The Personal Auto Policy (PAP)

Structure of the Personal Auto Policy

The Personal Auto Policy (PAP) is the standard Insurance Services Office (ISO) contract used to insure private passenger autos owned by individuals and married couples. Eligible vehicles include four-wheel private passenger autos, pickups and vans below a stated gross vehicle weight, and certain leased vehicles. The PAP is organized into six clearly labeled parts:

Before the coverage parts, the declarations page identifies the named insured, the described autos, the coverage limits selected, and the premium.

Part A — Liability, Limits, and Who Is Insured

Part A (Liability) is the core of the policy. It pays damages for bodily injury and property damage for which any insured becomes legally responsible because of an auto accident, and it includes a duty to defend the insured (defense costs are paid in addition to the limit of liability).

Limits can be written two ways:

• Split limits — three numbers such as 100/300/50 ($100,000 per person for BI / $300,000 per accident for BI / $50,000 per accident for PD). The per-person limit caps what one injured person can collect; the per-accident limit caps the total BI for everyone in that accident.
• Combined Single Limit (CSL) — a single pooled amount (e.g., $300,000) available for BI and PD combined in any proportion, giving more flexibility for a severe single-victim loss.

An insured under Part A includes: (1) the named insured and any family member (a resident relative by blood, marriage, or adoption); (2) any person using the covered auto with permission; and (3) any person or organization legally responsible for the acts of a covered user (e.g., an employer when the insured uses the auto on the job). This broad definition is heavily tested.

Parts B, C, and D

Part B — Medical Payments pays reasonable and necessary medical and funeral expenses, regardless of fault, for the named insured and family members injured as occupants of any auto or as pedestrians, and for any other person occupying the covered auto. Expenses generally must be incurred within three years of the accident.

Part C — Uninsured/Underinsured Motorists (UM/UIM) protects the insured when the at-fault party cannot pay:

• Uninsured Motorists (UM) applies when the at-fault driver has no liability insurance or is a hit-and-run driver.
• Underinsured Motorists (UIM) applies when the at-fault driver has insurance but the limits are too low to cover the injuries.

Part D — Coverage for Damage to Your Auto is physical damage on the insured's own vehicle and splits into two perils:

• Collision — loss caused by the auto's impact with another object or its upset (overturning), subject to a deductible.
• Other Than Collision (OTC / comprehensive) — virtually all other direct loss: fire, theft, vandalism, glass breakage, falling objects, flood, hail, and contact with a bird or animal.

Part E, Part F, and Exclusions

Part E (Duties After an Accident or Loss) lists the insured's post-loss obligations: prompt notice, cooperation, allowing inspection, and submitting to exams. Part F (General Provisions) sets the policy territory (U.S., its territories, Puerto Rico, and Canada — not Mexico), the bankruptcy clause, and the two-or-more-policies rule. Common PAP exclusions include intentional injury, vehicles used as a public livery (ride-for-hire), racing, autos used in a business (other than a private passenger auto, pickup, or van), and damage to property the insured owns or is transporting.

Eligible Vehicles, Non-Owned Autos, and Settlement

The PAP's broad insured definition is matched by a flexible vehicle definition. Your covered auto includes any vehicle shown in the declarations, a newly acquired auto (added vehicles, with notice rules), a trailer the insured owns, and a temporary substitute auto used while the covered vehicle is out of service for repair. Part A liability and UM also follow the named insured into a non-owned auto the insured is operating, which is why a borrowed or rented car is generally covered for liability even when the policy lists a different vehicle.

Physical damage losses under Part D are settled on an actual cash value (ACV) basis — replacement cost minus depreciation — up to the cost to repair or replace with like kind and quality, less the deductible. If repair exceeds value, the insurer may declare a total loss and pay ACV. Rental reimbursement and towing/labor are optional add-on coverages.

Comparing the Two Limit Approaches

A frequently tested trap: under split limits, the per-person BI cap applies before the per-accident cap, so even a $300,000 per-accident limit cannot pay more than the per-person figure ($100,000) to any single injured claimant. Choosing adequate limits — and pairing the PAP with an umbrella — is the practical takeaway for protecting an insured's assets.