Personal Auto Policy Part B, C, & D

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Back to: TelaClaims Adjuster I – Insurance Basics for Adjusting a Claim

Part B – Medical Payments Coverage

Insuring Agreement

The insurer will pay reasonable expenses incurred for necessary medical and funeral services caused by an accident, sustained by an insured, and incurred within 3 years of the accident. Unlike Liability Coverage, Medical Payments Coverage does NOT require an insured to be legally responsible for causing injuries. The policy defines insured in Part B, as:
  • The named insured or any family member occupying any auto or as a pedestrian when struck by a motor vehicle designed for use mainly on public roads. These vehicles do NOT have to be owned by the insured and include any type of trailer.
  • Any other person, such as a passenger, while occupying the insured auto.

Part B – Exclusions

Although legal liability on the part of an insured is not required for Medical Payments Coverage to apply, a bodily injury sustained by an insured is NOT covered under the following circumstances when an insured:
  • Is occupying a vehicle with fewer than 4 wheels.
  • Is occupying a vehicle being used as a public or livery conveyance.  A share-the-expense car pool is NOT public or livery conveyance.
  • Is occupying any vehicle that is located for use as a residence or premises – for example living in one’s car or a permanently located motorhome or trailer used as a residence.
  • Sustains bodily injury in the course of employment and workers’ compensation benefits are either required or available.
  • Is occupying or struck by a vehicle owned by the insured that is not a “your covered auto”  and is either owned by the insured OR furnished to the insured or available for the insured’s regular use, such as a company car.
  • Is occupying or struck by a vehicle owned by a family member that is not a “your covered auto” and is either owned by a family member OR furnished to a family member or available for the family member’s regular use, such as a company car.
  • Is using a vehicle without having a reasonable belief that he/she is entitled to drive the car.
  • Is using a vehicle while engaged in business; however, a coverage giveback applies to private passenger autos, pickups, vans, and owned trailers used with such vehicles. This exclusion applies to the business use of trucks and other commercial vehicles.
  • Injuries sustained because of, or as a result of, any type of war or nuclear hazard or action.
  • Injuries sustained when occupying a vehicle located inside a racing facility for the purpose of competing, practicing, or preparing for a race or speed contest.
Limit of Liability
The limit of liability shown in the Declarations is the maximum the insurer will pay for each person injured in any one accident. This is the most the policy will pay regardless of the number of insureds, claims made, vehicles or premiums are shown in the Declarations, or vehicles involved in the accident. If the loss is covered under more than one Part of the policy, payment will not be duplicated.
Other Insurance
If there is another applicable auto Medical Payments insurance, the insurer will pay only the proportion that its limit of liability bears to the total of all applicable limits. However, coverage for non-owned vehicles shall be excess over any other collectible auto insurance providing payment for the medical or funeral expense.

Part C – Uninsured Motorists Coverage

Insuring Agreement
Part C – Uninsured Motorists Coverage provides insurance to insured persons injured in accidents that are caused by another party. The other party must be legally responsible for bodily injury to an insured that arises out of the ownership, maintenance, or use of an “uninsured motor vehicle.” If the other party is NOT legally responsible (or not-at-fault), this coverage doesn’t apply.
The insurer will pay damages that an insured is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury. Unless the policy specifically states that Uninsured Motorist Physical Damage (UMPD) is also provided, this section of the policy only applies to bodily injury damages.
In addition to the definition of “insured” that applies to the entire policy, the definition of “insured” for uninsured motorist’s coverage means:
  • The named insured or any family member.
  • Any person occupying a “your covered auto.”
  • Any person who is entitled to recover damages because of bodily injury sustained by an insured and covered by the policy. For example, if Sue sustains a bodily injury in an accident caused by an uninsured motorist, her children will be entitled to recover damages for loss of care when Sue is unable to care for them because she broke both her legs in the accident.
Part C – Uninsured Motorists Coverage contains a definition for “uninsured motor vehicle.” An uninsured motor vehicle is one that:
  • Doesn’t have insurance or a bond in place at the time of the accident.
  • Has insurance in place at the time of the accident. However, the bodily injury liability limits are less than those required by the financial responsibility or compulsory insurance laws in place in the state where the insured’s “your covered auto” is principally garaged.
  • Is a hit-and-run vehicle. The owner or operator of the vehicle can’t be identified AND must hit:
    • The named insured or a family member;
    • A vehicle occupied by the named insured or a family member; or
    • “Your covered auto.”
  • Has insurance, but the insurer either denies the claim or becomes insolvent.
The following types of vehicles are NOT included in the definition of “uninsured motor vehicle”:
  • A vehicle that’s owned by the named insured or a family member OR a vehicle that’s furnished or available for the regular use of the named insured or a family member, such as a company car.
  • A vehicle that is owned or operated by someone who is self-insured, unless the owner or operator is or becomes insolvent.
  • A vehicle owned by any government agency.
  • A vehicle that operates on rails or crawler treads, such as a train or piece of mobile equipment like a bulldozer.
  • A vehicle designed mainly for use off public roads, such as a snowmobile or ATV.
  • A vehicle permanently located for use as a residence, such as a motorhome or a trailer in a campground.

Part C Exclusions

Coverage is NOT provided when any insured sustains bodily injury under the following circumstances:
  • An insured or family member is injured when occupying or struck by, a vehicle owned by the named insured or a family member and the vehicle is not insured by this policy.
  • An insured or a legal representative settles an Uninsured Motorists Bodily Injury Liability claim and that settlement impairs the insurance company’s ability to recover payments made to any insured.
  • An insured is occupying a “your covered auto” while it is being used as a public or livery conveyance.
  • An insured is using a vehicle without a reasonable belief that he or she is entitled to drive it. Family members always have a reasonable belief of entitlement to drive a “your covered auto” under this coverage.
  • While insured by workers’ compensation or disability insurance. No payment will be made under this coverage for injuries that might benefit any insurer, or self-insurer, under any workers’ compensation or disability benefits law. This means that if workers’ compensation or disability insurance is in place, that coverage must pay before this coverage applies.
  • If the insured is legally responsible for punitive or exemplary damages, this coverage does not apply.
Limit of Liability
The limit of liability shown in the Declarations is the maximum the insurer will pay in any one accident. This is the most the insurer will pay regardless of the number of insureds, claims made, vehicles or premiums are shown in the Declarations, or vehicles involved in the accident. If the loss is covered under more than one Part of the policy, payment will not be duplicated.
Other Insurance
If more than one policy is in place and provides Uninsured Motorists Coverage, the total amount the insured may collect cannot exceed the highest limit applying to any one vehicle.  For example, if the insured’s limits are 100/300 and the limits on the other policy are 50/100, the most the insured may collect is 100/300.
If the loss occurs while the insured is occupying a non-owned vehicle, the policy covering the non-owned vehicle is primary, and the insured’s coverage is excess. If more than one policy applies, the insurer pays only its share of the loss, which is the proportion that its limit of liability bears to the total amount of all applicable coverage.
Arbitration
If the insurer and the insured do not agree on the recovery of damages or the amount recoverable by the insured, each party may select an arbitrator (at each party’s expense) who then jointly select a third arbitrator (with the expense split equally by each party). A decision agreed upon by the arbitrators will be binding as to the insured’s entitlement to, and the amount of, damages.
Underinsured Motorists Coverage
This coverage is slightly different from Uninsured Motorists Coverage and may be required by state statutes as part of the Uninsured Motorists Coverage. In other states, coverage is optional or added by endorsement. Underinsured motorists coverage protects the insured against drivers who do have auto liability insurance, but whose coverage limits are inadequate or insufficient to respond to claims. The coverage pays only up to the amount that exceeds the limit of liability of the at-fault party.

Part D – Coverage for Damage to Your Auto

Coverage Part D of the personal auto policy addresses coverage for damage to the insured’s auto, also known as physical damage coverage. Part D provides first-party property damage coverage for the insured’s covered autos and also provides some coverage for non-owned vehicles being operated or used by the insured and family members.
Insuring Agreement
Part D – Coverage for Damage to Your Auto pays for the direct and accidental damage, regardless of fault, subject to the policy’s exclusions – and those contained in this coverage part. Covered vehicles are Your Covered Auto and non-owned autos. Part D of the policy is the only section that defines non-owned auto.
  • A deductible applies and will be the amounts shown on the Declarations for Collision coverage and Other Than Collision coverage, which is also known as comprehensive coverage. The deductibles for Collision and Other Than Collision coverages need not be the same.
  • If this coverage pays for damage to a non-owned auto, the broadest coverage appearing on the Declarations will apply.
Collision – The upset of the covered vehicle or a non-owned auto, or its impact with another vehicle or object, such as a tree. The collision is the single-named peril in the policy. Other Than Collision (OTC, Comprehensive) – Provides coverage on an open perils basis, which means all causes of loss other than a collision loss and not excluded in the policy. OTC, or Comprehensive, includes but is not limited to the following causes of loss:
  • Missiles or falling objects
  • Fire
  • Theft or larceny
  • Explosion or earthquake
  • Windstorm
  • Hail, water, or flood, including a flash flood
  • Malicious mischief or vandalism
  • Riot or civil commotion
  • Contact with a bird or an animal
  • Breakage of glass (If caused by an accident, this loss may be applied to collision coverage instead, in order to avoid a double deductible).
The policy defines non-owned auto as:
  • Any private passenger auto, pickup, van, or trailer not owned by, furnished, or available for the regular use of the named insured or a family member while being used by the named insured or a family member.
  • Any auto or trailer being used as a temporary substitute for the covered auto, while the covered auto is out of normal use due to:
    • Breakdown
    • Repair
    • Servicing
    • Loss
    • Destruction
Transportation Expenses
The insurer will pay, without application of a deductible, a maximum of $20 per day, up to $600, for transportation expenses incurred because of a collision or comprehensive loss. If the damaged auto is a non-owned auto, coverage only applies if the insured is legally responsible for the loss. If the loss is caused by a total theft of the covered auto or a non-owned auto, the insurer will only pay expenses incurred during the period beginning 48 hours after the theft, and ending when the auto is returned to use or the insurer pays for the loss. If the loss is caused by a peril other than theft of the auto, the insurer will only pay expenses beginning when the auto is withdrawn from use for more than 24 hours.
Part D Exclusions
No coverage is provided for:
  • An insured vehicle being used as a public or livery conveyance. The exclusion does not apply to a share-the-expense car pool.
  • Damage solely a result of wear and tear, freezing, equipment breakdown, or road damage to tires.  These are all maintenance issues and are excluded under other types of property insurance.
  • Losses due to war or nuclear hazard.
  • Electronic equipment, unless it’s permanently installed in the vehicle. Examples of electronic equipment include radios, stereos, tape decks, CD systems, navigation systems, Internet access systems, computers, telephones, televisions, two-way mobile radios, scanners, and CB radios.
  • Tapes, records, disks, or other media used with electronic equipment.
  • A total loss to Your Covered Auto due to destruction or confiscation or non-owned auto by the government or civil authorities.
  • A trailer, camper, or motorhome if it isn’t shown on the Declarations, unless the vehicle is a non-owned trailer, or is acquired during the policy period and the insured reports the purchase within 14 days.
  • A non-owned auto when used by the insured or a family member who doesn’t have a belief of entitlement to use the non-owned auto.
  • Loss to radar and laser detection devices and equipment.
  • Custom furnishings and equipment in any pickup/van. Custom furnishings and equipment include special carpeting and insulation, furniture or bars, height-extending roofs, and custom murals, paintings, decals, and graphics. The following items are not considered custom furnishings or equipment: any cap, bed liner, or cover in or upon any pickup.
  • A non-owned auto being used in the auto business.
  • Any auto when located at a racing facility for organized racing.
Under Part D if either state law or the rental agreement prevent the rental car company from recovering damages from the insured. Many insurers automatically cover a rental vehicle with the same coverage as the insured has on his/her own personal auto policy. If the insured only has liability coverage on a personal auto policy and rents a car for vacation, the rental car is not fully insured by the insured’s PAP. The insured will need to fill this gap by buying the rental agency’s insurance or upgrading his or her own policy.
Limit of Liability
The insurer’s limit of liability for loss is the lesser of the actual cash value (ACV) of the vehicle or the amount necessary to repair or replace the vehicle with another of like kind and quality.
In the event of a total loss, adjustments will be made for depreciation and physical condition when determining the ACV.
If a repair or replacement results in better than like kind or quality, the insurer will not pay for the amount of the betterment.
There is a maximum limit of $1,500 for a non-owned trailer and $1,000 for certain electronic equipment.
Payment of Loss
When paying for losses covered under Part D, the insurer may make payment in cash or by repairing or replacing the stolen or damaged property.  If making payment in the form of cash, the insurer will include any sales tax that applies to the stolen or damaged property. If stolen property is recovered, the insurer has the option of keeping the stolen property (at agreed or appraised value) or returning it to the named insured. If the insurer returns the stolen property, it must pay for any damage that resulted from the theft.
No Benefit to Bailee
If a bailment relationship exists with respect to the covered vehicle, the policy will not make payment for the benefit of anyone who had care, custody, or control of the covered auto. For example, if the insured’s vehicle was in the repair shop for servicing and the mechanic damaged the vehicle, this policy wouldn’t make payment; the repair shop’s insurance would have to pay because of its legal liability as a bailee.
Other Sources of Recovery
If other insurance is in place, or if another party is available to make payment for a covered loss, this policy only pays its proportionate share of the loss (as we’ve seen in the other coverage parts).
If a loss occurs and the covered auto is a non-owned auto, this policy will pay on an excess basis. Primary coverage is considered insurance provided by the vehicle’s owner, any other property coverage that may be in place, and any other source of recovery, such as the insurance purchased by the driver of the vehicle.
Appraisal
If the insured and the insurance company are unable to agree about the amount of a loss, either party may demand an appraisal. Each party selects and pays for, its own appraiser. The appraisers prepare separate appraisals of the actual cash value and amount of loss. If they fail to agree, they select an umpire to whom they submit their differences. If any two of the three parties agree, that decision is binding. The insured and insurer share the expenses of the umpire and appraisal.
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