3.2 Personal Auto Policy (PAP) Coverage
Key Takeaways
- The ISO Personal Auto Policy has six parts: A Liability, B Medical Payments, C Uninsured Motorist, D Damage to Your Auto, E Duties After Loss, and F General Provisions
- Part A liability covers the named insured, spouse, family members, and permissive users; Part D physical damage is collision plus other-than-collision (comprehensive)
- Split limits (25/50/25 in Tennessee) cap BI per person, BI per accident, and PD separately; a combined single limit (CSL) is one pooled limit for the accident
- Comprehensive (other than collision) covers theft, fire, glass, hail, flood, vandalism, and animal strikes; collision covers impact and rollover
- Physical damage pays actual cash value (ACV) - replacement cost minus depreciation - unless an endorsement changes the valuation
Structure of the Personal Auto Policy
The Personal Auto Policy (PAP) is the ISO standard contract for private passenger vehicles in Tennessee. It is built from six lettered parts, and the exam expects you to match a loss to the correct part instantly.
| Part | Name | What it does |
|---|---|---|
| A | Liability | Pays BI and PD the insured causes others; provides legal defense |
| B | Medical Payments | Pays the insured's own medical/funeral costs regardless of fault |
| C | Uninsured Motorists | Pays insured's injuries when the at-fault driver is uninsured/underinsured/hit-and-run |
| D | Damage to Your Auto | Physical damage: collision and other-than-collision |
| E | Duties After an Accident or Loss | Insured's reporting and cooperation duties |
| F | General Provisions | Policy-wide conditions, territory, termination |
Part A - Liability
Liability is the heart of the PAP. It pays bodily injury (BI) and property damage (PD) the insured becomes legally responsible for, and it provides a defense with defense costs paid in addition to the limits.
Who is an insured under Part A:
- The named insured and resident spouse - in any auto (owned or borrowed).
- Family members (related by blood, marriage, or adoption and resident in the household) - in any auto.
- Permissive users - anyone using the covered auto with permission.
- Persons/organizations legally responsible for a covered auto's acts.
Split Limits vs. Combined Single Limit
| Feature | Split Limits (e.g., 25/50/25) | Combined Single Limit (CSL) |
|---|---|---|
| Structure | Separate BI-per-person, BI-per-accident, PD caps | One pooled limit for all BI + PD in the accident |
| Tennessee minimum | 25/50/25 | $55,000+ commonly used to match |
| Flexibility | PD and BI capped independently | Dollars flow wherever needed in one accident |
CSL example. With a $300,000 CSL, an accident causing $250,000 BI and $40,000 PD ($290,000 total) is fully covered because the single limit pools both. Under split limits, each component would hit its own cap separately.
Part B - Medical Payments
Medical Payments (MedPay) pays reasonable medical and funeral expenses for the insured and passengers, regardless of fault, for injuries from a covered auto accident.
| Feature | Detail |
|---|---|
| Trigger | Bodily injury caused by an auto accident |
| Fault | Paid no matter who caused the crash |
| Time limit | Expenses incurred within 3 years of the accident |
| Limit type | Per-person limit (e.g., $5,000) |
MedPay covers the named insured and family members as pedestrians or while occupying any auto, plus any passenger in the covered auto - useful in Tennessee since the state has no PIP.
Part C - Uninsured/Underinsured Motorists
Part C pays the insured's own bodily injury (and, where elected, property damage) when the at-fault driver cannot.
- Uninsured (UM): at-fault driver has no liability coverage, is a hit-and-run phantom vehicle, or has an insolvent insurer.
- Underinsured (UIM): at-fault driver's limits are less than the insured's damages; UIM pays the excess gap up to the insured's UIM limit.
Remember the Tennessee rule from 3.1: UM/UIM is offered at limits equal to liability and applies unless rejected in writing.
Part D - Damage to Your Auto (Physical Damage)
Part D protects the insured's own vehicle. It splits into two perils, each with its own deductible.
Collision
| Feature | Detail |
|---|---|
| Definition | Impact with another object or vehicle, upset/rollover |
| Examples | Car-to-car crash, hitting a guardrail or tree, flipping into a ditch |
| Deductible | Commonly $250-$1,000 |
Other Than Collision (Comprehensive)
| Feature | Detail |
|---|---|
| Definition | Loss not caused by collision |
| Covered perils | Theft, fire, vandalism, hail, windstorm, flood, glass breakage, falling objects, contact with a bird or animal (a deer strike) |
| Deductible | Commonly $100-$500 (often lower than collision) |
Classic exam distinction: Hitting a deer is comprehensive (contact with an animal). Swerving to avoid the deer and hitting a tree is collision. A pothole impact is collision, not comprehensive.
Loss Settlement - Actual Cash Value
Physical damage settles at Actual Cash Value (ACV) = replacement cost minus depreciation, i.e., the market value of a comparable vehicle at the time of loss. The insurer pays ACV minus the deductible, and may subrogate against an at-fault third party to recover.
ACV example. A vehicle worth $12,000 (ACV) is totaled; the collision deductible is $500. The insured receives $11,500. If another driver caused the loss, the insurer pursues subrogation and may refund the $500 deductible if recovery succeeds.
Part E - Duties After an Accident or Loss
Failure to meet these duties can void coverage. The insured must:
- Promptly notify the insurer of how, when, and where the accident happened.
- Cooperate with the investigation, settlement, and defense.
- Send the insurer copies of any legal papers received.
- Submit a proof of loss and authorize medical record release when requested.
- Submit to examination under oath and physical exams if asked.
- Not admit fault or settle a claim without the insurer's consent.
Part F (General Provisions) then sets the policy territory (US, its territories, Canada), the fraud/concealment condition, and two-way cancellation/nonrenewal rules.
A Tennessee insured swerves to avoid a deer, misses it, and strikes a fence. Which Part D peril applies?
A covered auto worth $12,000 ACV is totaled in a covered collision with a $500 deductible. How much does the PAP pay the insured?
Which loss is covered under the comprehensive (other than collision) portion of Part D?
Under Part A liability, defense costs are paid: