6.1 Personal Auto Policy Structure and Eligibility

The Personal Auto Policy (PAP) is the contract that insures individually owned private passenger vehicles. On the Nevada Property & Casualty combo exam (141 scored questions, scaled passing score of 70), national auto-policy items appear throughout the Casualty Terms and Policy Provisions domains. The most heavily tested version is the Insurance Services Office (ISO) form PP 00 01 (2018 edition) — plain-English language built around a small set of defined terms that drive nearly every coverage answer.

The Six Parts of the PAP

A quick mnemonic for the four coverage parts is LMUP — Liability, Medical, Uninsured motorists, Physical damage — followed by the two administrative parts, E and F. Parts A through C are the focus of this chapter; they are the injury and third-party liability coverages every Nevada producer must explain at sale.

Defined Terms: "You" and "Family Member"

Two terms control most questions.

• "You" means 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 lives in the household, including a ward or foster child.

A divorced spouse who moves out is no longer a resident and loses "you" status. A child who establishes a separate household stops being a family member. A UNLV student who is only temporarily away from a Las Vegas household — still a resident — generally remains a covered family member.

Who Is an "Insured" — the Vehicle Matrix

Who qualifies as an insured depends on which vehicle is being driven. The named insured and family members carry their coverage with them into other people's cars; an outside permissive user does not.

Exam trap: A friend who borrows your car is an insured only while in your covered auto. The named insured and family members keep coverage even in a borrowed or rented vehicle; an outside permissive user does not.

What Counts as "Your Covered Auto"

The definition of "your covered auto" 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 Gross Vehicle Weight Rating (GVWR) of 10,000 pounds or less that are not used to deliver or transport goods for a fee. A Henderson contractor's pickup rated at 8,500 GVWR used only for personal errands qualifies; the same truck used daily to haul paid construction materials for hire does not fit the personal-auto eligibility rules without a commercial policy.

Newly Acquired Auto — Reporting Rules and Worked Example

A newly acquired auto is covered automatically, but the reporting window is exam gold.

Worked example. On March 1, Maria's PAP already insures two vehicles, both carrying Collision and Other Than Collision. She buys a third car on March 1 and garages it but does not call her agent. On March 10 the new car is damaged in a covered collision. Because the policy already carries physical damage on at least one auto, the new vehicle receives the broadest available coverage automatically. March 10 is within the 14-day reporting window (March 1 + 14 = March 15), so Collision applies subject to the deductible.

Contrast. If Maria's policy carried liability only — no Collision on any listed auto — and she bought a new car on March 1, she would have only 4 days to request physical damage. A collision on March 10 would leave her without Part D coverage because she missed the 4-day request window.

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

The Declarations Page and Nevada Minimums

The Declarations page personalizes the PAP: named insured, policy period, each covered auto, coverages purchased, limits, Part D deductibles, premium, lienholder, and endorsements. When a question asks whether a coverage applies, the Declarations control whether the insured actually purchased it.

Nevada's compulsory financial-responsibility law requires minimum liability limits of 25/50/20 — $25,000 bodily injury per person, $50,000 bodily injury per accident, and $20,000 property damage per accident. Those are split limits (explained in section 6.2). An insured may buy higher limits; the PAP's out-of-state coverage clause can read limits up to satisfy a higher compulsory minimum in another state, but never below what the insured purchased.

Auto liability insurance is mandatory in 49 states; New Hampshire alone does not require it, though a New Hampshire driver must still prove financial responsibility after an at-fault accident. About 14% of U.S. drivers are uninsured (Insurance Research Council, 2023) — a statistic that explains why Part C Uninsured Motorists coverage matters on Nevada roads.

Why the Defined Terms Decide the Question

Nearly every PAP claim question can be solved by answering two questions in order: (1) Is the person an insured for this situation? and (2) Is the vehicle a covered auto or a permitted non-owned auto? Master the six-part structure, the insured matrix, and the 14-day / 4-day reporting rules before you tackle limit math in the sections that follow.