The Personal Auto Policy (PAP)

Structure of the Personal Auto Policy

The Personal Auto Policy (PAP) is the standard Insurance Services Office (ISO) contract for insuring private-passenger vehicles owned by individuals. It is organized into a declarations page, definitions, and four lettered coverage parts, followed by duties after a loss and general provisions. A vehicle qualifies as your covered auto if it is listed on the declarations, a newly acquired auto, a trailer the insured owns, or a temporary substitute for a covered auto that is out of service.

Defense costs under Part A are paid in addition to the limit of liability, and the insurer's duty to defend ends once the limit is exhausted by payment of judgments or settlements.

Part A — Liability Coverage

Part A pays damages for bodily injury (BI) and property damage (PD) for which any insured becomes legally responsible because of an auto accident. It also provides a duty to defend the insured. Part A can be written two ways:

• Split limits — three separate limits shown as, for example, 100/300/50: $100,000 per person for BI, $300,000 per accident for BI, and $50,000 per accident for PD.
• Combined Single Limit (CSL) — one single limit (e.g., $300,000) that applies to the total of BI and PD per accident, giving more flexibility in how the limit is allocated.

Supplementary payments under Part A — paid above the limit — include bail bonds up to a stated amount, premiums on appeal bonds, post-judgment interest, and up to $200 per day for lost earnings to attend trial at the insurer's request.

Key exclusions include intentional injury, damage to property the insured owns or is transporting, vehicles used to carry persons or property for a fee (livery), and use of a vehicle without a reasonable belief of permission.

Parts B and C — Medical Payments and UM/UIM

Part B — Medical Payments pays reasonable and necessary medical and funeral expenses incurred within three years of the accident for bodily injury to a covered person. It is no-fault within the policy — it pays regardless of who caused the accident — and covers the named insured and family members while occupying any auto or as pedestrians struck by a vehicle, plus other passengers in the covered auto.

Part C — Uninsured/Underinsured Motorists protects the insured against drivers who lack insurance or carry inadequate limits:

• Uninsured motorist (UM) applies when the at-fault driver has no liability insurance or is a hit-and-run driver.
• Underinsured motorist (UIM) applies when the at-fault driver has insurance but limits too low to cover the insured's injuries.

UM/UIM primarily covers bodily injury; some states add uninsured-motorist property damage. Part C essentially steps into the shoes of the absent or inadequate liability coverage the negligent driver should have carried.

Part D — Coverage for Damage to Your Auto

Part D is the physical damage coverage on the insured's own vehicle, split into two perils, each subject to a deductible:

• Collision — direct and accidental loss from the covered auto's impact with another object or its overturn (upset). It applies whether or not the insured was at fault (the insurer may subrogate against a third party).
• Other-than-collision (comprehensive) — loss from nearly every other cause: fire, theft, vandalism, glass breakage, falling objects, hail, flood, and contact with an animal (e.g., hitting a deer).

Part D also provides transportation expenses (a daily allowance for a rental, often $20/$600) after a covered theft or loss, and pays on an actual cash value (ACV) basis — replacement cost minus depreciation — never more than the cost to repair or replace.

Exception: glass breakage and animal contact are covered as other-than-collision, not collision — a classic exam trap. A car that strikes a deer is a comprehensive loss; a car that swerves to avoid the deer and hits a tree is a collision loss.

Who Is an Insured

The definition of insured varies by coverage part, but in general the PAP protects:

• The named insured shown on the declarations and the resident spouse.
• Family members — persons related by blood, marriage, or adoption who are residents of the household (including a ward or foster child).
• Any person using your covered auto with reasonable belief of permission (Part A liability extends to permissive users).
• For Part A, any person or organization legally responsible for the acts of a covered person using a covered auto.

Note the asymmetry: Parts B, C, and D focus more narrowly on the named insured and family members and their occupants, while Part A's liability protection reaches permissive users of the covered auto. A friend who borrows the insured's car with permission is covered for liability under Part A, illustrating the broad reach of permissive-use liability.