6.1 Personal Auto Policy Structure and Eligibility

The Personal Auto Policy in Outline

The Personal Auto Policy (PAP) is the standard contract for insuring individually owned private passenger vehicles. The version tested on the national portion of the exam is the Insurance Services Office (ISO) form PP 00 01, currently the 2018 edition. It is drafted in simplified, readable language and relies on a handful of defined terms to settle nearly every coverage question.

Two terms dominate. "You" and "your" mean the named insured shown on the Declarations and that person's resident spouse. A "family member" is a person related to the named insured by blood, marriage, or adoption who is a resident of the same household, including a ward or foster child. Memorize the hierarchy: the named insured has the broadest protection, a family member is nearly as broad, and any other person is insured only in narrow situations.

The Six Parts

Parts A, B, C, and D are the coverage parts (mnemonic LMUP — Liability, Medical, Uninsured, Physical damage). Parts E and F are administrative. The Declarations page personalizes the contract with the named insured, the described autos, limits, and premium.

Who Qualifies as an Insured

Whether someone is an insured depends on which vehicle is being operated.

Key trap: A permissive user is an insured only while in your covered auto. The named insured and family members carry their coverage into a borrowed car; an outside permissive user does not.

A divorced spouse who moves out loses "you" status because residency ends. A child who establishes a separate household stops being a "family member," but a college student who is only temporarily away usually remains a household resident and stays covered.

What Counts as "Your Covered Auto"

The definition has four buckets:

1. Any vehicle shown in the Declarations.
2. A newly acquired auto (additional or replacement).
3. Any trailer you own.
4. A temporary substitute — a non-owned vehicle used while a covered auto is out of normal use for breakdown, repair, servicing, loss, or destruction.

Eligible vehicles are private passenger autos and pickups or vans with a GVWR of 10,000 pounds or less that are not used to deliver or transport goods for a fee. A pickup hauling cargo for hire, or a vehicle with three or more wheels used in a business, falls outside PAP eligibility.

Newly Acquired Auto Reporting Rule

Correction to a common error: the window is 14 days (or 4 days for physical damage when no vehicle carries it) — not the often-misremembered "30 days."

Additional and Replacement Vehicles

The newly acquired auto rule splits two ways. An additional auto (you keep the old one and add a new one) gets the broadest coverages already on the policy automatically during the reporting window. A replacement auto (you trade in or dispose of the old vehicle) inherits the same coverages the replaced vehicle carried — including its physical damage coverage if it had any.

This matters for Collision and Other Than Collision. If your traded-in car had Collision, the replacement keeps Collision automatically. If the old car had only liability, the replacement starts with only liability until you ask for more.

Trailers and Temporary Substitutes

A trailer designed to be towed by a private passenger auto is automatically covered for liability even if not listed, but physical damage on a trailer generally requires it to be shown in the Declarations. A temporary substitute vehicle steps into the shoes of your covered auto while that auto is out of normal use for breakdown, repair, servicing, loss, or destruction — for example, a rental while your car is in the shop. The substitute borrows the same coverages as the disabled vehicle.

Trap: A vehicle you borrow for convenience (not because your own car is out of service) is a non-owned auto, not a temporary substitute, and is treated differently for physical damage.