Which of the following is true of the insuring agreement of Part D under the personal auto policy?

An insurance policy is a legal contract between the insurance company (the insurer) and the person(s), business, or entity being insured (the insured). Reading your policy helps you verify that the policy meets your needs and that you understand your and the insurance company’s responsibilities if a loss occurs. Many insureds purchase a policy without understanding what is covered, the exclusions that take away coverage, and the conditions that must be met in order for coverage to apply when a loss occurs. The SCDOI would like to remind consumers that reading and understanding your entire policy can help you avoid problems and disagreements with your insurance company in the event of a loss.

The Basics of an Insurance Contract

There are four basic parts to an insurance contract:

• Declaration Page
• Insuring Agreement
• Exclusions
• Conditions

It is important to understand that multi-peril policies may have specific exclusions and conditions for each type of coverage, such as collision coverage, medical payment coverage, liability coverage, and so on. You will need to make sure that you read the language for the specific coverage that applies to your loss.

The Declaration Page

This page is usually the first part of an insurance policy. It identifies who is the insured, what risks or property are covered, the policy limits, and the policy period (i.e. time the policy is in force).

For example, the Declarations Page of an automobile policy will include the description of the vehicle covered (e.g. make/model, VIN number), the name of the person covered, the premium amount, and the deductible (the amount you will have to pay for a claim before an insurer pays its portion of a covered claim).

Similarly, the Declarations Page of a life insurance policy will include the name of the person insured and the face amount of the life insurance policy (e.g. $25,000, $50,000, etc.).

The Insuring Agreement

This is a summary of the major promises of the insurance company and states what is covered. In the Insuring Agreement, the insurer agrees to do certain things such as paying losses for covered perils, providing certain services, or agreeing to defend the insured in a liability lawsuit. There are two basic forms of an insuring agreement:

• Named–perils coverage, under which only those perils specifically listed in the policy are covered. If the peril is not listed, it is not covered.
• All–risk coverage, under which all losses are covered except those losses specifically excluded. If the loss is not excluded, then it is covered. Life insurance policies are typically all-risk policies.

The Exclusions

Exclusions take coverage away from the Insuring Agreement. The three major types of Exclusions are:

• Excluded perils or causes of loss
• Excluded losses
• Excluded property

Typical examples of excluded perils under a homeowners policy are flood, earthquake, and nuclear radiation. A typical example of an excluded loss under an automobile policy is damage due to wear and tear. Examples of excluded property under a homeowners policy are personal property such as an automobile, a pet, or an airplane.

The Conditions 

Conditions are provisions inserted in the policy that qualify or place limitations on the insurer’s promise to pay or perform. If the policy conditions are not met, the insurer can deny the claim. Common conditions in a policy include the requirement to file a proof of loss with the company, to protect property after a loss, and to cooperate during the company’s investigation or defense of a liability lawsuit.

Definitions 

Most policies have a Definitions section, which defines specific terms used in the policy. It may be a stand-alone section or part of another section. In order to understand the terms used in the policy, it is important to read this section.

Endorsements and Riders

An insurer may change the language or coverage of a policy at the time of the policy renewal. Endorsements and Riders are written provisions that add to, delete, or modify the provisions in the original insurance contract. In most states, the insurer is required to send you a copy of the changes to your policy. It is important that you read all Endorsements or Riders so you understand how your policy has changed and if the policy is still adequate to meet your needs.

Want to Review Your Policy? 

To obtain a copy of your insurance policy, please contact your insurance agent or company.

What Is It?

You are a car owner, or are about to be one. Your car is a valuable investment, and protecting it is a priority. A new automobile may be second only to your home as the single largest investment you make. You probably want to purchase collision or comprehensive coverage to protect the value of your car. Your personal auto policy (PAP) can provide coverage for damage to your auto. Physical damage protection comes in two forms:

• Collision damage, which pays for damage to your car because of a collision with another vehicle or object
• Other-than-collision damage (comprehensive) coverage, which pays for losses due to theft, fire, glass breakage, and falling tree limbs, for example

You can buy either or both of these coverages for each car you insure. Your need will depend on the value of the car. For more valuable cars, we recommend our Fortune 500 clients opt for damage protection insurance

Caution: Provisions of your car loan agreement may even require you to purchase a minimum amount of damage protection insurance.

Damage protection is located in Part D of your PAP and contains the following sections: the Insuring Agreement, Transportation Expenses, Exclusions, Limit of Liability, Payment of Loss, No Benefit to Bailee, Other Sources of Recovery, and Appraisal.

The Insuring Agreement

In General

We also understand that as Fortune 500 employees and retirees, who may not be versed in insurance agreements, they can seem daunting. We are here to help break it down in a simple, easy-to-understand way. The insuring agreement is the most important part of each section of your PAP. It sets out the circumstances under which the insurer will pay benefits to you, or on your behalf, for physical damage to your auto. It also defines some terms commonly used in damage coverage.

The insuring agreement states that the insurance company will "pay for direct and accidental loss to 'your covered auto,' or any 'non-owned auto,' including its equipment, minus any applicable deductible." The insuring agreement covers any type of damage to your car that is not excluded. If a collision damages more than one of your "covered autos," the highest applicable deductible will apply. "Your covered auto" is a vehicle listed on the Declarations Page of your PAP. Collision coverage may be broader than you think. Even if you're driving and have an accident in a car you don't own, your PAP will provide the same coverage as any of your "covered autos." Typically, these "non-owned autos" include borrowed cars and temporary substitute vehicles.

Caution: There are many limitations to this seemingly broad coverage in the sections on exclusions, limit of liability, and other sources of recovery.

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"Collision" Versus "Other-Than-Collision" (Comprehensive) Coverage

Our Fortune 500 clients have also expressed their confusion with the distinction between "collision" and "other-than-collision" coverage. Here is a simple explanation of the difference. Your policy defines "collision" as the upset of "your covered auto," or a "non-owned auto," or its impact with another vehicle or object. Collision coverage applies to situations you think of as a crash. Comprehensive coverage includes all other physical damage that is not covered under collision. Your PAP lists some specific losses to illustrate the point. This list is not exhaustive. Comprehensive coverage includes damage from missiles, falling objects, fire, theft, explosion, earthquake, windstorm, hail, water, flood, malicious mischief, vandalism, riot, civil commotion, contact with a bird or animal, and breakage of glass.

Tags: Financial Planning, Lump Sum, Pension, Retirement Planning

What does Part D of a personal auto policy cover?

Which of the following is true regarding supplementary payments under Part A of the personal auto policy?

Which of the following would be considered a Part D other than collision claim under a personal automobile claim?

Which of the following would be considered a collision under Part D coverage for damage to your auto?