6.1 Personal Auto Policy Structure and Eligibility

The PAP and Its Governing Form

The Personal Auto Policy (PAP) is the standard contract for insuring individually owned private passenger autos. The version tested on the national exam is the ISO Personal Auto Policy, form PP 00 01, most commonly the PP 00 01 09 18 edition. ISO drafts the form; states approve their own editions, so an exam answer may cite either the form number or the 2018 edition without changing the substance.

The PAP replaced the older Family Automobile Policy and is written in plain, simplified language so an ordinary policyholder can read it. Exam questions reward you for knowing that the PAP is an open-perils, named-insured contract organized into discrete numbered Parts.

The Six Parts of the PAP

The policy is built from a Declarations page plus six lettered Parts. Memorize the letter-to-coverage map; questions frequently ask which Part responds to a given loss.

This unit covers Parts A, B, and C — the injury and liability coverages. Part D (physical damage) is addressed in a separate unit.

The Declarations page is itself testable. It names the insured, describes each covered auto by year/make/VIN, lists the limits and premium for each Part, shows the rating classification, and identifies the policy period and territory. The policy applies only to accidents occurring during the policy period and within the policy territory — the United States, its territories/possessions, Puerto Rico, and Canada — plus international transport between those ports. Mexico is not in the territory, a heavily tested point.

Eligibility Rules

The PAP is designed for individuals and married couples (resident spouses), not for corporations or commercial fleets. To qualify, the vehicle must be a private passenger auto, pickup, or van that is:

• Owned by an individual, or owned jointly by resident relatives or two non-resident individuals;
• A pickup or van with a Gross Vehicle Weight (GVW) of 10,000 lbs or less;
• Not used to deliver or transport goods or materials, except incidental farm use or use in the named insured's own business of installing/repairing furnishings or equipment.

Vehicles owned by a partnership or corporation are not eligible and must be written on a commercial (Business Auto) policy. A common trap: a sole proprietor's owned auto is eligible, but a vehicle titled to an LLC or corporation is not.

Who Is an Insured Under the Policy

The definition of insured changes by Part, which is a heavily tested distinction. Broadly:

• Named insured: the person(s) shown in the Declarations.
• Spouse: a resident spouse is automatically a named insured; a spouse who moves out keeps coverage for 90 days or until separately insured/policy ends.
• Family member: a person related by blood, marriage, or adoption who is a resident of the household, including a ward or foster child.

A resident family member is covered while driving any auto (subject to limits), whereas a non-family permissive user is generally covered only while using your covered auto.

"Your Covered Auto" and Newly Acquired Autos

The term your covered auto is the linchpin of PAP coverage. It includes four categories:

1. Any vehicle shown in the Declarations.
2. A newly acquired auto (subject to the rules below).
3. A trailer you own.
4. A temporary substitute auto — a borrowed/rented vehicle used while a covered auto is out of normal use due to breakdown, repair, servicing, loss, or destruction.

Newly Acquired Auto Time Limits (PP 00 01 09 18)

The edition matters here because ISO has changed the windows over time. Under the 2018 edition:

Worked example: A policyholder buys a second car on the 1st and crashes it on the 10th without ever reporting it. Because she already carried liability on her first auto, the new auto is automatically covered for liability — no 14-day rule applies to Part A. The 14-day window only governs physical-damage coverage. Misapplying the 14 days to liability is the single most common exam error in this topic.

Temporary Substitute and Trailers

The PAP automatically extends liability and (where elected) physical-damage coverage to a temporary substitute auto — a vehicle the insured uses while a covered auto is out of service for repair, servicing, breakdown, or destruction — as if it were the covered auto. Trailers the insured owns are covered for liability automatically; physical damage on a trailer generally requires it to be listed.

Newly Acquired Auto Recap

Failing to report within the window can leave a gap on physical damage, so the timing is a tested point. The PAP defines a private passenger auto, pickup, or van under a stated weight (commonly 10,000 lbs GVW or less) not used for delivery or commercial purposes as eligible; vehicles used in a business or for ride-share/delivery need a commercial or specialty endorsement.