The Personal Auto Policy (PAP)

personal auto policy

For many Americans, a car is the single most costly property they own and for most others, second only in value to their homes.  For most, a car is also essential to their life style, since contemporary American society has been built around individual auto ownership rather than, say, widespread access to good public transportation. Many families own more than one primary car, as well as supplementary vehicles, such as RVs or golf carts. 

Driving is a skill. To do it right, the driver needs to be alert, focused, responsible, and sensible. Not all drivers meet those criteria. They get into accidents with other cars or just by themselves. But even careful drivers cannot always avoid accidents.  

Since 1971, the Insurance Services Office (ISO) has been providing property/casualty insurance companies with comprehensive risk data and analysis and model insurance policy language. ISO’s actuaries and legal experts write standardized policy language which is the foundation on which many insurers build their coverage programs. Among ISO’s forms is the model Personal Auto Policy (PAP). Here’s a brief look at what the PAP covers. 

You Injure Someone ia Car Accident 

Somebody has to pay for the damage cars and drivers do to other cars and the medical costs of the injuries accidents cause. States do not want this burden falling on them. That is one reason every state has some form of motorist financial responsibility law. These laws require drivers to demonstrate they are able to pay the costs for any accidents they cause. Most states require the purchase of auto liability insurance in minimum amounts set by law to cover at least a portion of motorists’ legal liability to others. 

Most commonly, liability limits are written as a split limit. A split limit will be written like 25/50/25. The first number ($25,000) represents the amount per person that could be paid for bodily injuries incurred as a result of the accident. The second number ($50,000) is the amount that could be paid, up to a maximum total, for all bodily injuries incurred in the accident. The third number ($25,000) describes the payment that could be issue for all property damaged in the accident. Remember, this coverage is for others involved in your accident, not for you or your vehicle.  

For example, Texas motorists are required to carry bodily injury and property damage liability insurance. Minimum limits are 30/60/25. The state requires motorists to show proof of insurance when they:     

  • are asked for it by a law enforcement officer; 
  • have an accident; 
  • register a car or renew its registration; 
  • obtain or renew a driver’s license; or 
  • get a car inspected.  

 Someone Steals Your Car or Damages It 

Comprehensive coverage, on the other hand, pays for repairs to your vehicle when it is damaged by something other than a collision. A rock flies up and breaks your windshield. Or maybe your car gets stolen. Or you hit a deer that runs out in front of you. Comprehensive insurance covers the damages. It also covers damage from natural disasters such as fire, wind, hail, and flood. What comprehensive doesn’t cover is any type of auto accident damage. 

You Have an Accident 

Collision insurance pays for your vehicle to be repaired after you collide with another vehicle or an object such as a tree. If you crash into a wall, fence, or another car, your collision coverage pays for damages even if it’s your fault. 

Miscellaneous Coverge 

The ISO Personal Auto Policy also offers these coverages: 

  • Medical – Pays medical expenses for injury in an auto accident no matter who is at fault. 
  • Uninsured/Underinsured Motorist – If you get into an accident with someone who has no insurance, or insufficient insurance, these coverages provides a backup that pays for the damages. 
  • Rental Reimbursement – Pays for a rental car while repairs are being made to damages due to an accident. 

Want to know more about personal auto insurance? Check out our Property and Casualty courses and PAP courses in our insurance continuing education classes. 

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