you crash it on day 10 before reporting, it is still covered, because day 10 is inside the 14-day window. If you wait until day 20 to report and have an accident on day 18, there is a coverage problem for an additional auto.
A temporary substitute auto — a borrowed or rental car used while a covered auto is being repaired — is automatically treated as a covered auto for liability and physical damage at no extra premium, but it must not be owned by or furnished/available for the regular use of the insured.
Definitions That Decide PAP Claims
The Personal Auto Policy turns on a handful of defined terms that the exam weaponizes. You and your mean the named insured and the resident spouse. Family member means a person related by blood, marriage, or adoption who is a resident of the household, including a ward or foster child — and crucially a college student away at school usually still qualifies as a resident.
Your covered auto includes any vehicle on the declarations, a newly acquired auto (subject to notice rules), a trailer you own, and a temporary substitute for a covered auto that is out of service for repair or breakdown. A temporary substitute auto is not owned by the insured and is borrowed while the covered auto is being serviced; it inherits the broadest coverage on the policy. Because the definitions of insured, family member, and covered auto differ across Parts A through D, the same person or vehicle can be covered for liability but not physical damage — a distinction tested repeatedly.
An insured owns one vehicle with full coverage and buys an ADDITIONAL second vehicle. They report it to the insurer on day 18 after purchase. They had an accident in the new car on day 16. What is the likely result?