The Personal Auto Policy (PAP)

provides coverage for loss
exposures that arise out of the ownership, maintenance or use of an
automobile. Eligible types of vehicles include private passenger
autos, minivans and sport utility vehicles owned by the insured.
Pickup trucks and vans can be insured under the PAP if the
vehicle has a gross weight of less than 10,000 pounds and is not
used for the delivery or transportation of goods and materials. There
is coverage for pickup trucks if the use is incidental to the insured’s
business of installing, maintaining or repairing furnishings or
equipment or when used for farming or ranching.The Personal Auto Policy can also be endorsed to cover motorcycles, golf carts, snowmobiles and similar vehicles. Newly
acquired vehicles, while automatically covered for liability exposures,
must be reported within 14 days. A replacement vehicle is insured
for the remainder of the policy period with the same coverages as
the replaced vehicle.

In addition to owned vehicles an insured may be using a
nonowned vehicle, such as a rented car or may be using a
temporary substitute auto because the insured’s vehicle is out of
service. The PAP provides limited coverage on such vehicles.

Parties insured under the PAP.

1) The named insured and any family member,

2) Any person using the named insured’s covered auto with permission,

3) Any person or organization but only for legal liability arising out of the insured’s use of a covered auto on behalf of that person or organization and

4) A family member as identified in the policy declarations.

Structure of the PAP.

— The policy is made up of a Declarations
page, Agreement and Definitions page and the following parts:

Part A — Liability Coverage,

Part B — Medical Payments Coverage,

Part C — Uninsured Motorists Coverage,

Part E — Duties After an Accident of Loss and

Part D — Coverage for Damage to Your Auto,

Part F — General Provisions.

Part A — Liability coverage.

— The insurance company agrees to
pay for bodily injury or property damage for which the insured
becomes legally responsible due to an automobile accident. It can
be issued with a single limit or split limits. The policy also provides
legal defense costs in addition to the policy limit and supplementary
payments such as premiums on bail and attachment bonds and
$200 per day for loss of earnings if required to attend hearings or
Liability coverage exclusions for the PAP include: intentional injury
committed by using the vehicle, property owned or transported in the
insured vehicle such as personal property, personal property is also
excluded but this exclusion does not apply to damage to a rented
residence or private garage, bodily injury to an employee of a
covered person, using the vehicle as a public or livery conveyancebut this exclusion does not apply to use of the vehicle in a car pool
and property rented, used or in the care of the insured.

Part B

— Medical Payments coverage. — This section provides
for all reasonable and necessary medical, surgical, dental and
funeral expenses faced by an insured resulting from bodily injury
caused by accident and incurred within three years of the date of
accident. The coverage is available for each insured person who is
injured in, getting into, on, out or off of an insured vehicle and applies
without regard to fault.
An insured person for medical payments coverage includes the
named insured and family members and any other person while
occupying a covered automobile. The named insured and family
member are also covered if injured as a pedestrian and struck by a
motor vehicle designed for use mainly on public roads.

Part C

— Uninsured Motorists and Underinsured Motorists Liability
insurance (UM/UIM). — These coverages are designed to meet the
financial problems incurred due to bodily injury suffered by the
insured which was caused by the negligent act of an uninsured or
underinsured motorist.

Persons insured under UM/UIM include the named insured and
family members, any other person occupying a covered auto and
any person legally entitled to recover damages (such as the widow
of an insured killed in an auto accident by an at-fault UM/UIM driver).
An uninsured motorist (UM) includes a negligent uninsured
motorist, a hit-and-run driver or at-fault driver whose auto insurance
company becomes insolvent.
The underinsured motorist (UIM) is an at-fault driver who has
insurance but with liability limits lower than those of the insured. The
injured insured can collect the difference between the two limits
when the underinsured motorist is held liable.
When the insurance company and the insured cannot agree as to
the damages or the amount of damage under a UM/UIM loss the
matter can be settled by submitting the matter to arbitration.

Part D

— Damage to Your Auto. — This coverage includes the
physical damage insurance Collision Loss and Other Than Collision.
The former covers damage caused by collision or upset. The latter is
often called “Comprehensive” and includes coverage for fire, theft,windstorm, flood, riot, vandalism, contact with a bird or animal and glass breakage losses.

When an insured is using a nonowned vehicle, which is not
furnished or available for the insured’s regular use, the physical
damage coverages apply to the nonowned vehicle but only on an
excess basis. The physical damage coverages that apply to an
insured’s owned auto will apply to a temporary substitute vehicle
used by the insured.

Part E

— Duties After an Accident or Loss. — These provisions
set forth the general duties expected of the insured when loss occurs
as well as some specific duties for Uninsured Motorists claims and
Physical Damage losses.

Part F

— General Provisions. — Matters such as changes in the
policy, legal actions against the company, policy period and territory,
termination and the insurance company’s right to recover payment
from an at-fault driver are covered in this section.
Residual Auto Insurance Market. — In addition to the standard
automobile insurance market there is the residual market available
for drivers that cannot otherwise obtain auto insurance. These
markets are the Automobile Insurance Plan (Assigned Risk Plan)
and Specialty Insurance Companies. Premiums are generally higher
than the standard market and may be limited or restricted by state
law. An insured person under the Automobile Insurance Plan is
placed with an insurance company that will handle the policy and
any claims. After a period of three years the insured may be able to
reenter the private insurance market for coverage.