If you’re like most Americans, your vehicle is practically a necessity. You’re around cars every day of your life. Sometimes you’re driving, sometimes you’re a passenger, and sometimes you’re just sitting in a parked car. Your auto not only functions as transportation; if need be, it can serve as an office, storage space, recreation, shelter, a dining room, or a bed. Because vehicles are so omnipresent in your life, a lot of things can happen to and around them. For instance:
- Your car can be damaged when it’s on the road or parked in your driveway
- When you’re driving your own car or someone else’s, you can injure people and damage property
- Other drivers can injure you or damage your property
- Your family can suffer injury and damage when they’re in a vehicle, and they can cause injury and damage to others when they’re using your vehicle
It helps to keep your auto in good repair and to drive defensively, but even then there’s no guarantee that you won’t be involved in an accident or other mishap. Purchasing a personal auto policy (PAP for short) also won’t prevent accidents, but it can protect you from suffering a significant financial loss if you or your vehicle is involved in an accident.
Tip: Personal auto policies apply to pickup trucks and vans (if they weigh less than 10,000 pounds) as well as cars. Your PAP also covers trailers designed to be pulled by those vehicles. Cars, pickup trucks, and vans are interchangeably referred to as “autos” in your PAP, and in this document.
Overview
You probably think that your auto insurance covers you for your injuries and any damage to your auto. Perhaps you already know that your PAP covers your auto when other people drive it and that your rental cars are also covered. But you may not know that depending on the situation, your auto policy covers a whole host of other people, vehicles, and property.
When reading your PAP, it’s best to view it as six different parts, each broken down into a variety of subsections. Four parts (Part A, Part B, Part C, and Part D) provide you with different types of insurance coverage (which may or may not apply to any given situation or damage). The final two parts (Part E and Part F) of your policy discuss your relationship with your insurance company and your rights and obligations under the policy. The following shows the component parts of your PAP:
Part A Liability Coverage
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Part B Medical Payments Coverage
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Part C Uninsured Motorist Coverage
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Part D Coverage for Damage to Your Auto
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Part E Duties after an Accident or Loss
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Part F General Provisions
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Definitions
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Definitions
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Definitions
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Definitions
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N/A
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N/A
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Supplementary Payments
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N/A
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N/A
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Transportation Expenses
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N/A
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N/A
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Exclusions
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Exclusions
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Exclusions
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Exclusions
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N/A
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N/A
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Limit of Liability
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Limit of Liability
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Limit of Liability
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N/A
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N/A
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Out-of-State Coverage
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N/A
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N/A
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Payment of Loss
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N/A
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N/A
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Financial Responsibility
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N/A
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N/A
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N/A
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N/A
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N/A
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Other Insurance
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Other Insurance
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Other Insurance
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Other Sources of Recovery
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N/A
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N/A
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N/A
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N/A
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Arbitration
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Appraisal
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N/A
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N/A
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As you can see, many parts of your PAP have subsections that cover similar topics (Exclusions, for example, or Other Insurance). But don’t make the mistake of assuming that subsections with identical titles have identical contents. You need to read each subsection carefully to understand similarities and differences among the different coverages. Even then, you may need to ask your insurance agent or attorney for an explanation of your rights and obligations under the policy. We cover some typical questions regarding standard policy provisions in the following sections:
Important Definitions
One of the first parts of your PAP contains definitions of many terms used in the policy. Additional definitions can be found in Parts A through D. When reading your policy, you should always consult the definition sections, because terms used in your policy may not have the same meanings you’d expect from regular speech. Some important examples of definitions from a typical PAP follow:
- Family members: any individual related to you by blood, marriage, or adoption who lives with you, including foster children and wards
- Covered autos: autos that are identified on the Declarations Page of your policy and any auto that you acquire after your policy is issued, as long as you ask your insurance company to insure it within 30 days of your purchase
- Occupancy: sitting in or on an auto or getting on, into, off, or out of an auto
- Uninsured motor vehicles: (Part C of your PAP, Uninsured Motorist Coverage, only applies when you or another insured person, typically your spouse or family members, are injured by an uninsured motor vehicle.) An uninsured motor vehicle is a vehicle that is:
- not covered by liability insurance at the time of the accident
- covered by liability insurance at the time of the accident but the coverage limit is less than required by your state’s financial responsibility law
- covered by liability insurance but the insurance company is insolvent or denies coverage
- involved in a hit-and-run accident and its operator cannot be identified
In the coming weeks, we will be focusing on elements of your Personal Auto Policy. In the meantime, if you have questions, contact the Experts at Henssler Financial: experts@henssler.com or 770-429-9166.