The Big Picture: What Is a PAP?
Personal Auto Policy = Car Insurance for Regular People
The PAP is designed for owners of private passenger vehicles - regular cars, SUVs, trucks used for personal purposes. It's not for commercial trucks or taxis.
What Makes PAP Special:
The PAP combines two types of insurance in one policy:
1. Physical Damage Insurance
Protects YOUR car from damage
2. Liability Insurance
Protects you when you hurt OTHERS or damage THEIR property
The 3 Types of Loss Every Driver Faces
Legal Liability
You cause an accident and hurt someone or damage their stuff
Covered by: Part A - Liability
Injury to You/Family
You or your family get hurt in an accident
Covered by: Part B (Medical) & Part C (UM)
Damage to Your Car
Your car gets wrecked, stolen, or damaged
Covered by: Part D - Physical Damage
PAP Structure: The 6 Parts
Think of the PAP like a house with 6 rooms. Each room has a specific purpose. Most rooms contain:
- An Insuring Agreement (what's covered)
- Exclusions (what's NOT covered)
- Limits of Liability (how much they'll pay)
Click each part below to learn more!
Each colored card links to detailed content about that coverage section.
Liability Coverage
Pays when YOU cause an accident - covers injuries to others and damage to their property
Medical Payments Coverage
Pays medical bills for you and passengers - doesn't matter who's at fault
Uninsured/Underinsured Motorist
Protects you when the OTHER driver has no insurance or not enough
Coverage for Damage to Your Auto
Collision + Other-Than-Collision (Comprehensive) - fixes or replaces YOUR car
Duties After an Accident or Loss
What you MUST do after an accident to keep your coverage valid
General Provisions
The rules that apply to the entire policy - cancellation, territory, etc.
Key Definitions You MUST Know
These definitions appear on the FIRST PAGE of the policy!
Know them cold - they determine who and what is covered.
"You" and "Your"
Throughout the policy, when you see "you" or "your," it means:
1. The Named Insured
The person whose name is on the Declarations page
2. Your Spouse
IF they live in the same household
What if Spouse Moves Out?
If your spouse moves out, they're still covered as "you" until the earliest of:
- 90 days after they move out
- The date they get their own policy listing them as named insured
- The end of the policy period
"Family Member"
A person who is:
- Related to you by blood, marriage, or adoption, AND
- Resident of your household
This includes: Ward or foster children
Example: Your 22-year-old son who lives at home = family member. Your brother who has his own apartment across town = NOT a family member (doesn't live with you).
"Your Covered Auto"
This includes 4 types of vehicles:
Vehicle in Declarations
Any vehicle shown on your policy's declarations page
Newly Acquired Auto
A vehicle you buy during the policy period (special rules apply - see below)
Any Trailer Owned
Trailers you own (boat trailers, utility trailers, etc.)
Temporary Substitute Vehicle
A car you're using temporarily because your regular car is broken down, being repaired, or was destroyed
Bodily Injury
Bodily harm, sickness, or disease, including death that results from the injury.
Property Damage
Physical injury, destruction, or loss of use of tangible property.
Newly Acquired Auto - The Rules
This is a Common Exam Topic!
The rules for newly acquired vehicles are tricky. Pay attention to the time limits!
What Qualifies as a Newly Acquired Auto?
Any of these vehicles acquired during the policy period:
- + A private passenger auto
-
+
A pickup or van that:
- Has GVW less than 10,000 lbs
- Is NOT used for delivery/transportation of goods (unless incidental to installing/maintaining/repairing furnishings)
- Is NOT used for farming or ranching
Coverage for Newly Acquired Vehicles
| Situation | Coverage | Notification Required? |
|---|---|---|
| Replacement Vehicle | Gets the broadest coverage on any existing vehicle | No notification needed |
| Additional Vehicle (Liability, Medical, UM) |
Gets coverage if you notify insurer | Within 14 days |
| Collision/Other-Than-Collision (if you already have this coverage) |
Gets the broadest coverage on any existing vehicle | Within 14 days |
| Collision/Other-Than-Collision (if you DON'T already have this) |
Can request coverage with $500 deductible | Within 4 days of loss |
Types of Autos
Owned Auto
Vehicles titled by the insured or acquired during the policy period.
Example: Your Honda Civic that you bought and titled in your name.
Nonowned Auto
A vehicle operated by you or a family member, but NOT titled by you and NOT furnished for your regular use.
Example: You borrow your friend's car for the day.
Hired Auto
Vehicles that are leased, hired, rented, or borrowed from someone other than an employee or partner.
Example: A rental car from Hertz.
Temporary Substitute
A vehicle NOT owned by you, used temporarily because your covered auto is out of service due to breakdown, repair, servicing, loss, or destruction.
Example: Loaner car from the dealership while your car is being repaired.
Exam Trap: Hired vs Nonowned
These are mutually exclusive! The key difference:
- Hired: Rented/borrowed from NON-employees
- Nonowned: Includes vehicles borrowed from EMPLOYEES
This distinction matters for rating and premium determination.
Collision vs Other-Than-Collision
Collision
The upset or impact of a covered vehicle with:
- + Another vehicle
- + An object (tree, guardrail, etc.)
Example: You rear-end another car. You hit a telephone pole.
Other-Than-Collision (Comprehensive)
Covers losses from:
Remember:
Other-than-collision is a property insurance coverage. It covers everything EXCEPT collision!
Other Important Definition: "Occupying"
"Occupying" means:
Why it matters: If you're covered while "occupying" a vehicle, you're covered even while getting in or out of it!
Key Numbers to Memorize
14 days
Notify insurer of new ADDITIONAL vehicle for liability/medical/UM
14 days
Notify insurer for collision/comprehensive on new vehicle
4 days
Request collision if you don't have it (with $500 deductible)
90 days
Spouse coverage after moving out
10,000 lbs
Max GVW for pickup/van to qualify
$500
Deductible if requesting collision within 4 days (no prior coverage)
Business Auto Policy (BAP)
Commercial Auto Insurance for Businesses
The Business Auto Policy is designed for companies that use vehicles for business purposes - delivery trucks, company cars, fleets, etc.
Business Auto Coverage Parts
Section I: Covered Autos
Uses numerical symbols to designate which vehicles are covered. The insured selects which symbols apply to their policy.
Section II: Liability Coverage
Covers bodily injury and property damage liability arising from the use of covered autos. Similar to PAP Part A but for business use.
Section III: Physical Damage Coverage
Covers damage to the business vehicles themselves - collision and comprehensive (other-than-collision).
Section IV: Business Auto Conditions
The rules and procedures that apply to the entire policy - duties after loss, claims procedures, policy changes.
Section V: Definitions
Key terms like "auto," "bodily injury," "covered pollution cost," and "insured."
Auto Designation Symbols
EXAM CRITICAL: Know These Symbols!
Business Auto and Garage policies use numerical symbols to identify which vehicles are covered. These symbols are selected by the insured and shown in the Declarations page.
Business Auto Symbols (1-9, 19)
| Symbol | Description | What It Means |
|---|---|---|
| 1 | Any Auto | Broadest coverage - covers ALL autos (owned, nonowned, hired) |
| 2 | Owned Autos Only | Only vehicles titled to the named insured |
| 3 | Owned Private Passenger Autos Only | Only owned cars (not trucks/commercial vehicles) |
| 4 | Owned Autos Other Than Private Passenger | Only owned trucks/commercial vehicles (excludes cars) |
| 5 | Owned Autos Subject to No-Fault | Only autos in states requiring Personal Injury Protection (PIP) |
| 6 | Owned Autos Subject to Compulsory UM | Only autos in states requiring Uninsured Motorist coverage |
| 7 | Specifically Described Autos | Only vehicles listed by VIN in the Declarations |
| 8 | Hired Autos Only | Rented/leased vehicles only |
| 9 | Nonowned Autos Only | Employee-owned vehicles used for business |
| 19 | Mobile Equipment Subject to Compulsory/Financial Responsibility | For states requiring insurance on mobile equipment |
Memory Tip: "1 = Any, 7 = Specific"
Symbol 1 is the broadest (ANY auto). Symbol 7 is the narrowest (only SPECIFICALLY listed vehicles). Think: "1 covers all, 7 is very limited."
Garage Coverage Form Symbols (21-31)
Who Uses Garage Coverage?
Auto dealerships, repair shops, service stations, and parking garages. These businesses have unique exposures because they work on and store customer vehicles.
| Symbol | Description | Simple Explanation |
|---|---|---|
| 21 | Any Auto | Covers ALL autos - the broadest garage symbol |
| 22 | Owned Autos Only | Only vehicles titled to the dealership/garage |
| 23 | Owned Private Passenger Autos Only | Only owned cars (not trucks) |
| 24 | Owned Autos Other Than Private Passenger | Only owned trucks/commercial vehicles |
| 25 | Owned Autos Subject to No-Fault | Autos in PIP states |
| 26 | Owned Autos Subject to Compulsory UM | Autos in UM-required states |
| 27 | Specifically Described Autos | Only listed vehicles |
| 28 | Hired Autos Only | Rented/leased autos |
| 29 | Nonowned Autos Only | Employee-owned vehicles |
| 30 | Autos Left With You for Service, Repair, Storage, or Safekeeping | Customer vehicles! Cars dropped off at the shop |
| 31 | Dealer's Autos (Physical Damage Coverage) | Inventory cars on the lot waiting to be sold |
Key Difference: Business Auto vs Garage
Business Auto: 1-9
Regular businesses with company vehicles
Garage: 21-31
Dealerships, repair shops (adds 20 to symbol numbers)
Memory Trick: Garage symbols are "20 + Business Auto symbol" (Symbol 1 = Any Auto, Symbol 21 = Any Auto for Garage)
Garagekeepers Insurance
What Problem Does It Solve?
When a customer drops off their car at a repair shop, dealership, or parking garage, what happens if that car gets damaged, stolen, or destroyed while in the garage's care?
Answer: Garagekeepers Insurance pays for damage to customer vehicles left in your care!
Symbol 30: The Garagekeepers Symbol
Symbol 30 specifically covers "Autos Left With You for Service, Repair, Storage, or Safekeeping."
Examples of covered situations:
- Customer's car vandalized while at repair shop overnight
- Car damaged by fire at the dealership
- Theft of customer's vehicle from parking garage
- Mechanic accidentally damages car during test drive
Three Coverage Options
Legal Liability
Pays only if the garage is legally liable for the damage
Example: Mechanic's error causes damage = Covered. Random theft = NOT covered (garage not at fault)
Direct Primary
Pays regardless of fault - doesn't wait for customer's insurance
Example: Random theft = Covered. Pays first, then seeks subrogation.
Direct Excess
Pays after the customer's own insurance pays first
Example: Customer has $500 deductible. Garagekeepers covers that $500.
Exam Tip: Remember the Three L-P-E
Legal Liability (only if garage is at fault), Primary (pays first), Excess (pays after customer's insurance)
Who Is Covered Under Business Auto?
The Named Insured
The business listed on the policy for any covered auto.
Permissive Users
Anyone using a covered auto with the owner's permission - employees driving company vehicles, for example.
Anyone Liable for Conduct of Above
Someone who is legally responsible for the actions of the named insured or permissive user.
Important: Employees Using Personal Vehicles
If an employee uses their OWN car for business, they're typically covered under Symbol 9 (Nonowned Autos). The employee's personal policy is PRIMARY, and the business auto policy is EXCESS.