Personal auto policy Chapter 11 outline
Textbook material is copyright protected: do not copy or post or circulate
A. PA differs from H.
1. PA: liability covered first.
2. H: set packages; PA: more variability.
B. Review of Tort Liability Process
C. The Personal Auto Policy Layout
Part A – Liability
Part B – Medical Payments
Part C – Uninsured Motorist Coverage
Part D – Physical Damage
Part E – Duties After a Loss
Part F – Other General Provisions
D. Definitions - designed to minimize ambiguous features of the contract.
E. Part A - Liability
1. Insuring agreement commits insurer to pay for bodily injury (BI) or property damage
(PD) on behalf of a covered person
2. Limit of Liability
a. Either a single or a split limit of liability may be chosen.
b. A single limit represents the maximum amount paid for any one accident, regardless
of whether one or more people are insured, or damage is to property or people.
c. Split limits are more conventional. Split limits operate by specifying a limit paid for
bodily injury to one individual/ to all individuals in the occurrence/ and for property
damage caused in one occurrence. Thus, 12,500/25,000/5,000 (or 12.5/25/5) implies
no one individual can collect from the insurance company more than $12,500
(regardless of the amount of injury sustained) from the contract, no more than
$25,000 will be paid for bodily injury (regardless of the number of people injured),
and no more than $5,000 will be paid for all property damage legal liability.
3. Insurer agrees to provide legal defense, and cost of the defense does not reduce amount
available for claims payment, it is paid in addition to the limits of liability.
4. Insurer has the right to settle any claims without litigation, without the insured's
approval (subrogation).
5. Persons Covered
a. Named Insured
b. Family members who reside with named insured
c. Any person using the covered auto. That is, the coverage on the car is "primary"
even if the driver has her own insurance. The coverage follows the car. Other
insurance is excess.
