2.4 The Personal Auto Policy (PP 00 01): Parts A–F, Who Is an Insured & New York Endorsements

The Personal Auto Policy (PP 00 01): Parts A–F, Who Is an Insured & New York Endorsements

Exam Focus: The Auto Insurance domain is 9% of the Series 17-70 and the ISO Personal Auto Policy (2005 edition) is its backbone. Learn the six Parts, the four defined vehicle categories, and the New York endorsements by form number — especially PP 01 79, which rewrites the countrywide form for New York, and the PP 05 87 / 05 88 / 05 89 / 05 92 personal injury protection family.

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Architecture of the Personal Auto Policy

The Four Vehicle Definitions — read these first on every file

• Your covered auto: any vehicle shown in the Declarations; a newly acquired auto; any trailer you own; and any auto or trailer you do not own while used as a temporary substitute for a covered auto out of normal use because of breakdown, repair, servicing, loss or destruction.
• Newly acquired auto: a vehicle acquired during the policy period. Under the 2005 form, if the insured already has liability on at least one auto the new one is covered for 14 days for liability (and for physical damage if any owned auto carries it, subject to a stated deductible). If the insured owns no other auto with that coverage, coverage is provided only if the insurer is asked within 14 days of acquisition.
• Non-owned auto: a private passenger auto, pickup, van or trailer not owned by or furnished or available for the regular use of the named insured or a family member, while in the custody of or being operated by either.
• Temporary substitute: the replacement for a covered auto out of service, which becomes a covered auto for the duration.

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Part A — Liability Coverage

The insurer pays damages for bodily injury or property damage for which an insured becomes legally responsible because of an auto accident, and has the duty to defend any suit asking for such damages. The duty to defend ends when the limit of liability has been exhausted by payment of judgments or settlements.

Who Is an Insured

1. You 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 — for the ownership, maintenance or use of any auto or trailer.
2. Any person using your covered auto with permission.
3. Any person or organisation legally responsible for acts of a covered person, but only for the covered person's use of a covered auto.
4. Any person or organisation legally responsible for the insured's use of a non-owned auto, but only if not in an auto business.

Supplementary Payments (in addition to the limit)

Up to $250 for a bail bond required because of an accident, premiums on appeal bonds and bonds to release attachments, interest accruing after a judgment, up to $200 a day for loss of earnings because of attendance at hearings or trials at the insurer's request, and other reasonable expenses incurred at the insurer's request.

Key Exclusions

Intentional injury; property owned or being transported by, or rented to or in the care, custody or control of, an insured; bodily injury to an employee of an insured other than a domestic employee not entitled to workers' compensation; use as a public or livery conveyance (with the share-the-expense car pool exception, and now the TNC overlay of Section 2.5); using a vehicle without a reasonable belief of entitlement; vehicles with fewer than four wheels or designed mainly for off-public-road use; and any vehicle other than your covered auto that is owned by or furnished or available for the regular use of the named insured or a family member — the “regular use” exclusion, which defeats the classic “I was driving the company car” claim.

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Part B — Medical Payments

Pays reasonable expenses for necessary medical and funeral services incurred within three years of the accident, on a no-fault basis, for an insured injured in a motor vehicle accident. Covers the named insured and family members in any auto or as pedestrians, and others while occupying a covered auto.

New York Practice Point: New York drivers rarely carry Part B, because Article 51 no-fault PIP already pays medical expense as basic economic loss. On a New York personal auto file the medical benefit almost always comes from the PP 05 87 PIP endorsement, not from Part B.

Part C — Uninsured Motorists

The countrywide Part C is displaced in New York by the mandatory UM endorsement required by Insurance Law § 3420(f)(1) and, when purchased, by the SUM endorsement under Regulation 35-D. Section 2.3 develops both.

Part D — Coverage for Damage to Your Auto

• Collision: upset of the covered auto or impact with another vehicle or object.
• Other Than Collision (comprehensive): everything else — fire, theft, explosion, earthquake, windstorm, hail, water, flood, malicious mischief or vandalism, riot, contact with a bird or animal, and breakage of glass. The insured may elect to have glass breakage caused by a collision treated as a collision loss so only one deductible applies.
• Transportation Expenses: a daily and aggregate allowance (commonly $20/$600 on the base form) for a temporary substitute after a covered other-than-collision loss, beginning after 48 hours, or after a total theft beginning 48 hours after the theft is reported.
• Exclusions: loss to a public or livery conveyance; damage from wear and tear, freezing, mechanical or electrical breakdown, and road damage to tires (unless caused by a covered theft); loss due to war, nuclear hazard or radioactive contamination; custom furnishings or equipment in a pickup or van; and electronic equipment not permanently installed.
• Limit of Liability: the lesser of the actual cash value of the stolen or damaged property, or the amount necessary to repair or replace it with property of like kind and quality — with a special reduced limit for certain non-owned trailers.

Part E — Duties After an Accident or Loss

Prompt notice to the insurer of how, when and where the accident happened; cooperation in the investigation, settlement or defence; prompt forwarding of legal papers; submission to physical examinations by physicians of the insurer's choosing at its expense; authorisation to obtain medical and other records; and submission of a proof of loss when required. For Part D specifically: notify the police of a theft, and take reasonable steps after a loss to protect the auto from further damage.

Part F — General Provisions

Bankruptcy of the insured does not relieve the insurer; changes to the policy require endorsement; fraud — no coverage for any insured who makes fraudulent statements or engages in fraudulent conduct in connection with an accident or loss; legal action against the insurer; transfer of the insured's interest requires written consent (with the death-of-the-named-insured exception); and two or more auto policies issued by the same insurer may not be stacked — the maximum is the highest applicable limit.

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The New York Endorsement Family

Out-of-State Coverage. The PAP's out-of-state provision automatically increases the policy's limits and adds any compulsory coverage (for example another state's no-fault or minimum limits) to the extent required while the covered auto is in that state. Combined with the § 3420(f)(1) rule that basic New York UM applies only to accidents in New York, this is a favourite exam contrast: liability travels and expands; basic UM does not.