|
In return for payment of the premium
and subject to all the terms of this policy we agree with you as follows: |
|
|
A. Throughout this
policy, "you" and "your" refer to:
1. The "named insured" shown
in the Declarations, and
2. The spouse if a resident
of the same household. |
Definitions A. "You" -
the Named Insured
Note that the spouse must be a
resident of the same household as the person whose name appears in the
Declarations, in order to be considered a "you" and have the same
protection. It is advisable to name both the husband and wife in the
declarations since by doing so you avoid potential coverage problems should
a separation or divorce occur during the policy period. The policy would
continue to provide the broadest possible coverage to both persons even if
they are maintaining separate households. |
| B. "We,"
"us" and "our" refer to the Company providing this insurance. |
|
| C. For purposes
of this policy, a private passenger type auto, pickup, or van shall be
deemed to be owned by a person if leased:
1. Under a written agreement to
that person; and
2. For a continuous period of
at least 6 months.
Other words and phrases are defined.
They are boldfaced when used. |
C. Private Passenger Autos
This wording is necessary to provide
"automatic" coverage on newly acquired leased vehicles. It has the effect of
substituting the word "leased" wherever the word "owned" appears in the
policy. |
| D."Family member"
means a person who is a resident of your household and related to you by
blood, marriage or adoption. This definition includes a ward or foster child
who is resident of your household, and also includes your spouse even when
not a resident of your household during a period of separation in
contemplation of divorce. |
D. Family Members Note the
requirement for residency in the household. This has been interpreted to
include a dependent child living elsewhere to attend school. Under previous
wording, a nonresident spouse during a period of separation was covered only
as a permissive user. Now, inclusion of a nonresident spouse "in
contemplation of divorce" provides some extension of coverage. The spouse
would not have automatic coverage for newly acquired or substitute
vehicles.
(See technical report "Insuring
Nonowned Autos") |
| E."Occupying"
means in, upon, getting in, on, out or off. |
E. Occupying This is an
important broadening of the dictionary definition and is used only in
Part B (Medical
Payments and Personal Injury Protection) and
Part C
(Uninsured/Underinsured Motorist). A 2001 Austin Court of Appeals decision
ruled that a person lying underneath an auto performing maintenance is not
"occupying" the auto. |
| F. "Trailer"
means a vehicle designed to be pulled by a:
1. Private passenger
auto; or
2. Pickup or van.
It also means a farm wagon or farm
implement while towed by a vehicle listed in 1. or 2. above. |
F. Trailers The definition
is broad enough to clearly include a "gooseneck" or "fifth wheel"
trailer. Note that whatever coverage is provided for a trailer is in effect
even if it is not connected to or being pulled by a vehicle, as contrasted
to coverage for a farm wagon or implement which only applies while being
towed by a private passenger auto, pickup or van. |
| G. "Your
covered auto" means:
|
G. Your Covered Auto(s)
Vehicles that fall within the four categories in this definition receive the
broadest coverage available under the terms of the policy. |
| 1.
Any vehicle shown in the Declarations; |
1. Any Vehicle in Declarations
The
eligibility of a
vehicle for coverage under a PAP has been previously described. However,
there is no qualifying language in this first category. If the company
attaches coverage by description and premium charge, any type of vehicle
will have coverage even if it does not meet the manual eligibility
requirement. The most likely possibility of this occurrence is a "utility"
vehicle which is used in business when such use has not been disclosed.
G V W = gross vehicle weight |
| 2. [ed. note:
see I and II below]
I. Any of the
following types of vehicles on the date you became the owner:
a. a private passenger auto; or b. a
pickup or van with a G.V.W. of 25,000 lbs. or less not used for the delivery
or transportation of goods, materials or supplies other than samples;
unless,
(1) the delivery of
goods, materials or supplies is not the primary usage of the vehicle, or
(2)used for farming or ranching. |
2. Newly Acquired Autos
This section outlines the automatic
coverage feature for newly acquired vehicles. Note the restrictions in types
of vehicles which are eligible for automatic coverage, as it tracks the
eligibility requirement previously discussed. This restriction would apply
even for a replacement vehicle. There would be no automatic coverage for a
"utility" vehicle primarily used in the business of delivery.
(see technical article "Sport
Utility Vehicles") |
| II.
This provision (G.2) applies only if you:
a. acquire the vehicle during the
policy period; and
b. notify us within 30 days after
you become the owner. |
If
the acquired vehicle is an additional auto (not a replacement) it will have
the broadest coverage which applies to any vehicle currently on the policy.
The vehicle must be reported within 30 days in order for any coverage to
continue after 30 days. |
| If the vehicle you
acquire replaces one shown in the Declarations, it will have the same
coverage as the vehicle it replaced. You must notify us of a replacement
vehicle within 30 days only if you wish to add or continue Coverage for
Damage to Your Auto. If the vehicle you acquire is in addition to any shown
in the Declarations, it will have the broadest coverage we now provide for
any vehicle shown in the Declarations. |
If
the acquired vehicle is a replacement, it will have the same coverage as the
vehicle it replaced, even if that might give it less coverage than other
vehicles on the policy. All coverages except
Coverage for Damage to
Your Auto extend until policy expiration with no requirement for
notification. Coverage for Damage to Your Auto, if such coverage existed on
the replaced vehicle, continues after 30 days only if the replacement auto
is reported to the insurance company within 30 days of the acquisition.
The option to continue physical damage
on a replacement vehicle or any coverage on a newly acquired vehicle rests
solely with the insured. The company must add coverage to the policy when
the insured requests the addition within 30 days.
(See technical report "Replacing,
Adding, Newly Acquired Autos") |
| 3.
Any trailer you own. |
3. Trailers
Includes any trailer owned at inception or acquired during the policy
period. They do not have to be described in the policy. Refer to
Exclusion #6 in Part
D - Coverage for Damage to Your Auto, for special information regarding
damage coverage for trailers. |
| 4.
Any auto or trailer you do not own while used
as a temporary substitute for any other vehicle described in this definition
which is out of normal use because of its:
a. breakdown;
b. repair;
c. servicing;
d. loss; or
e. destruction |
4. Temporary Substitute Autos
The effect of this wording is to
remove a "temporary substitute" auto from the broad class of "nonowned"
autos, which have limited coverage, and to place them in the same category
as owned and described vehicles, except as respects the "Other
Insurance" section.
Three important examples of broader
coverage for temporary substitutes are:
· For liability coverage, any person
using the "temporary substitute" and the owner of the temporary substitute
would be "covered persons." For Medical Payments and Personal Injury
Protection, any person occupying a "temporary substitute" is a "covered
person."
· It can include an auto owned by a
"family member" or one which is furnished to or available for regular use of
the named insured or spouse or a "family member."
· For liability coverage, a pickup
or van rented as a temporary substitute for a vehicle used in business would
be covered and not subject to liability exclusions
A.6. or
A.7.
In
2003, the Texas Supreme Court ruled in Progressive vs. Sink that the
definition of a temporary substitute auto is limited by the
permissive
use exclusion — the user of a non-owned auto must have a reasonable
belief that he or she is entitled to do so.
(See technical article "Covering
Rental Vehicles" and
Coverage D
"temporary substitute" language). |
| H."Business day"
means a day other than a Saturday, Sunday or holiday recognized by the
state of Texas. |
|
|
Insuring Agreement
A. We will pay
damages for bodily injury or property damage for which any
covered person becomes legally responsible
because of an auto accident. Property damage includes loss of use of the
damaged property. Damages include prejudgment interest awarded against the
covered person. We will settle or
defend, as we consider appropriate, any claim or suit asking for these
damages. In addition to our limit of liability, we will pay all defense
costs we incur. Our duty to settle or defend ends when our limit of
liability for this coverage has been exhausted. |
Note that the terms "bodily injury,"
"property damage" and "auto accident" are not defined, but left to legal
interpretation.
In its 2004 decision in the case
Texas Farm Bureau v. Sturrock, the Texas Supreme Court ruled
that an “auto accident” or a “motor vehicle
accident” occurs when (1) one or more vehicles are involved with
another vehicle, an object, or a person, (2) the vehicle is being used,
including exit or entry, as a motor vehicle, and (3) a causal connection
exists between the vehicle’s use and the injury-producing event. This case
involved a PIP claim resulting when the vehicle’s driver entangled his foot
in the door facing and fell out of the vehicle. The court’s decision allowed
the driver to collect PIP benefits previously denied by the company.
Other types of liability claims
affected by the Supreme Court’s interpretation, based on previous decisions,
include:
- No coverage for a case involving
a dog bite to a passenger riding in the auto.
- No coverage for a case involving
a drive-by shooting.
- Coverage for a case involving
accidental discharge of a weapon while resting in a gun rack in the back
window of a pickup.
The insurance company makes two
promises here:
(i) to pay legal damages to
which the policy applies, and
(ii) to settle or defend any
claim for such damages. The option to settle rests solely with the insurer.
It is clear that defense costs are
paid in addition to the limit of liability which is totally reserved for the
payment of damages. The company has no obligation to continue defending any
insured after the limit of liability has been paid out.
(See "Liability
Components") |
| B. "Covered person"
as used in this Part means:
1. You or any
family
member for the ownership, maintenance, or use of any auto or
trailer.
|
1. Named Insured and Family Members
The named insured and family members
are provided the broadest possible coverage for "covered autos" and nonowned
autos. If there is no exclusion that applies, these persons will be covered
for anything that would meet the legal interpretation of the undefined word
"auto." This could include a vehicle of any size or description, as long as
it has at least 4 wheels (see Exclusion
B.1.).
Texas courts have generally held
that "use" is broader than "operation" and includes putting or bringing a
thing into action or service and employing a thing for or applying a thing
to a given purpose. For example, sending a maid or other household employee
to the store could be considered "use" by the named insured. For a sole
proprietor of a business that covers a business vehicle on a PAP, this
amounts to non-owned auto liability just like one would have under a BAP.
|
| 2.
Any person using
your covered
auto. |
2. Permissive Users
Includes "temporary substitutes."
Note the "permission" aspect found in Exclusion A.8. |
| 3.
For your
covered auto, any person or organization but only with respect to
legal responsibility for acts or omissions of a person for whom coverage is
afforded under this Part.
4. For any auto or
trailer,
other than
your covered
auto, any person or organization but only with respect to legal
responsibility for acts or omissions of you or any
family
member for whom coverage is afforded under this Part. This provision
(B.4.) applies only if the person or organization does not own or hire the
auto or
trailer. |
3. Others
Both #3 and #4 provide coverage for
the "vicarious liability" of others arising out of the use of those autos to
which liability coverage applies. The distinction between the two items is
that #4 excludes coverage for the owner of a nonowned vehicle used by the
named insured or a family member.
Thus, if the named insured borrows a
fellow employee's car to use on their employer's business, the employer
would have coverage but the employee owning the car would not. This
provision also excludes direct protection for the owner of a rent car,
unless the rent car is being used as a "temporary substitute." |
|
In addition to our limit of
liability, we will pay on behalf of a
covered person: |
Supplementary Payments
These supplementary payments are not charged against the limit of liability. |
| 1. Up
to $250 for the cost of bail bonds required because of an accident including
related traffic law violations. The accident must result in bodily injury or
property damage covered under this policy. |
1. Bail Bonds
A bail bond for a ticket with no
accident involvement is not subject to this provision. A single-car accident
with no covered BI or PD would not trigger this provision. |
| 2.
Premiums on appeal bonds and bonds to release attachments in any suit we
defend. |
|
| 3. Interest
accruing after a judgment is entered in any suit we defend. Our duty to pay
interest ends when we offer to pay that part of the judgment which does not
exceed our limit of liability for this coverage. |
3. Interest
Postjudgment interest is covered
here as a supplementary payment. Prejudgment interest is included as a part
of "legal damages" and therefore included within the limit of liability. |
| 4. Up
to $50 a day for loss of earnings, but not other income, because of
attendance at hearings or trials at our request.
5. Other reasonable
expenses incurred at our request. |
|
|
A. We do not
provide Liability Coverage for any person: |
Exclusions A.
The application of an exclusion to one "covered person" will not
exclude protection for another "covered person" who might be legally liable
for the accident. |
| 1.
Who intentionally causes bodily injury or property damage; |
1. Intentional Injury or Damage
There is no exception for
intentional acts arising out of attempts to protect persons or property. |
| 2.
For damage to property owned or being transported by that person; |
2. Owned or Transported Property
No coverage for running into one's
own garage on this policy - it's covered on the homeowners policy, subject
to the deductible. However, see exclusion #3 below for coverage if one runs
into the garage of a rental home. |
| 3.
[Ed. Note - see I and II below] |
3. Care, Custody, or Control (with exceptions) |
| I. For damage
to property: a. rented to;
b. used by; or
c. in the care of;
that person. |
|
| II. This
exclusion (A. 3.1) does not apply to damage to:
a. a residence or private garage; or |
The
exceptions to the exclusion provide some very important protection.
First, part "a" provides coverage
for an insured who damages his rented house or garage, as a result of his
own negligence. |
| b. any of the
following type vehicles not owned by or furnished or available for the
regular use of you or any
family
member: (1) private
passenger autos;
(2)
trailers;
or
(3) pickups or vans. |
Part
"b" of the exception protects "covered persons" for their legal liability
for damage to a rented or borrowed vehicle or trailer, other than trucks
larger than a "utility" vehicle. An insured can be legally liable for damage
to a rent car either through negligence or by virtue of his "contractual"
responsibility to return an undamaged vehicle to the rental company. (See
Technical Report:
Furnished or Available)
Damage to a borrowed vehicle is covered only if the damage is caused as a
result of the insured's negligence.
(See the "Coverage
for Rental Cars Under the PAP" for further information on the rent car
exposure.) |
| However, the exclusion
3.I. does apply to a loss due to or as a consequence of a seizure of an auto
listed in 3 II. b by federal or state law enforcement officers as evidence
in a case against you under the Texas Controlled Substances Act or the
federal Controlled Substances Act if you are convicted in such case. |
|
| 4.
For bodily injury to an employee of that person during the course of
employment. This exclusion (A.4.) does not apply to bodily
injury to a domestic employee unless workers' compensation benefits are
required or available for that domestic employee. |
4. Employee Injury This
exclusion would apply to the actual employer of a person, including the
named insured or an organization such as a partnership or corporation which
would otherwise qualify as a "covered person" under Items #3 and #4 of the
definition of "covered person." Especially important is the absence of an
exclusion for injury to a "fellow employee." This exposure is covered by the
PAP so long as some other exclusion does not apply. Injury to a domestic
employee is covered by exception. |
| 5.
For that person's liability arising out of the ownership or operation of a
vehicle while it is:
a. being used to carry persons for a fee; this does not apply to a
share-the-expense car pool.
b. being used to
carry property for a fee; this does not apply to you or any
family
member unless the primary usage of the vehicle is to carry property
for a fee; or
c. rented or leased
to another; this does not apply if you or any
family
member lends
your covered
auto to another for reimbursement of operating expenses only. |
5. Use for a Fee The
intention of this exclusion is to exclude the hazards associated with the
operation of an automobile for hire to the general public. The wording
attempts to overcome company interpretations of previous wording that
excluded coverage for delivering property when there was an exchange of
money for such a service, such as delivery of pizzas or newspapers. Such
activity is excluded only if that is the primary usage. |
| 6.
While employed or otherwise engaged in the business or occupation of:
a. selling;
b. repairing;
c. servicing;
d. storing, or
e. parking;
vehicles designed for use mainly on
public highways. This includes road testing and delivery. This exclusion
(A.6.) does not apply to the ownership, maintenance or use
of your covered auto by:
1. you,
2. any family
member; or
3. any partner,
agent or employee of you or any family member. |
6. Garage Business Use The
PAP will not apply to individuals for whom coverage should be found in a
garage liability policy. Excluded are all vehicles except "covered autos"
operated by the insured, family members or employees of either. Application
of this exclusion would deny coverage (i) to the named insured if he works
at a garage and drives a customer's auto, and (ii) to a garage employee
driving a "covered auto." |
| 7.
Maintaining or using any vehicle while that person is employed or otherwise
engaged in any business or occupation not described in Exclusion A.6. This
exclusion (A.7.) does not apply to the maintenance or use of a:
a. private passenger
auto;
b. pickup or van
that is your covered auto; or
c. trailer used
with a vehicle described in 7.a. or 7.b. above
|
7. Other Business Use The
primary purpose of this exclusion is to exclude coverage for the use of a
nonowned pickup, van or any larger vehicle in a business or occupation.
(Note: Coverage is available with Endorsement 511 - see discussion in
endorsement section.)
An owned trailer is not covered when used with a nonowned truck for business
purposes.
(see technical article "Sport
Utility Vehicles") |
| 8.
Using a vehicle without a reasonable belief that that person is entitled to
do so. This exclusion (8) does not apply to you or any
family
member while using
your covered
auto. |
8. Non-Permissive Users
This exclusion would apply (i) to the named insured or a family member
operating a nonowned auto, or (ii) someone else operating a "covered auto." |
| 9. I.
For bodily injury or property damage for which that person:
a. is an insured under
a nuclear energy liability policy; or
b. would be an
insured under a nuclear energy liability policy but for its termination upon
exhaustion of its limit of liability.
II. A nuclear
energy liability policy is a policy issued by any of the following or their
successors:
a. American Nuclear
Insurers;
b. Mutual Atomic
energy Liability Underwriters; or
c. Nuclear
Insurance Association of Canada. |
|
| B. We
do not provide Liability Coverage for the ownership, maintenance or use of:
1. Any motorized
vehicle having fewer than four wheels; |
B. 1. Two- or Three-Wheeled Autos
Motorcycles and 3-wheelers could not be
covered on this policy as additionally acquired, replacement, nonowned or
temporary substitute vehicles. (Note: Endorsement 583 modifies this and
other provisions to allow coverage for specific "miscellaneous type
vehicles"see
discussion in the endorsement section.) |
| 2.
Any vehicle, other than
your covered
auto, which is:
a. owned by you; or
b. furnished or
available for your regular use. |
2. Owned or Furnished Autos Named Insured
Section "a" reinforces the fact that a
vehicle which is owned at inception, and which is not described in the
declarations, does not have any coverage. Section "b" excludes coverage when
the named insured operates a furnished auto, such as a company car. The
terms used in this exclusion are not defined and are therefore subject to
interpretation. "Furnished" suggests possession of the auto, while
"available for regular use" could mean access to the auto without specific
permission. (Note: Coverage is available with Endorsement
511 - see discussion
in endorsement section.) |
| 3. I. Any
vehicle, other than
your covered
auto, which is:
a. owned by any
family
member; or
b. furnished or
available for the regular use of any
family
member.
II. However, this exclusion
(B.3.) does not apply to your maintenance or use of any vehicle which is:
a. owned by a
family
member; or
b. furnished or
available for the regular use of a
family
member. |
3. Owned or Furnished Autos Family Members
This exclusion applies to the named
insured and family members. These persons are not covered for a vehicle
owned by the family member, or a vehicle furnished for their regular use,
except for "covered autos."
The exception to the exclusion gives
coverage back to the named insured while operating a vehicle owned by a
family member. However, exclusion B.2.b. above may still apply if the family
member's vehicle is furnished or available for the regular use of the named
insured. |
| C. We
do not provide liability coverage for you or any
family
member for bodily injury to you or any
family
member, except to the extent of the minimum limits of liability
coverage required by Texas Civil Statutes, Article 6701h, entitled "Texas
Motor Vehicle Safety-Responsibility Act." |
C. Family Member Exclusion Limited
This exclusion was intended to prevent
recovery for intra-family suits.
However, the Texas Supreme Court in
1993 invalidated this exclusion to the extent of the Financial
Responsibility Law requirements. Based on this decision and the policy
language added following that decision, a family member can collect damages
under this policy, up to the minimum limits, when the injury is caused by
another family member. |
|
A. If separate
limits of liability for bodily injury and property damage liability are
shown in the Declarations for this coverage the limit of liability for "each
person" for bodily injury liability is our maximum limit of liability for
all damages for bodily injury sustained by any one person in any one auto
accident. Subject to this limit for "each person," the limit of liability
shown in the Declarations for "each accident" for bodily injury liability is
our maximum limit of liability for all damages for bodily injury resulting
from any one auto accident. The limit of liability shown in the Declarations
for "each accident" for property damage liability is our maximum limit of
liability for all damages to all property resulting from any one auto
accident.
If the limit of liability shown in
the Declarations for this coverage is for combined bodily injury and
property damage liability, it is our maximum limit of liability for all
damages resulting from any one auto accident.
This is the most we will pay
regardless of the number of:
1.
Covered
persons;
2. Claims made;
3. Vehicles or
premiums shown in the Declarations; or
4. Vehicles
involved in the auto accident.
We will apply the limit of liability
to provide any separate limits required by law for bodily injury and
property damage liability. However, this provision will not change our total
limit of liability. |
Limit of Liability
A. A company has the option of printing a policy that
includes language for split limits, combined single limits, or both. The
language for both limits is displayed here.
This wording and the insuring
agreement provision of coverage for any insured for any claim provide what
is commonly called the "severability of interests" or separation of insureds
feature of the PAP. No provision of the PAP prevents claims or suits by one
insured against another, except for Exclusion C, which prevents recovery in
intra-family suits for amounts in excess of minimum financial responsibility
requirements. |
| B.
Any payment under the Uninsured/Underinsured Motorists Coverage or the
Personal Injury Protection Coverage of this policy to or for a
covered person will reduce any amount that
person is entitled to recover under this coverage. |
B. This coordination of benefits provision prevents a
duplication of payments among various parts of the PAP. Similar wording in
the Medical Payments Coverage part takes care of its omission here. |
|
If an auto accident to which this
policy applies occurs in any state or province other than the one in which
your covered
auto is principally garaged, we will interpret your policy for that
accident as follows:
A. If the state or province
has:
1. A financial
responsibility or similar law specifying limits of liability for bodily
injury or property damage higher than the limit shown in the Declarations,
your policy will provide the higher specified limit.
2. A compulsory
insurance or similar law requiring a nonresident to maintain insurance
whenever the nonresident uses a vehicle in that state or province, your
policy will provide at least the required minimum amounts and types of
coverage.
B. No one will be
entitled to duplicate payments for the same elements of loss. |
Out of State Coverage The
PAP limits and coverage will modify themselves to comply with financial
responsibility or other laws in any state or province in which a covered
accident may occur, unless the vehicle is principally garaged in that state
at the time of the accident. When an insured moves to another state to
establish permanent residency, this provision will not apply, providing
incentive to cancel the Texas PAP and purchase a new policy in the new
state.
(See also: "Mexico
Coverage" technical report) |
| Financial
Responsibility Required
When this policy is certified as proof of financial responsibility, this
policy shall comply with the law to the extent required. |
|
| Other Insurance
If there is other applicable liability
insurance we will pay only our share of the loss. Our share is the
proportion that our limit of liability bears to the total of all applicable
limits. However, any liability insurance we provide to a
covered person for the maintenance or use
of a vehicle you do not own shall be excess over any other applicable
liability insurance. |
Other Insurance This
provision for excess coverage over any applicable liability coverage on a
nonowned vehicle can produce a strange phenomenon when a covered person
damages the nonowned vehicle and causes BI and/or PD to others. Assuming no
specific exclusions apply, the named insured's PAP will pay for damage to
the nonowned vehicle but the liability policy carried by the vehicle owner
will take care of the third-party claims, with the named insured's PAP
available for excess coverage for those with "insured" status on the PAP,
but not the vehicle owner |
|
Insuring Agreement
A. We will pay for direct and
accidental loss to your covered auto, including its equipment less
any applicable deductible shown in the Declarations. However, we will pay
for loss caused by collision only if the Declarations indicate that
Collision coverage is provided. |
Part D provides "all risk" coverage
on "covered
autos."
There are two coverage categories:
Collision and Other Than Collision.
Selection of one or both of these is
determined on a per-vehicle basis, by showing a premium entry on the
declarations page. Each of these two coverage categories has its own
separate deductible, as shown on the declarations.
The inclusion of "equipment" in the
insuring agreement is generally taken to encompass any item designed for use
with an automobile and attached to it or normally contained in it. This
broad interpretation necessitates several restrictions in the exclusions
section, to prevent coverage on certain items.
(See Technical Reports: "Your
Covered Auto" and
Coverage D - Damage to Your Auto and
Intentional Damage By An
Insured) |
| B. "Collision"
means the upset, or collision with another object of your covered
auto. However, loss caused by the following are not considered
"collision":
1. Missiles or falling
objects;
2. Fire;
3. Theft or larceny;
4. Explosion or earthquake;
5. Windstorm;
6. Hail, water or flood;
7. Malicious mischief or
vandalism;
8. Riot or civil commotion;
9. Contact with bird or
animal; or
10. Breakage of glass.
If breakage of glass is caused by a
collision or if loss is caused by contact with a bird or animal, you
may elect to have it considered a loss caused by collision.
|
B. Definition of Collision
The distinction between "collision"
losses and other covered losses is important only if the deductibles are
different, or if the insured elects not to have collision coverage. The
definition of collision and the listing of types of losses not to be
considered collision are attempts to minimize any disputes when the
distinction does make a difference. (See Technical Report: "Blowouts")
The provision at
the bottom of this section: (i) prevents the application of two
deductibles when a collision causes glass breakage, and (ii) allows the
insured to have an animal collision claim paid with whichever coverage has
the lower deductible. |
|
In addition, we will pay up to $20
per day, to a maximum of $600 for transportation expenses incurred by you.
This applies only in the event of the total theft of your covered auto.
We will pay only transportation expenses incurred during the period:
1. Beginning 48 hours after
the theft; and
2. Ending when your
covered auto is returned to use or we pay for its loss. |
Transportation Expenses
These payments may be used for any
type of substitute transportation, including a rental car, bus or taxi. Note
the very limited application of this extension to the total theft of the
covered auto. Endorsement
523
is available for an additional premium to provide this coverage for
other types of covered losses and to provide a higher limit on theft-related
claims. |
|
We will not pay for:
1. Loss to your covered
auto while it is:
a. being used to carry
persons for a fee; this does not apply to a share-the-expense car pool; or
b. being used to carry
property for a fee; this does not apply to you or any family member
unless the primary usage of the vehicle is to carry property for a fee; or
c. rented or leased to
another; this does not apply if you or any family member lends
your covered auto to another for reimbursement of operating expenses
only. |
Exclusions
1. Use for a Fee
Same as the liability exclusion.
|
| 2. Damage due
and confined to:
a. wear and tear;
b. freezing;
c. mechanical or electrical
breakdown or failure; or
d. road damage to tires.
This exclusion (2.) does not apply
if the damage results from the total theft of your covered auto.
|
2. Expected Losses
The most common legal interpretation
of this exclusion allows coverage for ensuing loss caused by an intervening
factor which leads to a covered loss.
Examples include a tire blowout
which results in a collision, and a deteriorated wire which shorts and
causes a fire. The exception to the exclusion allows coverage for any of
these otherwise excluded perils if the damage occurs after the vehicle has
been stolen.
(See technical article "Blowouts"
in the BAP section) |
| 3. Loss due to
or as a consequence of:
a. radioactive contamination;
b. discharge of any nuclear
weapon (even if accidental);
c. war;
d. civil war;
e. insurrection; or
f. rebellion or revolution.
|
|
| 4. Loss to
stereos, radios and other sound reproducing equipment. This exclusion (4.)
does not apply if the equipment is permanently installed in your covered
auto. |
4. Sound Reproducing Equipment
Sound reproducing equipment would
include tape and disc players. The phrase "permanently installed" is not
defined and is generally interpreted to include equipment that is bolted to
the vehicle in some way to prevent easy removal. Contrast this wording with
the more solid qualifications of installation indicated in Exclusion #9.
There is a $1,500 limit on this property (see Limit of
Liability section).
Use
Endorsement
521 to insure these items on a specific
basis for full value with no deductible. |
| 5. Loss to
tapes, records or other devices for use with equipment designed for the
reproduction of sound. |
5. Sound Reproduction Devices
"Other devices" would include
compact discs. Endorsement
520 provides a
limited buyback for these items. |
| 6. Loss to a
camper body or trailer not shown in the Declarations. This exclusion
(6.) does not apply to a camper body or trailer you:
a. acquire during the policy
period; and
b. notify us within 30 days
after you become the owner. |
6. Camper Bodies and Trailers
Since "your covered auto" includes
"any trailer you own" and also auto "equipment," this exclusion is necessary
in order to avoid covering trailers and camper bodies without receiving a
premium.
The automatic 30-day coverage for
newly acquired trailers and camper bodies only applies if Part D coverage is
provided on any other vehicle scheduled on the policy. The term "camper
body" is not defined in the policy; the old commercial auto physical damage
coverage part defined it as "a body designed to be mounted upon a covered
auto and equipped as sleeping or living quarters."
Using this definition, it is clear
that there would be no exclusion for those items which are commonly known as
"toppers" or "shells," unless they are so equipped.
In order to cover a camper body on
the PAP, the description of the vehicle to which it is attached should
include the words "with camper" in the declarations, and the cost used to
determine premium should include the additional cost of the camper body.
|
| 7. Loss to any
vehicle while used as a temporary substitute for a vehicle you own which is
out of normal use because of its:
a. breakdown;
b. repair;
c. servicing;
d. loss; or
e. destruction. |
7. Temporary Substitute Autos
Since "your covered auto" includes a
temporary
substitute vehicle, this exclusion is necessary to avoid providing
Coverage D on these vehicles. There is no possibility of coverage under Part
D for any nonowned vehicle. The liability coverage applies to a covered
person's legal liability for damage to noncovered autos. |
| 8. When in or
upon any trailer, loss to:
a. TV antennas;
b. awnings or cabanas; or
c. equipment designed to
create additional living facilities. |
8. Trailer Equipment
Note that the exclusion applies only
to trailer equipment. The same items on a motor vehicle fall into Exclusion
#10, but with a different approach. Endorsement
561
provides a buyback provision for specific perils on these trailer items.
(See the definition of "trailer") |
| 9. Loss to any
of the following or their accessories:
a. citizens band radio;
b. two-way mobile radio;
c. telephone;
d. scanning monitor receiver;
or
e. any device or instrument
used for detection of radar or other speed measuring equipment.
This exclusion (9.) does not apply
if the equipment is permanently installed in the opening of the dash or
console of the auto. This opening must be normally used by the auto
manufacturer for the installation of a radio. |
9. Radios and Telephones
Note the much stricter conditions on
permanent installation than were found in Exclusion #4.
"Accessories" would include an antenna. Part "e" refers to so-called "fuzz
busters." There is no buyback possibility for "fuzz busters" but the other
four excluded items can be covered using Endorsement
521.
|
| 10. Loss to any
custom furnishings or equipment in or upon any pickup or van. Custom
furnishings or equipment include but are not limited to:
a. special carpeting and
insulation, furniture, bars or television receivers;
b. facilities for cooking and
sleeping;
c. height-extending roofs; or
d. custom murals, paintings
or other decals or graphics.
This exclusion (10.) does not apply
if the value of the custom furnishings or equipment has been reported to us
prior to a loss and included in the premium for this coverage. |
10. Custom Furnishings
This entire exclusion can be avoided
by including the value of these items as a part of the cost shown in the
declarations. Detailed records of purchases should be kept by the insured in
order to verify this, if necessary, at the time of a loss. Note also that
this exclusion does not apply to any such equipment in a
private
passenger car.
(see technical article "Sport
Utility Vehicles") |
| 11.
Loss due to or as a consequence of a seizure of your covered auto by
federal or state law enforcement officers as evidence in a case against you
under the Texas Controlled Substances Act or the federal Controlled
Substances Act if you are convicted in such case. |
|
|
Our limit of liability for loss will
be the lesser of the:
1. Actual cash value of the
stolen or damaged property;
2. Amount necessary to repair
or replace the property with other of like kind and quality; or
3. Amount stated in the
Declarations of this policy. |
Limit of Liability
This section establishes the amount
that will be paid in the event of a covered physical damage loss.
See technical report "Valuation
of Auto Losses" for a complete analysis of this section.
|
| The most we will pay
for loss to equipment listed in Exclusion 4. is $1,500. Our payment for loss
will be reduced by any applicable deductible shown in the Declarations.
|
Note
the $1,500 limitation on stereos, radios and sound reproducing equipment;
any deductible amount would be deducted from this limit. Full coverage with
no deductible on specified items is available by using Endorsement
521A.
|
| At the mutual
agreement of you and us, we will not apply the applicable deductible for a
glass loss if the glass is repaired rather than replaced. |
A
glass loss is paid with no deductible if the glass is repaired rather than
replaced, subject to the mutual agreement of the insurer and policyholder. |
Payment of Loss
We may pay for loss in money or
repair or replace the damaged or stolen property. We may, at our expense,
return any stolen property to:
1. You; or
2. The address shown in this
policy.
If we return stolen property we will
pay for any damage resulting from theft. We may keep all or part of the
property at an agreed or appraised value. |
The last sentence in this section
gives the insurer the right to "total" an auto and keep the salvage. |
|
This insurance shall not directly or
indirectly benefit any carrier or other bailee for hire. |
No Benefit to Bailee
See technical report "No
Benefit to Bailee"
|
|
A. If other insurance also
covers the loss we will pay only our share of the loss. Our share is the
proportion that our limit of liability bears to the total of all applicable
limits. |
Other Insurance |
| B. For any loss
to which Uninsured/Underinsured Motorists Coverage (from this or any other
policy) and this coverage both apply, you may choose the coverage from which
damages will be paid.
You may recover under both
coverages, but only if:
1. Neither one by itself is
sufficient to cover the loss;
2. You pay the higher
deductible amount (but you do not have to pay both deductibles); and
3. You will not recover more
than the actual damages. |
B. The provision
concerning duplication of coverage by the Uninsured Motorist property damage
section is restated here. |
|
If we do not agree on the amount of
loss, either may demand an appraisal of the loss. In this event, each party
will select a competent appraiser. The two appraisers will select an umpire.
The appraisers will state separately the actual cash value and the amount of
loss. If they fail to agree, they will submit their differences to the
umpire. A decision agreed to by any two will be binding. Each party will:
1. Pay its chosen appraiser;
and
2. Bear the expenses of the
appraisal and umpire equally.
We do not waive any of our rights
under this policy by agreeing to an appraisal. |
Appraisal
This is similar to the appraisal
process found in property policies. It is used only when the insurer and
insured cannot agree on the value of the claim, and not to determine whether
or not coverage applies |
| General
Duties
A. We must be notified
promptly of how, when and where the accident or loss happened. Notice should
also include the names and addresses of any injured persons and of any
witnesses. If we show that your failure to provide notice prejudices our
defense, there is no liability coverage under the policy. |
Up to this point the only
contractual promise made by the insured was to pay the premium while the
insurer was making many promises to pay in the event of certain occurrences.
In sections A and B, the insured is being given a list of do's and don'ts
that are necessary after an accident or loss. Sections C through H describe
the insurer's duties regarding prompt payment of claims and settlement, as
required by the Texas Insurance Code. |
| B.
A person seeking any coverage must:
1. Cooperate with us in the
investigation, settlement or defense of any claim or suit.
2. Promptly send us copies of
any notices or legal papers received in connection with the accident or
loss.
3. Submit, as often as we
reasonably require, to physical exams by physicians we select. We will pay
for these exams.
4. Authorize us to obtain:
a. medical records which are
reasonably related to the injury or damage asserted; and
b. other pertinent records.
5. When required by us:
a. submit a sworn proof of
loss;
b. submit to examination
under oath. |
B. Assist and Cooperate
|
| C.
Within 15 days after we receive your written notice of claim, we must:
1. acknowledge receipt of the
claim.
If our acknowledgment of the claim
is not in writing, we will keep a record of the date, method and content of
our acknowledgment.
2. begin any investigation of
the claim.
3. specify the information
you must provide in accordance with paragraph B. above.
We may request more information, if
during the investigation of the claim such additional information is
necessary. |
|
| D.
After we receive the information we request,we must notify you in writing
whether the claim will be paid or has been denied or whether more
information is needed:
1. within 15 business days;
or
2. within 30 days if we have
reason to believe the loss resulted from arson. |
|
| E.
If we do not approve payment of your claim or require more time for
processing your claim, we must:
1. give the reasons for
denying your claim, or
2. give the reasons we
require more time to process your claim. But, we must either approve or deny
your claim within 45 days after our requesting more time. |
|
|
F. In the event of a weather-related catastrophe or major natural
disaster, as defined by the Texas Department of Insurance, the
claim-handling deadlines as stated above are extended for an additional 15
days.
|
|
|
1. If we notify you that we
will pay your claim, or part of your claim, we must pay within 5 business
days after we notify you.
2. If payment of your claim
or part of your claim requires the performance of an act by you, we must pay
within 5 business days after the date you perform the act.
|
G. Loss Payment |
|
1. We will notify you in
writing of any initial offer to compromise or settle a claim against you
under the liability section of this policy. We will give you notice within
10 days after the date the offer is made.
2. We will notify you in
writing of any settlement of a claim against you under the liability section
of this policy. We will give you notice within 30 days after the date of the
settlement. |
H. Notice of Settlement of Liability
Claim |
|
A person seeking
Uninsured/Underinsured Motorists Coverage must also:
1. Promptly notify the police
if a hit and run driver is involved;
2. Promptly send us copies of
the legal papers if a suit is brought;
3. Take reasonable steps
after loss, at our expense, to protect damaged property from further loss;
and
4. Permit us to inspect and
appraise the damaged property before its repair or disposal.
|
Additional Duties
Uninsured Motorist Claims
Any person seeking UM/UIM benefits
must comply with these provisions. |
Additional Duties for Coverage For
Damage to Your Auto
A person seeking Coverage for Damage
to Your Auto must also:
1. Take reasonable steps
after loss to protect your covered auto and its equipment from
further loss. We will pay reasonable expenses incurred to do this;
2. Promptly notify the police
if your covered auto is stolen; and
3. Permit us to inspect and
appraise the damaged property before its repair or disposal. |
Physical Damage Claims
The insured must notify the police
if the car is stolen and comply with these provisions in order to collect
for damage to a covered auto.
|
|
Bankruptcy or insolvency of the
covered person shall not relieve us of any obligations under this policy.
|
|
|
A. This policy contains all
the agreements between you and us. Its terms may not be changed or waived
except by endorsement issued by us.
B. If a change requires a
premium adjustment, we will adjust the premium as of the effective date of
change in accordance with rules prescribed by the Texas Department of
Insurance or its successor. Changes made during the policy term that may
result in a premium increase or decrease include, but are not limited to,
changes in:
1. The number, type or use
classification of the insured autos;
2. Operators using insured
autos;
3. The place of principal
garaging of insured autos;
4. Coverage, deductible or
limits.
C. If this policy form is
revised to provide more coverage without additional premium charge, we will
automatically provide the additional coverage as of the date the revision is
effective.
D. We will compute the
premium at the rates in effect on each anniversary of the policy's inception
date for a policy written for more than a full year. |
Changes
Changes must be made by endorsement.
The "liberalization clause" applies to changes in the coverage form approved
by the Texas Department of Insurance with no additional premium charge. If
an amendatory endorsement is approved, the change applies whether or not the
endorsement is attached. |
|
A. No legal action may be
brought against us until there has been full compliance with all the terms
of the policy. In addition, under Liability Coverage, no legal action may be
brought against us until:
1. We agree in writing that
the
covered
person has an obligation to pay; or
2. The amount of that
obligation has been finally determined by judgment after trial.
B. No person or organization
has any right under this policy to bring us into any action to determine the
liability of a covered person. |
|
|
A. If we make a payment under
this policy and the person to or for whom payment was made has a right to
recover damages from another we shall be subrogated to that right. That
person shall do:
1. Whatever is necessary to
enable us to exercise our rights; and
2. Nothing after loss to
prejudice them.
(A release of the insurer of an
underinsured motor vehicle does not prejudice our rights.)
However, our rights in this
paragraph do not apply under Part D, against any person using
your covered
auto with a reasonable belief that that person is entitled to do so.
B. If we make a payment under
this policy and the person to or for whom payment is made recovers damages
from another, that person shall:
1. Hold in trust for us the
proceeds of the recovery; and
2. Reimburse us to the extent
of our payment. (However, we may not claim the amount recovered from an
insurer of any underinsured motor vehicle.) |
Our Right to Recover Payment
This is the "subrogation" clause.
The insured is permitted to waive this right against a third party if done
before the loss. The PIP coverage section specifically states that this
clause does not apply to PIP payments.
The insurance company has no right
to recover a Part D loss (Coverage
for Damage to Your Auto) from a permissive user of the vehicle,
regardless of their responsibility for the damages. |
|
A. This policy applies only
to accidents and losses which occur:
1. During the policy period
as shown in the Declarations; and
2. Within the policy
territory.
B. The policy territory
is:
1. The United States of
America, its territories or possessions;
2. Puerto Rico; or
3. Canada.
This policy also applies to loss to,
or accidents involving,
your covered
auto while being transported between their ports. |
Policy Period and Territory
The unendorsed policy does not apply
to accidents in Mexico. Many companies include limited
Mexico coverage
Endorsement 551 in their printed policy form. (See "Mexico
coverage" technical article)
See Technical Report:
What Is A Territory? |
|
Termination
A. Cancelation. This policy
may be canceled during the policy period as follows:
1. The named insured shown in
the Declarations may cancel by:
a. returning this policy to
us; or
b. giving us advance written
notice of the date cancelation is to take effect.
2. We may cancel by mailing
at least 10 days notice to the named insured shown in the Declarations at
the address shown in this policy.
3. After this policy is in
effect for 60 days, or if this is a renewal or continuation policy, we will
cancel only:
a. if you submit a fraudulent
claim; or
b. for nonpayment of premium;
or
c. if your driver's license
or motor vehicle registration or that of:
(1) any driver who lives with
you; or
(2) any driver who
customarily uses
your covered
auto
has been suspended or revoked.
However, we will not cancel if you consent to the attachment of an
endorsement eliminating coverage when your covered auto is being
operated by the driver whose license has been suspended or revoked.
4. We may not cancel this
policy based solely on the fact that you are an elected official.
|
A. This section
provides for a 10-day notice of cancellation by delivery or mail, but only
for limited reasons after the original policy has been in effect for 60
days. |
|
If we decide not to renew or
continue this policy, we will mail notice to the named insured shown in the
Declarations at the address shown in this policy. Notice will be mailed at
least 30 days before the end of the policy period. If the policy period is
other than 1 year, we will have the right not to renew or continue it only
at each anniversary of its original effective date. We will not refuse to
renew because of a covered person's age. We may not refuse to renew
this policy based solely on the fact that you are an elected official. |
B. The company must
give at least 30 days advance notice of nonrenewal. The company may not use
a covered person's age (young or old) as their reason for nonrenewal.
Texas law
specifies that moving the policyholder from one company within a group of
companies to another company does not trigger the requirement for written
notice of nonrenewal.
Additional TDI rules, not made a
part of the policy, prohibit nonrenewal based on
(1) certain types of claims, or
(2) the number of autos on the
policy, or
(3) the lack of "supporting"
business.
|
|
If, at any time, you obtain other
insurance on
your covered
auto, any similar insurance provided by this policy will terminate
as to that auto on the effective date of the other insurance.
If we offer to renew or continue and
you or your representative do not accept, this policy will automatically
terminate at the end of the current policy period. Failure to pay the
required renewal or continuation premium when due shall mean that you have
not accepted our offer. |
C. If renewal is
offered and renewal premium is requested, but not paid by the due date, the
policy automatically terminates at the end of current policy period. This
would apply even if the insured has already received a renewal declarations
page, but the renewal billing should state that the policy will
automatically terminate if the premium is not paid by the renewal date. |
|
1. We may deliver any notice
instead of mailing it. Proof of mailing of any notice shall be sufficient
proof of notice.
2. If this policy is
canceled, you may be entitled to a premium refund. If so, we will send you
the refund promptly. The premium refund, if any, will be computed prorata,
subject to the policy minimum premium. However, making or offering to make
the refund is not a condition of cancelation.
3. The effective date of
cancelation stated in the notice shall become the end of the policy period.
4. Any cancellation or
restriction of coverage made without your consent will be of no effect,
except as
a. provided for in this
Termination provision under:
(1) Cancelation;
(2) Nonrenewal.; or
(3) Automatic Termination;
or
b. required by the State
Board of Insurance. |
|
|
A. Your rights and duties
under this policy may not be assigned without our written consent. However,
if a named insured shown in the Declarations dies, coverage will be provided
for:
1. The surviving spouse if
resident in the same household at the time of death. Coverage applies to the
spouse as if a named insured shown in the Declarations;
2. The legal representative
of the deceased person as if a named insured shown in the Declarations. This
applies only with respect to the representative's legal responsibility to
maintain or use
your covered
auto.
B. Coverage will be provided
until the end of the policy period.
Note: Refer to medical payments
and/or Personal Injury Protection Coverages for Assignment of Benefits.
|
Transfer of Your Interest in
this Policy
Except in the case of death of the
named insured, an insurance company will generally not permit a change of
named insured.
The extension of coverage to the
legal representative after an insured's death only applies to the policy in
effect when the insured dies. When the policy expires, other insurance must
be arranged. A Texas appeals court ruled in 1990 that a policy renewed in
the name of a deceased person was not valid. |
|
If this policy and any other auto
insurance policy issued to you by us apply to the same accident, the maximum
limit of our liability under all the policies shall not exceed the highest
applicable limit of liability under one policy. |
Two or More Auto Policies
Some companies issue a separate
policy for each covered auto or more than one policy for a large number of
autos. If both policies apply to a claim, such as a liability or PIP claim
arising out of the use of a nonowned auto, only one policy will pay the
claim. |
