PERSONAL AUTO INSURANCE POLICY
An automobile insurance policy, or
personal auto policy (PAP) as it is commonly referred to today,
consists of several types of insurance.
Some are mandatory and
some are optional,
depending on state law.
You can tailor the amount of coverage and the cost for each type of insurance, to fit your particular
The PAP is actually one of the more complex insurance contracts because it provides coverage against
different types of losses and circumstances.
types of losses
legal liability, injury to the
insured or members of his/her family, and damage to or loss of the automobile.
The PAP is also designed
protection for the owner when
someone else is operating his/her auto,
or when the
insured is driving someone else’s car.
(p. 113-140) and
(p. 188-201) of your text should be read together, because
is essentially a “tour guide” of the personal auto policy in
As your author notes at
the beginning of
auto policy in
issued by the
Insurance Services Office
, an organization
owned by the insurance industry to pool data, to
publish standardized insurance
contracts, and to perform other services for the industry.
Recall from our prior lecture why functions such
as pooling of industry data and the issue of standardized contracts are needed:
to better analyze and
forecast losses and to better price insurance products to reduce the chances of insurer insolvency.
are likely to have as much, or more, practical importance to you as any other
two chapters that you have read in your studies at LSU.
Because most of you probably own or drive
a car and because most people, not just students but parents also, do not read their insurance contracts and
know important details contained within them.
does a nice job of explaining the auto policy
contract provisions in
in sequence, and provides numerous examples
of what some of the more
ambiguous provisions really mean.
Discussed below are your lecture notes for
For the sake of brevity, text quotations
below for the auto policy are from
, therefore if
you want to read the specific
language of the sample ISO auto policy, refer to
However, for all
insurance policies that we
will discuss this semester,
always read your
auto, home, or other insurance policy, because slight
variations in policy terms may exist for different insurers and for different states in which you may
“Liability coverage (Part A) is the
most important part of the PAP.
protects a covered person against a
suit or claim arising out of the
of a covered vehicle.” (Chapter 22, p. 115).
Who is covered under the policy