Bảo hiểm - Chapter 22: Auto insurance

Chapter 22Auto InsuranceAgendaPersonal Auto PolicyPart A: Liability CoveragePart B: Medical Payments CoveragePart C: Uninsured Motorists CoveragePart D: Coverage for Damage to Your AutoPart E: Duties After an Accident or LossPart F: General ProvisionsInsuring Motorcycles and Other VehiclesPersonal Auto Policy BasicsThe 2005 Personal Auto Policy (PAP) is widely used throughout the USDrafted by the ISO, it replaces the 1998 formEligible vehicles include:A four-wheeled motor vehicle owned or leased by the insured for at least six consecutive monthsA pick-up or van with a gross vehicle weight rating of 10,000 pounds or lessCannot be used for deliveries, with some exceptionsPersonal Auto Policy BasicsAutos covered by the policy include:Any auto shown in the declarationsA newly acquired autoCoverage depends on whether it is an additional vehicle or a replacement vehicle and whether the declarations indicates at least one auto for collision coverageA trailer owned by the named insuredA temporary substitute vehicle, which is a nonowned auto or trailer used temporarily because of mechanical breakdown, repair, servicing, loss, or destruction of a covered vehiclePart A: Liability Coverage Liability coverage (Part A) is the most important part of the PAPIt protects a covered person against a suit or claim arising out of the ownership or operation of a covered vehicleThe coverage is usually written in split limits, where the amounts of insurance for bodily injury liability and property damage liability are stated separatelyFor example, split limits of 250/500/100 mean that you have bodily injury coverage of $250,000 for each person, a maximum of $500,000 of bodily injury coverage per accident, and a maximum of $100,000 for property damage liability The insurer also agrees to provide defense and pay all legal defense costs for claims covered by the policyDefense costs are covered in addition to the policy limitsPart A: Liability CoverageLiability coverage applies to:The named insured and any resident family memberAny person using the named insured’s covered autoAny person or organization legally responsible for any insured’s use of a covered auto on behalf of that person or organizationAny person or organization legally responsible for the named insured’s or family members’ use of any auto or trailer (other than a covered auto or one owned by the person or organization)Part A: Liability CoverageIn addition to the policy limits and legal defense, certain supplementary payments can be paid, including:The cost of a bail bondPremiums on appeals bondsInterest accruing after a judgmentLoss of earnings ($200/day)Other reasonable expensesPart A: Liability CoverageExclusions to the coverage include:Intentional injury or damageProperty owned or transportedProperty rented, used, or in the insured’s careBodily injury to an employeeUse as a public livery or conveyanceVehicles used in the auto businessVehicles with fewer than four wheelsVehicle furnished for the insured’s regular usePart A: Liability CoverageIf an accident occurs in another state, and the financial responsibility law in that state has higher liability limits than shown in the declarations, the PAP automatically provides the higher limitsIf more than one liability policy covers a loss:The insurer pays its pro rata share of the loss for an owned vehicleThe insurance coverage is excess over any other insurance for a nonowned vehicle Exhibit 22.1 Primary and Excess Insurance Part B: Medical PaymentsMedical payments coverage covers all reasonable medical and funeral expenses incurred by an insured in an accident Two groups are eligible for coverage:The named insured and family members are covered:While occupying any motor vehicle, orAs pedestrians when struck by a motor vehicleOther persons occupying a covered auto are coveredBut not covered in a nonowned vehicleCovers medical services rendered within three years from the date of the accidentCoverage is not based on faultPart B: Medical PaymentsExclusions to the coverage include injuries sustained:While occupying a vehicle with fewer than four wheelsWhile operating the vehicle as a public livery or conveyanceWhen the vehicle is used as a residenceWhen the vehicle is used without a reasonable belief of permissionWhen the vehicle is competing in a raceIf more than one auto policy covers a loss:The insurer pays its pro rata share of the loss for an owned vehicleThe insurance coverage is excess over any other insurance for a nonowned vehicle Part C: Uninsured Motorists CoverageThe uninsured motorists coverage pays for the bodily injury caused by an uninsured motorist, by a hit-and-run driver, or by a negligent driver whose insurance company is insolventIn some states, property damage is also coveredThe uninsured motorist must be legally liableThe coverage applies to:The named insured and family membersAny other person while occupying a covered autoAny person legally entitled to recover damages (e.g., a surviving spouse)Exhibit 22.2 Estimated Percentage of Uninsured Motorists in the United States in 2007Part C: Uninsured Motorists CoverageCoverage does not apply when:An insured is injured in, or by, a vehicle owned by the named insured, but not insured under the policy There is primary coverage under another policyThe vehicle is used as a public livery or conveyanceDoes not apply to a carpoolWhen workers compensation benefits are applicableThere are several limitations when more than one uninsured motorist coverage provision applies to a loss For example, if an insurer provides coverage on a vehicle not owned by the named insured, the insurance provided is excess over any collectible insurance provided on a primary basis Part C: Uninsured Motorists CoverageUnderinsured motorists coverage can be added to the PAP to provide more complete protectionIn general, the maximum amount paid is the underinsured motorist’s coverage limit stated in the policy less the amount paid by the negligent driver’s insurerCoverage is typically added as an endorsementSome states make it mandatory, while others make it optionalPart D: Coverage for Damage to Your AutoUnder the coverage for damage to your auto, the insurer agrees to pay for any direct and accidental loss to a covered auto or any nonowned autoTwo optional coverages are available:Collision coverage: a collision is defined as the upset of your covered auto or nonowned auto or its impact with another vehicle or objectCollision losses are paid regardless of faultOther-than-collision coverage: an other-than-collision loss is a loss due to the following perils:Missiles or falling objects - Hail, water, floodFire - Riot or civil commotionMalicious mischief or vandalism - Contact with a bird or animalTheft - Glass breakageExplosion or earthquake - WindstormPart D: Coverage for Damage to Your AutoA nonowned auto is also covered under the Part D coveragesA nonowned auto is a private passenger auto, pickup, van, or trailer not owned by or furnished or made available for regular use of the named insured or family member, while it is in the custody of or being operated by the named insured or family memberThe coverage also applies to a temporary substitute vehicleThe policy offers the broadest coverage applicable to any covered auto shown in the declarations A collision damage waiver (CDW) may be unnecessary on a rental car if you carry collision and comprehensive coverage on your own carMost independent agents recommend purchase of the CDWPart D: Coverage for Damage to Your AutoPart D also pays for temporary transportation expenses, e.g., for train, bus, taxi expensesThe expense must be the result of a covered lossCoverage is subject to a daily and total limitIncludes charges from a rental car company for loss of daily rentalCoverage for towing and labor costs can be added by an endorsementPart D: Coverage for Damage to Your AutoExclusions to the coverage include, for example:Use as a public livery or conveyanceDamage from wear and tear, freezing, and mechanical or electrical breakdownRadioactive contamination or warCertain electronic equipmentPermanently installed equipment is coveredTapes, records, and disksGovernment destruction or confiscationTrailer, camper body, or motor homeRacing vehiclePart D: Coverage for Damage to Your AutoFor a total loss, the policy pays the actual cash value less the deductibleFor a partial loss, the policy pays only the amount necessary to repair or replace the damaged property of like kind and qualityThe car can be repaired with original equipment manufacturer (OEM) or generic partsInsurers can add a clarifying endorsement to exclude coverage for diminution in value from a direct and accidental physical damage lossThe insured can purchase gap insurance to cover the difference between the amount an insurer pays for a totaled car and the amount owed on a lease or loanPart D: Coverage for Damage to Your AutoIf more than one auto policy covers a physical damage loss:The insurer pays its pro rata share of the loss for an owned vehicleThe insurance coverage is excess over any other insurance for a nonowned vehicle The policy includes an appraisal provision for handling disputes over the amount of physical damage lossEither party can demand an appraisal of the lossPart E: Duties After an Accident or LossAfter an accident, the insured is required to perform certain duties, such as:Promptly notify the insurance company or agent Cooperate with the insurer in the investigation and settlement of a claimSend the insurer copies of any legal notices received in connection with an accidentTake a physical exam, if requiredThe police must be notified if a hit-and-run driver is involvedThe insurer must be allowed to inspect your vehicle if you are seeking coverage under Part DThe insurer can deny coverage only if failure to comply is prejudicial to the insurerPart F: General ProvisionsThe PAP provides coverage in the US, US territories, Puerto Rico, and CanadaAll states restrict the insurer’s right to cancel or nonrenew coverageTermination provisions include:Cancellation: The named insured can cancel at any time by returning the policy to the insurer or providing written notice. If a policy has been in force for more than 60 days, the insurer can cancel only if:The premium has not been paidThe driver’s license of any insured has been suspended, orThe policy was obtained through material misrepresentationNonrenewal: if an insurer decides to discontinue coverage, the insured must be given notice at least 20 days before the end of the policy periodAutomatic termination: a policy is automatically terminated if the insured decline’s the insurer’s offer to renew Insuring Motorcycles and Other VehiclesA miscellaneous-type vehicle endorsement can be added to the PAP to insure motorcycles, mopeds, motorscooters, golf carts, motor homes, dune buggies, etc.Does not cover snowmobilesThe liability coverage does not apply to a nonowned vehicleA passenger hazard exclusion can be elected, which excludes liability for bodily injury to any passenger on a motorcycle