Personal Auto Policy (PAP) Explained

Your Personal Auto Policy (or What on Earth is All That Rigamarole?)

When you think “PAP,” try to resist the mental image of a hillbilly grandfather and instead think “Personal Auto Policy,” – the contract that spells out the rights, obligations, and everything else agreed upon between your insurer and you. A PAP contains the following sections: Declarations, Insuring Agreement, Definitions, Conditions, Exclusions and Limitations. Actually understanding what these sections mean can only help you; not understanding them can . . . well, we won’t even go there . . .

Easy as ABC (Almost) To break your PAP down into understandable terms, we’ve taken each section and (hopefully) written it to where you don’t have to be a rocket scientist or have a degree in Insurance Lingo to decipher it.

The Declarations section lists all pertinent information about your PAP. This includes:

• the year, make, and model of your car
• its VIN (vehicle identification number)
• the name of all insured (you, your spouse, any of your children who drive the vehicle, or anyone else you’ve given permission to drive your vehicle)
• the effective policy dates
• the coverage types and limits
• the cost of the policy (that darn premium)

If you use your car for business or pleasure, that information is sometimes listed in this section as well as the name of your lender if your car is financed so that if something happens to the vehicle, they will get reimbursed.

The Nitty Gritty

Next comes the Insuring Agreement, which is the heart and soul of the policy. This is where what you are paying for is spelled-out in detail. The type and extent of each kind of coverage along with who is covered will be encompassed, and although this is the long, complicated part, it’s the most critical portion of your PAP, so read it and re-read it, then read it again to make sure you completely understand what it says. If there is something you just can’t seem to get your mind around, call or e-mail the insurance company and request clarification.

Define “Jargon,” Please

The Definitions section is where all that mumbo-jumbo is defined in human language that even your slow cousin, Abner, should be able to understand. Hopefully, this section will eliminate -- or at least cut down on the possibility -- of any misunderstandings or confusion between what you think they mean and what they really mean. If worst comes to worst, and you find yourself in a lawsuit, be aware that the court will first turn to the Definitions section to determine the intent of the insurer. If the meaning of a term is not expressly defined, the court go with the term's normal and customary usage, usually citing dictionary references in its ruling.

You Mean I Have to Do Something, Too?

Written in the Conditions portion of your PAP are procedures explaining what you are obligated to do in the event you need to file a claim, such as contacting the insurance company, getting a police report, and even canceling the policy, if that is on your mind.

What You DON’T Get

Exclusions and Limitations are the insurance company’s way of protecting itself from policy abuse and to clarify to the nth degree that for which you can NOT count on being covered. One would think it should go without saying that if someone intentionally caused damage or injury to his/her vehicle, the insurance company would not cover it, but you know some people – you’ve just got to spell it out in black and white. The Exclusions and Limitations section defines exactly who won’t be covered, what won’t be covered, and when who and what won’t be covered under your policy. You really want to make sure you “get” this part so you won’t be going around thinking you’re covered for something somewhere sometime when, in reality, it just ain't so.

Wrapping It Up

That’s about it for what all is included in your PAP, so if you haven’t confused it with the old guy you saw smoking a corncob pipe on your vacation to the Ozarks last year, you ought to have a pretty good idea of what you’re getting into with a Personal Auto Policy. Although some policies may have minor variations, a PAP is basically a PAP is basically a PAP, so rest assured: If you can understand one PAP, you can understand them all – unless they’ve got a corncob pipe in their mouth.

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