Personal Auto Insurance

The Personal Auto Policy (PAP) provides much broader coverage than its Commercial Auto counterpart, the Business Auto policy form. To provide coverage remotely as expansive as provided by the PAP, the Business Auto policy would require numerous customized endorsements.

Broad Coverage with the PAP

Typical PAP coverage forms extend coverage to a broad group of insureds. Various individuals can be considered “insureds” in diverse capacities, and for a wide variety of claim circumstances. For example, coverage for the use of borrowed, hired, and non-owned vehicles is expansive under the PAP. PAP Uninsured Motorist Coverage is also an important consideration, given that an estimated one in four drivers nationwide is an Uninsured Motorist with NO liability insurance.

Potential Shortcomings of PAP Coverage

Although the PAP provides more liberal coverage terms than Commercial Auto policy forms, it is not without discrepancies. The following items can potentially create disputes among insureds, agents, and carriers:

• Named Insured may not match the vehicle title.
• A clerical error may occur in adding/deleting vehicles.
• The insured may not have adequate liability limits (see Personal Umbrella policy).
• An agent may fail to adequately explain coverage limitations to the insured.
• Named Driver exclusions can be an issue
• The insured or agent may fail to disclose material information.
• Claims may not be reported promptly.
• Non-standard Surplus Lines policies.