Casualty Auto Insurance
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end of a policy term.
when coverage on an expiring policy is extended for an additional policy term.
ending coverage through cancellation, expiration, or nonrenewal.
terminating coverage through written notice.
occurs at the end of the policy period when the policyholder does not renew a policy and fails to pay the renewal premium when due. Also occurs when the named insured obtains other insurance on a covered auto.
PAP Cancellation Circumstances
- named insured returns policy with written notice and receives unearned premium
- right of insurer within 60 days- nonpayment (10 day notice) and other reasons.
- right of insurer over 60 days or renewal- nonpayment; suspension or revocation of drivers license; misrepresentation.
PAP Nonrenewal Provision
requires the insurer to notify the named insured at least 20 days before the current policy expires.
PAP Nonrenewal Time Frame
- If policy period is less than 6 months, the insurer has the right to nonrenew only after the first six months are completed.
- If six months or longer, but less than 1 year, can nonrenew after 12 months completed.
- If one year or longer, can nonrenew at each anniversary of its original effective date.
any form of insurance that is required by law.
Minimum Auto Liability Limits
- per person/
- per accident for bodily injury/
- per accident for property damage
Uninsured Motorist (UM) Coverage
Uninsured motorists (UM) coverage is designed to protect insureds from financially irresponsible drivers who have not purchased auto liability insurance and do not have the financial resources to compensate any people they injure through their negligence in an auto accident. Uninsured motorists coverage is often coupled with underinsured motorists (UIM) coverage.
Underinsured Motorist (UIM) Coverage
Underinsured motorists (UIM) coverage provides protection for bodily injury—and in some states, property damage—suffered by an insured when an accident is caused by a motorist who is not sufficiently insured—that is, the negligent motorist’s limits of insurance are lower than the UM/UIM limits carried by the insured.
No-Fault Auto Insurance
No-fault auto insurance is intended to reduce auto liability coverage costs (bodily injury liability, in particular) and related litigation costs. In short, its goal is to create a better system to compensate persons involved in auto accidents.
Under a no-fault system, an injured insured recovers damages resulting from auto accidents from their own insurer. Fault is not a consideration in determining whether coverage applies.
No-fault does not compensate for general damages like pain and suffering or disfigurement. Most reimburse for bodily injury and not property damage.
- The tort threshold is the measure of the minimum injury severity which, once reached, allows the insured to sue the at-fault party for noneconomic damages (e.g., pain and suffering).
- There are two types of tort threshold-
- Verbal threshold—Expressed in definitions of the seriousness of injury, such as "serious or permanent" injury.
- Monetary threshold—Expressed as dollars of medical costs incurred.
Other Regulation of Auto Insurance Policies
- Aftermarket Crash Parts
- Residency Statements
- Arbitration- deals with damages and entitlement to damages.
- Notice of Rental Car Coverage
- Constructive Total Loss- when the cost of repairing the damaged property exceeds the property's pre-loss value. Typically when repairs cost 75-80% of the vehicle's actual cash value.
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