Automobile Insurance
The personal auto policy
The PAP has four parts: Part A – Liability (bodily injury and property damage to others), Part B – Medical Payments, Part C – Uninsured/Underinsured Motorists, and Part D – Coverage for Damage to Your Auto (collision and other than collision, i.e., comprehensive). Definitions control: covered auto, your covered auto, newly acquired auto, non-owned auto, and who is an insured (named insured, resident relatives, and permissive users).
Split limits read per person/per occurrence, e.g., Alabama's minimum 25/50/25; a combined single limit applies one amount per accident. UM/UIM responds when the at-fault driver has no coverage or inadequate limits; UIM typically pays the difference between the tortfeasor's limits and the insured's damages, subject to the insured's own limit and any offset language. Stacking of UM limits across policies or vehicles depends on policy wording and state law. Physical damage settles at ACV unless the form provides replacement cost; a deductible applies per loss, and other-than-collision covers theft, fire, glass, and weather.
Business use raises hired auto and non-owned auto questions, and the regular use exclusion bars coverage for a vehicle furnished for the insured's frequent use.
Traps
- Reading split limits as a single total for multiple claimants.
- Forgetting garaging fraud (rating the car where it is not kept) as a material misrepresentation issue.
- Assuming a permissive user is covered on a commercial auto without endorsement.
Worked example
Damages $60,000; tortfeasor carries 25/50. The tortfeasor pays $25,000; the injured insured with $50,000 UIM limits recovers up to $25,000 more, capped by the UIM limit.