Anatomy of the personal automobile policy

Jan 5, 2005
Contributor: joel randon

Declarations page: Your PAP is a written contract between you and your insurance company. The policy's declarations page contains factual information concerning you (as the owner of the policy), the vehicles covered by the policy, and other identifying features.

Part A--liability coverage: Liability coverage insures you against injuries you cause to other people and damage you cause to other people's property in an automobile accident. Liability claims for pain and suffering can be virtually limitless, so this is one area in which you definitely do not want to be underinsured. The PAP separates liability coverage into two parts: bodily injury coverage and property damage coverage.

Part B--medical payments coverage: Medical payments coverage (med pay) pays medical expenses resulting from an automobile accident up to a specified dollar limit. The purpose of "med pay" is to provide payment for immediate medical treatment for passengers of your car who are injured in an auto accident. This way, there's no need to wait and find out who is at fault and ultimately liable.

Part C--uninsured/underinsured motorist coverage: This coverage insures you against losses caused by someone who is completely uninsured or who has less than adequate insurance to cover the loss (underinsured).

Part D--coverage for damage to your auto: Part D coverage actually consists of two separate parts: collision coverage and comprehensive coverage. You can purchase either or both of these coverages for each vehicle you own. In general, collision coverage insures you against damage to your vehicle caused in an accident. Comprehensive coverage insures you against all other physical damage to your car caused by such events as fire, theft, flood, and vandalism. These coverages can be written with or without a deductible (generally, anywhere from $100 to $1,000). The higher the deductible, the lower the premium, and vice-versa.

Part E--duties after an accident or loss: This part of the PAP deals with the specific procedures that you must follow in order to have your claim covered by the insurer. It contains a list of general and specific duties that you must comply with. It's essential to follow these procedures carefully, since payment of your claim may depend on your doing so.

Part F--personal auto policy provision: Part F of the PAP contains various provisions that limit and qualify the coverage provided in other sections of the PAP. Such provisions are commonly referred to as disclaimers. If the conditions set forth in this section are not met, the insurer may be able to deny coverage of your claims.

In addition to these basic parts included in every policy, there are certain optional coverages which can be purchased at an additional cost.




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