An automobile insurance policy is a type of package policy which may provide: • Property coverage as a result of damage to the insured's auto • Legal liability protection for bodily injury or property damage to others arising out of the operation, maintenance or use of the insured auto. • Injury to the insured or members of the insured's family. The policy form primarily used today to provide coverage for automobile exposures is the Personal Auto Policy (PAP). The definitions section of a PAP identifies several important aspects of the auto insurance contract. These definitions generally appear on the first page of the PAP and include:

Bodily Injury (BI) The definition of "bodily injury” to others includes death. Family Member A person related to the named insured by blood, marriage or adoption, who is a resident of the insured's household (includes a ward or foster child.) Occupying In or upon; or getting in, on, out of or off of the covered auto. Note: Getting in to or out of an auto is also referred to as "alighting" the auto.

Trailer A vehicle designed to be pulled by a private passenger auto. A farm wagon or farm implement, while towed by a private passenger auto, is also considered to be a trailer. Covered Auto The specific vehicle described on the declarations page of the policy. Coverage territory The U.S. and its possessions, Puerto Rico and Canada.

Owned Auto The vehicle that appears on the declarations page; the auto that the named insured owns and insures under the Personal Auto Policy. As previously mentioned, a PAP is a package policy providing property and liability protection. There are four principal coverage parts which make up the PAP including: • Liability coverage • Medical payments coverage • Uninsured motorist coverage • Coverage for damage to the insured's auto.

Part A Liability Coverage This PAP coverage states that the insurer will pay damages for bodily injury or property damage to others. Damages include prejudgment interest awarded against the insured. The insurer will also settle or defend any claim or legal suit asking for these damages. In addition to the limit of liability provided by the policy, the insurer will pay all defense costs it incurs.

Liability coverage is provided on a split limits basis. The limits are expressed as a series of three numbers, such as 15/30/10. This means the policy will pay: $15,000 per person for bodily injury to a maximum of $30,000 per accident for bodily injury and $10,000 per accident for property damage. An auto policy provides liability insurance protection when a named insured or any covered family member is legally accountable for bodily injury or property damage to others when operating an owned auto.

In addition, the Personal Auto Policy also covers an insured and/or family members if they are responsible for Bodily Injury (BI) and Property Damage (PD) to others while operating a non-owned auto. If an insured injures a person while operating a non-owned auto and the owner of that auto carries no liability protection, the insured will have protection under his/her own policy. Therefore, a Personal Auto Policy provides coverage for an insured (and family members) while operating an owned or non-owned motor vehicle.

The actual policy language provides a description of who is considered to be an insured; an insured is: 1. The named insured or any resident family member participating in the ownership, maintenance or use of the covered auto or trailer 2. Any person using the auto with the permission of the insured

In addition to the policy's limits of liability for bodily injury or property damage to others, the insurer, on behalf of the named insured, will also pay for certain additional expenses incurred as a result of the operation, maintenance or use of the covered auto. The following are supplementary payments as listed in the policy: • Up to $250 for the cost of bail bonds required because of an accident, including related traffic violations

• Premiums on appeal bonds and bonds to release attachments in any suit the insurer defends • Interest accruing after a judgment is entered in any legal suit the insurer defends • Up to $200 a day for loss of earnings, but not other income, because of attendance at trials or hearings at the insurer's request • Other usual or likely expenses incurred at the insurer's request as long as they are reasonable.

Endorsements The following endorsements may be added to the PAP (usually for an additional cost): • Extended non-owned coverage for named individual An insured who has no personal automobile may purchase an endorsement to a personal auto policy which provides liability protection to the insured while driving any non owned vehicle • Towing and Labor costs Pays the cost of moving a stranded automobile (towing or emergency roadside repair). If the vehicle is towed to a garage before the labor is preformed, it will not be covered.

Part B Medical Payments Coverage Under Part B, the insurer will pay for expenses incurred for necessary medical and funeral expenses resulting from bodily injury to an insured or guest occupants of the auto. The insurer will pay only those medical expenses incurred within three years from the date of the accident. The “insured" is the named insured, family members and anyone else (guest passengers) while occupying or getting out of the vehicle. Any named insured hit by a vehicle while a pedestrian is covered as long as the vehicle is designed for use on a public road.

Part C Uninsured Motorist Coverage Part C will pay compensatory damages that an insured is entitled to collect (from his own policy) if he suffers bodily injury as a result of being struck by another driver who does not have auto liability insurance. The coverage limits provided for this coverage part are based on a per person/per accident basis. The limit of liability appearing in the declarations for this coverage is the maximum amount that the insurer will pay for damages resulting from any one accident. An uninsured motor vehicle is a vehicle that is: • Uninsured (someone who simply doesn’t have insurance)

• Hit and run drivers (some states have adopted the phantom driver law which does not require physical contact to be considered hit and run) • Insuring company denies coverage or becomes insolvent. Underinsured Motorist Coverage is also available to anyone who purchases uninsured motorist coverage. It covers BI sustained by an insured when the negligent operator possesses insurance, but the limits of liability carried are not sufficient to cover the damages.

Part D Coverage for Damage to the Insured Auto Part D of the PAP provides property insurance protection for the covered auto. There are two primary forms of coverage provided by Part D, collision coverage and other than collision coverage (comprehensive). Both are subject to a deductible before the policy pays according to its limit of liability. Collision is defined as "the upset of the covered vehicle or damage resulting from impact with another auto or object.” Collision damages are paid regardless of fault. If an insured is unable to collect from an at-fault third party, his/her policy will pay for the loss, less any deductible. The insurer then attempts to subrogate against

the at-fault party to recoup what was paid to the insured as part of the claim. If an insured is responsible for the collision damage to the covered auto, the policy will pay up to its limit, less any deductible. Collision coverage also applies to damage to a non-owner auto that is being operated by the named insured. This coverage is excess over other coverage applicable to the non-owned auto. Note: Part D will pay only $500 for damage to a non-owned trailer.

Other Than Collision (comprehensive) coverage will cover any direct and accidental damage to the covered auto as a result of any cause "other than collision" such as: • Falling objects • Fire • Explosion • Earthquake • Windstorm, hail, water, flood • Theft or larceny • Malicious mischief or vandalism • Riot or civil commotion • Breakage of glass • Contact with a bird or animal

Part D will pay, in addition to its limits, without the application of a deductible, up to $20 per day to a maximum of $600 for transportation expenses incurred if the vehicle is damaged as a result of a collision or other than collision provided the insured carries these coverages. Note: If the covered auto is stolen the insurer will pay only expenses incurred during the period beginning 48 hours after the theft and ending when the covered auto is returned to use or the insurer pays for its loss (maximum of 30 days).