6.1 Personal Auto Policy Structure and Eligibility
Key Takeaways
- The tested PAP form is ISO PP 00 01 (2018 ed.) with six components: Declarations, Definitions, Parts A-D, and conditions.
- "You" = named insured + resident spouse; a permissive user is an insured only while driving your covered auto.
- Eligible autos are four-wheel, GVWR <= 10,000 lbs, owned/leased 6+ months, not for hire or delivery.
- Report a newly acquired auto within 14 days (4 days to obtain Part D when no auto currently carries it).
The PAP and the ISO PP 00 01
The Personal Auto Policy (PAP) is the standard contract that insures privately owned passenger vehicles. The version dominating state exams is the Insurance Services Office (ISO) form PP 00 01, currently the 2018 edition. It is drafted in simplified, readable language and is organized into six identifiable components. Memorize the architecture first; almost every PAP question is really asking which part responds.
| Component | Function |
|---|---|
| Declarations | Names insured, vehicles, limits, premium, term |
| Definitions | Defines "you," "insured," "your covered auto" |
| Part A | Liability (third-party BI/PD) |
| Part B | Medical Payments (first-party, no-fault) |
| Part C | Uninsured/Underinsured Motorists |
| Part D | Coverage for Damage to Your Auto (physical damage) |
| Part E / F | Duties After Loss / General Provisions |
Who Is "You" and Who Is an "Insured"
The Declarations name the named insured; the term "you" also includes the named insured's resident spouse (a spouse who lives in the same household). "Insured" expands further depending on the coverage part. Under Part A, an insured includes:
- The named insured and resident family members for any auto.
- Any person using your covered auto with permission.
- Any person or organization legally responsible for a permissive user's acts (vicarious liability), but only for that covered auto.
A trap: a permissive user is an insured only while operating your covered auto. When that same person drives their own car, your PAP gives them nothing. "Family member" means a person related by blood, marriage, or adoption who is a resident of the household, including a ward or foster child.
"Your Covered Auto" and Newly Acquired Vehicles
Your covered auto comprises four categories: (1) any vehicle shown in the Declarations; (2) a newly acquired auto; (3) any trailer the insured owns; and (4) a temporary substitute vehicle used while a covered auto is out of service for repair, servicing, breakdown, loss, or destruction.
Eligibility rules to memorize: an eligible private passenger auto is a four-wheel vehicle, owned or leased under a contract of at least six months, with a Gross Vehicle Weight Rating (GVWR) generally at or below 10,000 lbs and not used to deliver goods or for hire. A pickup or van qualifies if it does not carry property for a fee and is not used in business other than farming/ranching.
Newly Acquired Auto Reporting Deadlines (Exam-Critical Numerics)
The automatic coverage period for a newly acquired auto depends on whether it replaces an existing auto and what coverage the insured already carries:
| Situation | Auto-coverage rule | Report within |
|---|---|---|
| Replacement auto | Same coverage as the replaced auto | 14 days to add Part D / specify coverage |
| Additional auto (when other autos already insured) | Broadest coverage already on any auto | 14 days to report |
| Newly acquired auto, wanting Part D Other Than Collision/Collision when no auto currently has it | Coverage applies only if reported and a $500 deductible applies provisionally | 4 days |
The most-tested figure is 14 days for general reporting of a newly acquired auto. Note the older 30-day language has been replaced; the 2018 PP 00 01 uses 14 days.
Defining "Your Covered Auto"
The PAP's coverage hinges on the defined term "your covered auto," which includes: (1) any vehicle shown in the declarations; (2) a newly acquired auto; (3) a trailer you own; and (4) a temporary substitute for a covered auto out of service for repair. The newly acquired auto rule is heavily tested: an added vehicle generally gets the broadest coverage you carry on any owned auto for 14 days; a replacement vehicle continues the prior auto's coverage (for physical damage you must ask within 14 days if you carried collision).
Eligibility and the Family Member Concept
The PAP covers a private passenger auto, pickup, or van owned by an individual or spouse, not vehicles owned by a corporation. The defined "family member" — a person related by blood, marriage, or adoption who is a resident of your household — extends coverage to spouses, children, and certain others, which determines who is an insured under each part. A college student living away but still a household resident usually remains a covered family member.
Trailers, Non-Owned Autos, and the Portability Rule
The PAP follows the person, not just the listed vehicle, in limited ways. A covered non-owned auto (a borrowed or rented car) furnished for the named insured's regular use is generally excluded, but an occasional borrowed car is covered. Trailers designed for use with a private passenger auto are covered for liability automatically. These portability rules explain why the PAP can respond when an insured drives a friend's car occasionally, but not when an employer-furnished car is available for regular use — that needs the friend's policy or a Drive Other Car endorsement.
Termination and Two-Year Rule
The PAP's general provisions limit when an insurer may cancel or nonrenew. After a policy has been in effect for a stated period, cancellation is restricted to nonpayment, license suspension of an insured, or material misrepresentation. A common exam point: a long-standing PAP cannot be canceled mid-term merely for a single at-fault accident; the insurer must wait until renewal to nonrenew, and even then must give advance written notice with the reason — protections that tie the national PAP structure to state cancellation statutes.
A friend borrows the named insured's covered auto with permission, then later that day drives the friend's OWN uninsured car and causes an accident. Under the named insured's PAP Part A, the friend is an insured:
The named insured buys an ADDITIONAL vehicle (already insuring two others with full coverage). To keep automatic coverage on the new auto, the insured must report it within: