6.1 Personal Auto Policy Structure and Eligibility
Key Takeaways
- The Insurance Services Office (ISO) Personal Auto Policy, form PP 00 01 (10 13 edition), is built from six parts: A Liability, B Medical Payments, C Uninsured Motorists, D Damage to Your Auto, E Duties After an Accident, and F General Provisions
- Two defined terms drive nearly every answer: "you" means the named insured plus a resident spouse, and "family member" means a household resident related by blood, marriage, or adoption
- Eligible vehicles are private passenger autos and pickups or vans with a Gross Vehicle Weight Rating (GVWR) of 10,000 pounds or less not used to deliver goods for a fee
- A newly acquired auto is covered automatically but must be reported within 14 days; physical damage on a new auto must be requested within 4 days when no auto on the policy already carries it
- A temporary substitute vehicle inherits the same coverage the disabled covered auto carried; a vehicle furnished for the insured's regular use does not qualify
The Personal Auto Policy in National Context
The Personal Auto Policy (PAP) is the standard contract for insuring individually owned private passenger vehicles. The exam tests the Insurance Services Office (ISO) form PP 00 01, written in simplified, second-person language. Every coverage question turns on two defined terms.
"You" means the named insured shown on the Declarations plus that person's resident spouse. 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 or foster child.
The Six Parts
| Part | Name | Function |
|---|---|---|
| A | Liability | Pays third parties for injury or damage the insured is legally liable for |
| B | Medical Payments | First-party, no-fault medical and funeral expenses |
| C | Uninsured Motorists | Pays the insured's injuries when the other driver lacks insurance |
| D | Damage to Your Auto | Collision and Other Than Collision on the insured's own vehicle |
| E | Duties After an Accident or Loss | The insured's notice, cooperation, and proof obligations |
| F | General Provisions | Policy-wide rules: territory, termination, subrogation, legal action |
A useful memory hook for the coverage parts is LMUP: Liability, Medical, Uninsured motorists, Physical damage.
Who Is an "Insured"
Insured status depends on which vehicle is involved. The named insured and family members carry coverage with them; an outside permissive user does not.
| Driver | Covered auto | Non-owned auto |
|---|---|---|
| Named insured ("you") | Insured | Insured |
| Resident spouse | Insured | Insured |
| Resident family member | Insured | Insured |
| Permissive user (friend) | Insured | NOT insured |
Trap: A friend who borrows the car is an insured only while in the covered auto. A divorced spouse who moves out loses "you" status; a college student temporarily away remains a resident family member.
What Counts as "Your Covered Auto"
The definition has four buckets:
- Any vehicle shown on the Declarations.
- A newly acquired auto (additional or replacement).
- Any trailer the named insured owns.
- A temporary substitute non-owned vehicle used while a covered auto is out of normal use.
Eligible vehicles are private passenger autos and pickups or vans with a Gross Vehicle Weight Rating (GVWR) of 10,000 pounds or less not used to deliver or transport goods for a fee.
The Newly Acquired Auto Reporting Rule
| Situation | Liability / Medical / UM | Physical Damage |
|---|---|---|
| Policy already covers an auto with physical damage | Automatic; report within 14 days | Automatic; report within 14 days |
| No auto on the policy carries physical damage | Automatic; report within 14 days | Must request within 4 days |
Correction to a common error: the window is 14 days, with a 4-day rule for physical damage when no vehicle carries it. It is not "14 to 30 days."
Trailers and Temporary Substitutes
An owned trailer is automatically part of the covered auto for liability, but physical damage on a trailer generally requires it to be scheduled. A temporary substitute — a loaner used while the covered auto is repaired, serviced, or destroyed — inherits the same coverage the disabled covered auto carried. A vehicle furnished for the insured's regular use does not qualify.
The Declarations Page
The Declarations personalize the PAP: named insured, policy period, each auto by year/make/model and vehicle identification number (VIN), the coverages and limits purchased, Part D deductibles, premium, lienholder, and endorsements. The Declarations control whether the insured actually bought a coverage — an insured with no Part D shown has no Collision or Other Than Collision at all, regardless of how a loss occurs. Reading the Declarations first prevents assuming a coverage the insured never purchased.
Why Defined Terms Decide the Question
Nearly every PAP claim resolves by answering two questions in order: Is the person an insured for this situation? and Is the vehicle a covered or permitted non-owned auto? Because named insureds and family members carry coverage into other people's cars while outside permissive users are covered only inside the covered auto, a single fact — who drove what — usually settles the answer. Train yourself to identify the driver's status before reaching for a coverage part.
Other Insurance and Mandatory Coverage
When more than one auto policy could apply, the Other Insurance rules in Part F govern. For a covered auto the policy is generally primary; for a non-owned auto the named insured or family member drives, the PAP is typically excess over any other collectible insurance on that vehicle. Two excess policies share a loss in proportion to their limits.
Auto liability insurance is mandatory in 49 states; New Hampshire is the lone exception, though a New Hampshire driver must still prove financial responsibility after an at-fault accident. Penalties for driving uninsured include fines, registration and license suspension, impoundment, and a state filing such as an SR-22 certificate of financial responsibility. Roughly 15% of U.S. drivers are uninsured (Insurance Research Council, 2023), which is the practical reason Part C exists later in this chapter.
A Working Method for Every PAP Question
Approach each fact pattern with a short checklist:
- Identify the person. Named insured, resident spouse, family member, or outsider?
- Identify the vehicle. Scheduled auto, newly acquired, trailer, temporary substitute, or a non-owned vehicle?
- Confirm the coverage was purchased by reading the Declarations.
- Select the coverage part (A, B, C, or D) the facts call for.
Applied consistently, this method resolves the overwhelming majority of exam questions without memorizing every clause.
Under the PAP, how long does an insured have to report a newly acquired auto when the policy already covers another vehicle with physical damage coverage?
Which vehicle qualifies as an eligible "your covered auto" under the Personal Auto Policy?