7.3 Part F - General Provisions, Endorsements, and No-Fault Concepts

Part F: General Provisions

Part F contains the policy-wide conditions that govern how and when the PP 00 01 operates. These are tested as recall items, so memorize the numbers and the rules.

• Bankruptcy of the insured does not relieve the insurer of its obligations.
• Changes: the policy can be changed only by endorsement issued by the insurer; broadening changes during the policy term apply automatically without additional premium.
• Fraud / concealment / misrepresentation voids coverage for an insured who makes fraudulent statements or engages in fraudulent conduct connected with a loss.
• Legal action against the insurer (suit): no suit may be brought until the insured has fully complied with the policy terms.
• Our right to recover payment (subrogation): after paying a loss, the insurer steps into the insured's rights against the responsible party; the insured must do nothing to impair those rights.
• Two or more auto policies: if more than one PAP issued by the same company applies, the company pays no more than the highest applicable limit.

Termination provisions

Part F sets the cancellation and nonrenewal rules, which are tested with day counts:

During the first 60 days a new policy is in force, the insurer may cancel for almost any reason. After 60 days (or on a renewal), cancellation is limited to nonpayment, license suspension/revocation of a driver, or material misrepresentation. State law frequently lengthens these notice periods.

Territory, eligibility, and key endorsements

The policy territory is the United States, its territories and possessions, Puerto Rico, and Canada (and while a covered auto is being transported between their ports). It does not include Mexico - an insured driving into Mexico needs a Mexican auto policy or the Coverage for Damage to Mexico Auto considerations.

Frequently tested endorsements built on Part F:

• Miscellaneous Type Vehicle (PP 03 23) - extends the PAP to motorcycles, motor homes, golf carts, and similar vehicles.
• Extended Non-Owned Coverage (PP 03 06) - broadens liability for a furnished/available auto or while using a non-owned vehicle regularly.
• Joint Ownership Coverage (PP 03 34) - for vehicles owned by two or more people who are not residents of the same household.

No-Fault and Personal Injury Protection (PIP)

In no-fault states, an injured person collects medical and wage-loss benefits from their own insurer (via Personal Injury Protection, PIP) regardless of who caused the accident, in exchange for limits on the right to sue. PIP is broader than the PAP's optional Medical Payments coverage because PIP typically pays medical expenses, a percentage of lost wages, essential-services costs, and a death/funeral benefit.

Key concepts the exam tests:

• Tort thresholds: a no-fault state allows a lawsuit only when injuries exceed a monetary threshold (a dollar amount of medical bills) or a verbal/descriptive threshold (death, permanent disfigurement, significant disability).
• Add-on vs. pure no-fault: add-on states give first-party PIP benefits without restricting the right to sue; pure/modified no-fault states restrict suits via a threshold.
• PIP coordination of benefits may make health insurance primary or secondary depending on the election.

Worked split-limits and stacking concept

Auto liability limits are often written as split limits such as 100/300/50: $100,000 bodily injury per person, $300,000 bodily injury per accident, $50,000 property damage per accident. If three people are injured at $90,000, $120,000, and $150,000:

• Person 1: $90,000 paid (under the $100k per-person cap).
• Person 2: capped at $100,000 (per-person limit).
• Person 3: capped at $100,000 (per-person limit).
• Total $290,000, which is within the $300,000 per-accident cap, so all three amounts above are paid as shown.

Stacking of UM/UIM limits (adding the limits of multiple covered autos on one policy) is permitted in some states and barred by anti-stacking language in others - know that the unendorsed PP 00 01 contains anti-stacking wording and that state law controls.

Cancellation and Nonrenewal Day-Counts

Part F's termination rules are tested with specific day-counts that mirror most state statutes:

• For nonpayment of premium, the insurer may cancel with as little as 10 days' notice.
• For other reasons during the first 60 days of a new policy, the insurer may cancel with notice (commonly 10-20 days) for almost any underwriting reason.
• After the policy has been in effect 60 days (or is a renewal), cancellation is limited to nonpayment, license suspension/revocation of an insured or regular driver, or material misrepresentation, with longer notice (commonly 20-30 days).
• Nonrenewal requires advance notice (commonly 20-30 days) before the anniversary.

PIP vs. Med Pay and No-Fault Thresholds

In no-fault states, Personal Injury Protection (PIP) pays the insured's own medical expenses, lost wages, and essential services regardless of fault, and the right to sue for non-economic damages (pain and suffering) is restricted until a verbal or monetary threshold is met. Medical Payments (Part B) differs — it is not tied to a no-fault scheme and does not restrict the right to sue. Oklahoma is a traditional tort (at-fault) state, so its drivers carry liability and optional Med Pay rather than mandatory PIP.