Structure of the standard personal car insurance policy

Structure of personal car insurance policies

As with homeowners policies, there is a standard personal car insurance policy published by the Insurance Services Office. As is the case with homeowners policies, many insurers, particularly direct writers such as State Farm, Allstate, and Farmers, use proprietary policy forms for their personal car insurance policies.

Furthermore, jurisdictions, like Massachusetts, have established a statutorily-mandated personal auto policy. The provisions of the standard ISO personal auto policy and of the proprietary policies sold by other insurers tend to be more alike in their basic coverage provisions than they differ. Coverage provisions in the ISO personal auto policy are grouped as follows:

definitions;
liability coverages;
medical payments coverage;
uninsured motorist coverage;
first-party physical damage coverages;
insured's duties after accident or loss; and,
general provisions.

Proprietary personal auto policy forms used by insurers that do not employ the ISO personal auto policy forms may differ in the order in which these categories of provisions appear. Personal auto policies issued in no-fault states also differ from the ISO personal auto policy. For example, the Massachusetts Automobile Insurance Policy first lists the policy's definition and the four compulsory coverages, which include the no-fault coverages.

Following the basic coverage provisions are the optional coverage provisions. These are then followed by the general provisions and exclusions, with provisions relating to cancellation and renewal, the insured's duties in case of accident or loss, and the safe driver insurance plan provisions.

Insurable interest

Before discussing the actual provisions of auto policies, the concepts of insurable interest and insured capacity, as they relate to the coverages afforded by auto policies, should be discussed. As with homeowners policies, the concept of insurable interest relates to the coverages for physical damage to your auto. A person must have an insurable interest in the auto in question to be entitled to payment of a loss.

The easy insurable interest concepts are those of the registered owner and a lien holder, such as your auto loan lender or leasing company of a covered vehicle. However, coverage also extends to nonowned autos. The common definitions of nonowned autos includes rental vehicles and borrowed vehicles as long as they are not regularly available for use by a named insured or a family member. Spouses will generally be considered to have an insurable interest even if not a registered owner of the vehicle.

The concept of insured capacity is mostly a question of the definitions of insured, covered person, family member, or eligible injured person, as well as those arising under the vehicle codes and other state laws.

For example, the laws of a particular state may require that a person using a vehicle with the named insured's express or implied permission be covered as an insured under the named insured's policy. Such requirements are related to the named insured's statutory liability as the vehicle owner for bodily injury or property damage arising out of its use.

1. Insurance coverages have various conditions that apply to them
Cancellation The cancellation condition in the standard ISO HO 3 homeowners policy is often superseded by specific states' statutory limitations on cancellation...

2. Concepts of the personal car insurance policy are very complex
The concepts embraced by this definition contained in the ISO personal auto policy are relatively complex. Most of these concepts appear in one form or another in the p...

3. Purpose of insurance coverage exclusion for owned or rented property
Insurance coverage for owned or transported property This exclusion precludes coverage for property damage to property owned or being transported by the insured...

4. Provisions applicable specifically to auto liability coverages
Car insurance limit of liability The ISO personal auto policy limit of liability condition is quite simple. It provides that the per accident limit of liability...

5. Rented and borrowed vehicles and car insurance exclusions
Unrated Vehicles Exclusion The definition of your covered vehicle encompasses not only the rated and described vehicles in the declarations, but also rented and...

6. Additional coverages included by car insurance policies
Most personal auto policies include some additional coverages. The policies do not actually use this term; however, the concept fits. This is also an area where there is ...

7. Right to recover payment after a loss or accident
Our Right to Recover Payment This condition contains the personal auto policy's subrogation provisions. When an insurer makes a payment for a loss for which a t...