6.1 Personal Auto Policy Structure and Eligibility
Key Takeaways
- The PAP (ISO PP 00 01) has six parts: A Liability, B Medical Payments, C UM/UIM, D Damage to Your Auto, E Duties After Loss, F General Provisions.
- Parts A, B, and C are the injury/liability coverages; Part D is physical damage; E and F are conditions.
- Eligible vehicles are private passenger autos and pickups/vans with a GVWR of 10,000 lbs or less not used to haul goods for business.
- A 'family member' is a resident of the household related by blood, marriage, or adoption, including wards and foster children.
- Permissive users of your covered auto are insureds under Part A liability.
Personal Auto Policy Structure and Eligibility
The Personal Auto Policy (PAP) is the most-tested form on the national P&C exam. The current industry standard is the ISO PP 00 01 policy form. Memorize that the PAP is a package policy assembled from a Declarations page plus six lettered parts. Examiners love to test which loss falls under which part, so anchor the letters early.
The six parts are arranged in a fixed order. Each part has its own insuring agreement, exclusions, and limits.
The Six Parts of the PAP
| Part | Coverage | Pays for |
|---|---|---|
| A | Liability | Bodily injury & property damage you cause to others |
| B | Medical Payments | Med expenses for you & passengers regardless of fault |
| C | Uninsured/Underinsured Motorists | Your injuries caused by an at-fault uninsured driver |
| D | Coverage for Damage to Your Auto | Physical damage to your own vehicle (collision/other) |
| E | Duties After an Accident or Loss | Insured's conditions/obligations |
| F | General Provisions | Policy-wide terms, territory, termination |
A classic trap: Parts A, B, and C cover injury/liability (the focus of this unit); Part D is physical damage. Parts E and F are conditions, not coverages.
Eligibility Rules
The PAP is written for private passenger autos owned by an individual or by a married couple who are residents of the same household. Eligible vehicles include:
- A private passenger auto (4-wheel, not used for hire)
- A pickup or van with a Gross Vehicle Weight Rating (GVWR) of 10,000 lbs or less, not used to deliver/transport goods for a business (other than farming/ranching)
- A vehicle owned under a lease of at least 6 months (treated as owned)
Vehicles titled to a corporation, used as a public/livery conveyance, or with a GVWR over 10,000 lbs generally do not qualify for the PAP and must be insured on a Business Auto Policy (BAP).
Who Is an "Insured"
The definition of insured is broad and varies slightly by part. For Part A liability, an insured includes:
- You (the named insured) and any family member (a person related by blood, marriage, or adoption who is a resident of your household, including a ward or foster child).
- Any person using your covered auto with permission.
- Any person or organization legally responsible for the acts of an insured while using your covered auto (vicarious liability).
- For non-owned autos, only you and family members are insureds, plus anyone legally responsible for their acts.
A newly acquired auto is automatically covered, but the insured must report it within specific time frames (commonly 14 days for an added vehicle that gets full coverage like the broadest existing coverage).
Your Covered Auto - Four Categories
The term your covered auto is defined in the declarations section and drives most of the policy's coverage decisions:
- Any vehicle shown in the declarations.
- A newly acquired auto (additional or replacement) within the reporting window.
- A trailer you own.
- A temporary substitute vehicle used while your covered auto is out of service for repair, servicing, breakdown, or destruction.
The distinction between an additional and a replacement auto is heavily tested. A replacement vehicle steps into the shoes of the vehicle it replaces and keeps the same coverage, including physical damage, automatically until the policy expires (the insured need only ask for physical damage to continue). An additional vehicle (one added to the fleet) is covered with the broadest coverage on the policy, but the insured generally must request coverage within 14 days, and physical damage applies only if the insured asks and the policy already carries it on at least one auto.
Temporary Substitute and Non-Owned Autos
A temporary substitute auto - a loaner while your car is in the shop - is treated as your covered auto for liability and physical damage, but it must not be owned by you or a household member. A non-owned auto (a friend's car you borrow, or a rental on a trip) is covered for you and family members under liability and medical payments, but physical damage follows only if the policy carries Part D and then on the broadest basis among your owned autos. These distinctions decide whether a borrowed-car accident is covered, a common scenario question.
Why Eligibility and Definitions Matter
Getting the eligibility and "covered auto" definitions right is the foundation for every later PAP question. A vehicle that fails eligibility (over 10,000 lbs GVWR, titled to a corporation, used as a livery) belongs on a Business Auto Policy, and applying PAP rules to it yields the wrong answer.
Likewise, whether a person is an "insured" changes by part - broad for Part A liability, narrower and person-following for Part B medical payments - so always confirm both the vehicle and the person before deciding coverage. A quick checklist for any PAP scenario: identify the vehicle and confirm it qualifies as a covered, temporary-substitute, or non-owned auto; identify the person and confirm insured status for the relevant part; then apply the part's insuring agreement, exclusions, and limits in that order.
An individual owns a pickup truck with a GVWR of 9,000 lbs used only for personal errands. Which policy is appropriate?
Under Part A, a friend borrows your covered auto with your permission and negligently injures a pedestrian. Who is an insured for the resulting liability claim?