Personal Auto Policy Definitions and Liability Coverage
Domain 2 - Definitions and Liability Coverage
This domain tests the defined terms that decide who is an insured and which auto is covered, then applies them to Part A liability. Questions often hinge on permission, family membership, newly acquired autos, and the business-use exclusions.
Key definitions
- You/your: the named insured and resident spouse.
- Family member: a person related by blood, marriage, or adoption who is a resident of your household, including a ward or foster child.
- Insured under Part A: you and family members for any auto; anyone using your covered auto with permission; and persons or organizations legally responsible for that use.
- Your covered auto: the vehicle(s) in the Declarations, a newly acquired auto, a trailer, and a temporary substitute auto.
Part A liability
The insurer pays damages for bodily injury and property damage for which an insured is legally liable because of an auto accident, and provides a defense. Supplementary payments can include bail bonds (up to $250), appeal bond premiums, and loss of earnings (up to $200 per day). Major exclusions include intentional damage, property owned by or transported by the insured, employee injuries covered by workers’ compensation, livery use, racing, vehicles with fewer than four wheels, and use without a reasonable belief of permission.
Newly acquired autos
If an additional auto is acquired and the policy has collision coverage on any auto, physical damage coverage is automatic for 14 days; without collision, the automatic period is 4 days for other-than-collision. A replacement auto is covered automatically. Liability coverage for a newly acquired auto is broader.
Worked example
A 17-year-old family member borrows a friend’s car with permission and causes a collision. She is a family member and therefore an insured for any auto under her parents’ Part A, subject to limits. The friend’s PAP may also respond because she had permission to use that covered auto. The reasoning: liability follows the insured person for any auto, not just the described auto.
Traps
- A roommate is not a family member absent a blood, marriage, or adoption relationship.
- A person who takes a car without a reasonable belief of permission is not an insured.
- A vehicle you own but do not insure is generally excluded under the owned-vehicle exclusion.
- Business use of a pickup or van can fall outside coverage.