XII.  PERSONAL AUTO INSURANCE
RATING MANUAL INFORMATION

 

This description and outline of a Personal Automobile Insurance Rating Manual is to be used only for illustrative purposes.  Where premiums or rates are quoted, they are only examples and are not to be quoted or used for any other purpose other than for education and training. 

 

Some of the more confusing parts of this typical manual, including such items as “Code Numbers” and “Symbols” are used only for training purposes.  If the student is in a position to rate insurance policies, these and other technical terms will be well understood.  In any event, most people never concern themselves with these technicalities, as the computer will perform the functions described in the Manual. 

 

One should always remember the very applicable adage when entering data into a computer to arrive at the proper premiums:  “Garbage in – Garbage out.”  Reviewing the Rating Manual will help in correctly rating by computer, as the student should at least understand why certain DATA is entered, and will be aware of why the computer asks for the information.  NOTHING is unimportant in entering or reporting information to the insurance company for the purpose of determining the premium. 

 

The Rating Manual is (was) usually presented in a manner very similar to that described as follows.  Basic questions will be asked at various intervals so that the purpose of the Manual information can be absorbed.  Some of it may appear to be (and actually is) repetitive from earlier discussions of the provisions of the insurance contract, especially the first section of the Manual.  However, there may be differences that do not seem important, but are quite important in this discussion of rates and premium calculations. 

 

The first section of a Rate Manual would be typically similar to the following:

1 . Definitions

A. 1. A private passenger auto is a four wheel motor vehicle, other than a truck type, owned or leased under contract for a continuous period of at least six months, and

a. not used as a public or livery conveyance for passengers,

b. not rented to others.

2. A motor vehicle that is a pickup or van shall be considered a private passenger auto, if

a. it is owned by an individual or by a husband and wife who are residents of the same household;

b. has a Gross Vehicle Weight of less than 10,000 lbs.; and

c. is not used for the delivery or transpor­tation of goods or materials unless such use is:

1) incidental to the insured's business of installing, maintaining or repairing furnishings or equipment, or

(2) for farming or ranching.

A pickup or van used in the business of the United States Government, by an employee of the Government, shall be considered a private passenger auto only if:

a. it meets the conditions in a., b. and above c.; and

b. coverage is limited in accordance with the federal employees using autos in government business endorsement

3. A motor vehicle owned by a farm family co-partnership, or farm family corporation shall be considered a private passenger auto owned by two or more relatives who are residents of the same household if:

a. it is principally garaged on a farm or ranch, and

b. it otherwise meets the definitions in 1. and 2. above.

 

Generally, private passenger automobiles are four-wheel vehicles which are not used to carry passengers for a fee (livery) or rented to others.  Pickups and vans are treated as private passenger automobiles if they are less than 10,000 in weight and aren’t used in the business, except for farming.

 

B. AUTO as used in the manual refers to a private passenger auto or a vehicle considered as a private passenger auto.

 

C. LIABILITY as used in the manual refers only to Bodily Injury and Property Damage Coverages.

 

D. SINGLE LIMIT LIABILITY as used in the manual refers to one limit of liability that covers both Bodily Injury and Property Damage.

Liability and Single Limit Liability as used for rating purposes are not necessarily the same as the “legal” definition, therefore they must be defined for these purposes.

 

E. COMPREHENSIVE COVERAGE as used in the manual refers to other than collision damage to a motor vehicle.

 

F. OWNED as used in the manual includes an auto leased under contract for a continuous period of at least six months. If an auto lease contract requires the lessee to provide primary insurance for the lessor, attach the additional insured‑lessor endorsement

 

The :”Eligibility” of a Personal Auto Policy is set forth in the rating manual to describe the functions of the PAP and when it should apply.  The Manual would be similar to the following:

2. PERSONAL AUTO POLICY ‑ ELIGIBILITY

A. A Personal Auto Policy shall be used to afford coverage to private passenger autos and motor vehicles considered as private passenger autos in Rule 1., if:

1. They are written on a specified auto basis, and

2. They are owned by an individual or by a husband and wife who are residents in the same household.

B. A Personal Auto Policy shall be used to afford coverage to private passenger autos that are owned jointly by two or more:

1. relatives other than husband and wife; or

2. resident individuals;  if

    (i) They are written on a specified auto basis, and

    (ii) Coverage is limited in accordance with the miscellaneous type vehicle
                      endorsement.

C. A Personal Auto Policy shall be used to afford coverage to motorcycles, motor homes, golf carts or other similar type vehicles and snowmobiles if:

1. They are written on a specified vehicle basis,

2. They are owned by an individual, by a husband and wife who are residents of the same household, or by two or more resident relatives, and

3. Coverage is limited in accordance with the miscellaneous type vehicle or snowmobile endorsement.

D. A Personal Auto Policy shall be used to afford coverage to a named individual who does not own an auto. The named non‑owner coverage endorsement must be attached.

Exception Exposures in A., B. or C. above may be written under a commercial auto policy when combined with a commercial risk.

 

This subject of eligibility has been covered early in the text, with no difference between the policy and the rating manual.  One additional factor:  If two unrelated individuals reside together, a Joint Ownership Endorsement is attached to the policy.  Also, a PAP can be issued to cover an auto owned by relatives other than husband and wife.

 

3. PREMIUM DETERMINATION

 

The Classification of automobiles is of utmost importance in determining the PAP premiums.  The definitions in the Manual, as shown below, are detailed as to use, operators, and to the automobile itself.  The referrals to the “rules” below are covered in detail later, and the first section is general instructions as to determination of their classification.

 

Single Limit Liability, or Bodily Injury and Property Damage Liability; Medical Payments; Comprehensive and Collision premiums are determined as follows:

A.  Refer to the Classification Rule to determine the applicable Classification, Rating Factor and Statistical Code.

 

B  Refer to the Model Year/Age Group Rule to determine the model year/age of the auto and refer to the Symbol and Identification Section for the appropriate symbol of the auto.

When model year is used in rating and the rates for a model year are not displayed in the rate pages, use the rates shown for the latest model year.

 

C.  Refer to Territory Definitions to determine the territorial schedule code number for the location where the auto is principally garaged.

Note: When a risk is statutorily required to have, or is eligible for, a coverage that is not available in the territory of principal garaging, use the registration address to determine the territory for that coverage.

 

D.  Refer to the State Rate Sheets to determine base rates for the desired coverage for the appropriate territory.

 

E.  For Stated Amount Comprehensive multiply the rate by the limit of liability to determine the Base Premium.

 

F.  The premium for each coverage is determined by multiplying the base rate by the appropriate rating factor and adding the appropriate Expense Fees according to the following rule:

 

EXPENSE FEES

 

Expenses are determined by localities and are shown on State Rate pages.  Because of the detail and the volume of information on State Rate pages, they are not shown in this text.  Expenses are added to the Base Rate, and importantly, are not affected by any rating plans or rules.  The Expense Factor is intended to pay for, or partially pay for, the administrative cost of issuing the policy, and has no effect on any other part of the rate making procedure.  Theoretically, it costs no more to issue a single limit, minimum liability limit policy on an old beat-up pickup, than it would for a high-limit policy covering a new Mercedes. For illustrative purposes, the State Section of the Rating Manual consist of several factors:

 

• The State is divided into Territories, each Territory is assigned a code number.  The rates are then shown in tables that show the rates for
• Single Limit Liability
• Bodily Injury Limit
• Property Damage in thousands (000)
• Medical Payments
• Deductible Comprehensive (by Deductible amounts, e.g. $100, 200, $300, etc.) and by Age Group
• Deductible Collision, by Age Group and “Symbol” Group.

 

• Rates for Miscellaneous coverage, such as Uninsured Motorists Coverage, Underinsured Motorists Coverage, and Non-owners rates.

 

• Rates for Increased Limits, for increasing the Single Limit BI, BI Liability, and PD.

 

• Miscellaneous types, such as trailers, etc.

 

• Territory Definitions

 

• Breaks down the state by population centers, Cities and more heavily populated Counties, and assigned a Territorial Schedule and Code for rating purposes.
• List of important Cities and Towns
• Symbol and Identification Section.  This lists information on all vehicles, by Model and Body type, Rating Symbol and Code, VIN (Vehicle Identification Number), and the Engine displacement and the number of cylinders.

 

The Rating Manual continues to show the applicability of Expense Fees:

 

1.  Refer to State Rate pages to determine the applicable Expense Fees.

2.  Expense Fees are added separately to the premium for the Single Limit Liability or Bodily Injury and Property Damage Liability, Comprehensive, Collision and No‑Fault Coverages applying to each auto.

3.  Expense Fees are not subject to modification by the provisions of any rating plans or other rating rules (e.g., Classifications, Safe Driver Insurance Plan, Increased Limits factors, Physical Damage Deductible factors, etc.).

4.  Expense Fees are subject to the Cancellation and Suspension provisions of this manual.

5.  Expense Fees apply to the rates for Miscellaneous Types vehicles as follows:

    a. Motorcycles, Go Carts and Similar Vehicles

      Add the expense fees to the B.I., P.D., Comprehensive, Collision and, if applicable, No‑Fault' rates that  apply.

    b. Snowmobiles and All-Terrain Vehicles, Dune Buggies, Golf carts and Antique Autos

      Add the expense fees to the Liability rates and, if applicable, No‑Fault rates.

    c. Classic Autos, Electric Autos and Motor Homes

      Add the expense fees to the Liability, Physical Damage and, if applicable, No-Fault rates.

    d.  Recreational Trailers

      Add the expense fees to the Comprehensive and Collision rate.

G. When a surcharge is applicable under the Certified Risk ‑ Financial Responsibility Laws Rule, the surcharge is to be applied to the liability premium determined by the foregoing provisions.

 

4. CLASSIFICATIONS

 

This section actually breaks down the information discussed above.  For an illustration, the following categories are derived for rating purposes.

 

This rule does not apply to risks rated in accordance with the Miscellaneous Types Rule unless otherwise specified.

Refer to Section C below for definitions of terms used in this rule.

A. Autos owned by an individual, or owned jointly by two or more relatives or resident individuals are classified as follows:

1. Primary Classification

a. Classify the auto according to the age, sex and marital status of the operators, the use of the auto and the eligibility of youthful operators for the Driver Training and/ or Good Student classes, and

b. Determine the applicable factor from the Primary Rating Factor tables.

2. Secondary Classification

a.  Refer to the Symbol and Identification Section to determine if the auto is:

(1) standard performance,

(2) intermediate performance,

(3) high performance, or

(4) sports.

b. Determine if the auto is:

(1) a single car, or

(2) part of a multi‑car risk.

c. Refer to the Safe Driver Insurance Plan, to classify operators according to the provisions of the Plan.

d Refer to the Secondary Rating Factor table to determine the appropriate factor to be added to, or subtracted from the Primary Rating Factor.

3.  Classification Changes

Compute premium adjustments on a pro-rata basis when changes in Primary and Secondary Rating Classifications are made. This includes the addition or deletion of an operator during the policy term.

 

EXCEPTIONS.

1. A policy shall not be changed mid‑term because of the attained age of an operator of the auto.

2. A policy shall not be changed mid‑term to affect a change in the Driving Record Sub-Classification.

  Policies exceeding one year:

• The attained age of an operator shall be recognized during the 2nd and 3rd annual policy periods or the portion of these years affected.
• A policy shall not be changed mid‑term solely due to a change in symbol assignment based on a review of loss experience.

 

B. Private Passenger Autos owned by corporations, co‑partnerships, or unincorporated associations and covered by a Personal Auto Policy.

• Corporations, co‑partnerships or unincorporated associations owning fewer than five motor vehicles:
• An owned private passenger auto principally furnished to a specified individual shall be classified and rated as if owned by that indi­vidual in accordance with Rule 4.A., provided that auto is not used for business purposes. This rule does not apply to autos which are eligible for rating as van pools in the Commercial Lines Manual ‑ Division 1 ‑ Automobile.
• Farm family co‑partnerships or farm family corporations:

 

An owned private passenger auto principally garaged on a farm or ranch shall be classified and rated in accordance with Rule 4.

provided that vehicle is:

a. experience rated, and

b. not used in an occupation other than farming or ranching, or

c. used only in driving to or from work.

 

 

The Rating Manual will then outline the Classifications based on Use of the vehicles.

 

1. Use Classifications

•   BUSINESS USE means that the use of the auto is required by or customarily in­volved in the duties of the applicant or any other person customarily operating the auto, in an occupation, profession or business, other than going to or from the principal place of occupation, profession or business.
• FARM USE means the auto is principally garaged on a farm or ranch, and
• it is not customarily used in going to or from work other than farming or ranching, or driving to or from school, and

(2) it is not customarily used in any occupation other than farming or ranching.

•   PLEASURE USE means:

(1) no BUSINESS USE.

(2) personal use including driving to or from work or school

(a) less than 3 road miles one way; and

(b) 3 or more, but less than 15, road miles one way for not more than 2 days per week or not  more than 2 weeks in any 5 week period.

• WORK LESS THAN 15 MILES means:
• no BUSINESS USE.
• personal use including driving to or from work or school
• 3 or more, but less than 15, road miles one way if such usage is more than 2 days per week or more than 2 weeks per 5 week period; or
• 15 or more road miles one way, for not more than 2 days per week or not more than 2 weeks in any 5 week period.

   e. WORK 15 OR MORE MILES means:

•  no BUSINESS USE.
•  personal use including driving to or from work or school 15 or more road miles one way more than 2 days per week or more than 2 weeks in any 5 week period.

f. an auto driven part way to or from work or school, such as to a railroad or bus depot, whether or not the auto is parked at the depot during the day, shall be considered as driving to or from work or school.

 

As stated earlier, premiums are determined by multiplying the base rates by an applicable rating factor.  This procedure applies to all coverages except Uninsured Motorists Coverage.  For illustrative purposes only, the following calculations would be made:

Coverage                         Base Premium               Total Factor      Premium

BI/PD Liability                              $180                1.05                      $189

Medical Payments                          $  12                1.05                     $  12 (whole dollar)

Uninsured Motorists                                                                         $  18

Comprehensive                               $  78                1.05                     $  82 (whole dollar)

Collision            $  96                                            1.05                     $191 (whole dollar)

 

Total Premium:                                                                                   $492

 

 

Rating Manual LIABILITY COVERAGE ONLY

 

As described earlier, Automobile Liability consists of Bodily Injury Liability and Property Damage Liability (BI & PD).  The typical PAP has a “single limit of liability”, or  “combined single limit” which is the maximum amount that the insurance company has to pay for all damages as the result of a single accident, regardless of the number of persons injured, and regardless of the amount of bodily injury as compared to property damage.

Some companies do allow a “split limit of liability”, which allows the policyowner to pick a different amount for Bodily Injury and for Property Damage.  As illustrated earlier in the text, this is illustrated by using three number separated by a slash (e.g. 50/100/200)

 

The Manual would continue into “Classification” by using other factors, as outlined below;

 

• An auto used in the business of the U.S. Government by one of its employees may be classified and rated as PLEASURE USE, WORK LESS THAN 15 MILES or WORK 15 OR MORE MILES when the federal employees using autos in government business endorsement is used to limit coverage.
• Age, Sex and Marital Status Classifications
• YOUTHFUL OPERATOR means an applicant or any other operator resident in the same household as the applicant, who customarily operates the auto, and is one of the following:
• YOUTHFUL UNMARRIED FEMALE OPERATOR ‑ unmarried female under 25 years of age;
• YOUTHFUL MARRIED MALE OPERATOR ‑ married male under 25 years of age;
• YOUTHFUL UNMARRIED MALE OPERATOR ‑ unmarried male under 25 years of age who is not an owner or principal operator;
• YOUTHFUL UNMARRIED MALE OWNER OR PRINCIPAL OPERATOR ‑unmarried male under 30 years of age who is an owner or principal operator.

a. AGE means the age attained on the last birthday.

b. MARRIED means a married person living with his or her spouse and includes a person widowed, divorced or legally separated only if such person has custody of one or more resident children.

c. RESIDENT means anyone residing in the same household.

 

EXCEPTIONS.

• A person in active military service with the armed forces of the United States of America is not considered a resident in the applicant's household unless this person customarily operates the auto.
• If a YOUTHFUL UNMARRIED FEMALE OPERATOR or a YOUTHFUL UNMARRIED MALE OPERATOR is a student residing at an educational institution over 100 road‑miles from the auto's place of principal garaging, the auto is rated as if the student is MARRIED.

Note: For the purpose of Exception 2, if the rating factor for a married youthful operator is greater than the factor for an unmarried youthful operator, use the lower factor and corresponding statistical code.

 

 

 

• Driver Training

 

Drivers Training is an important part of the rating procedure.  Insurance companies have always been in the forefront in supporting and recommending Drivers Training, as statistics show overwhelmingly that those drivers who have completed a Drivers Training course have fewer accidents and a much lower ultimate loss ratio, than those who were “taught” by their parents or friends. 

Drivers Training has become “big business” in many areas, although the majority of those taking Drivers Training do so at their High School or Community College.  As with all things, some courses are better than others, so the industry learned early that there should be rather strict requirements for a Drivers Training course before any premium discounts can be offered for insurance policies.  The following information from the Rating Manual indicates the concern that Drivers Training should be adequate to support the premium discount.

 

The applicable Driver Training Classification applies to each Youthful Operator under 21 years of age where "Satisfactory Evidence" is presented that such operator has successfully completed a driver education course meeting the following standards:

• The course included a minimum of 30 clock hours of classroom instruction plus a minimum of 6 clock hours of actual driving experience per student. These requirements may be met in either of the following ways:
• A minimum of 6 clock hours per student of actual driving experience exclusive of observation time in the car.
• In this case, part of the required 30 clock hours of classroom instruction can be met by the time spent in an approved simulated practice driving trainer.
• Use of the driving trainer must be authorized by the State Department of Education or other responsible educational agency.
• A minimum of 3 clock hours per student of actual driving experience exclusive of

Observation‑time in the car, and

•   A minimum of 12 clock hours per student in an approved practice driving trainer.
• In this case only time spent in excess of 12 clock hours may be counted as part of the required 30 clock hours of classroom instruction.
• Use of the driving trainer must be authorized by the State Department Education or other responsible educational agency.
• The course was conducted by instructors certified by the State Department Education or other responsible educational agency, and
• The course was conducted by a recognized secondary school, college or university and had the approval of the State Department of Education or other responsible educational agency, or
• The course was conducted by  schools, and such course and school with the approval and supervision of the State Department of Education or other responsible educational agency, or
• The course was conducted by a commercial driving school under the jurisdiction of the Motor Vehicle Department provided that by Statute or Regulations such school meets the same requirements as schools having official sanction from the responsible state education agency.
• "Satisfactory Evidence" is a certificate signed by a school official certifying the fulfillment of the requirements in (6), and (7), or (8) above.

Most companies offer discounts for “Good Students”, and where applicable, the Manual would providing rating instructions similar to the following:

 

4. Good Student

The applicable Good Student Classification applies provided:

a.  The owner or operator is ‑

(1) at least 16 years of age, and

(2) a full- time high school, college or university student.

b. A certified statement from a school official is presented to the Company on each anniversary date of the policy indicating that the student has met one of the following requirements during the immediately preceding school semester:

(1) is in the upper 20% of his/her class scholastically, or

(2) maintains a "B" average, or its equivalent.

If the letter grading system can not be averaged then no grade can be below "B."

(3) when in a school maintaining a numerical grade, must have at least a 3 in a 4, 3, 2, 1 point system or its equivalent

(4) student is included in a "Dean's List," "Honor Roll" or comparable list indicating scholastic achievement

A classification change resulting from a change in the scholastic standing of the student can not be effected between anniversary dates of the policy.

 

For certain situations involving Good Student or Drivers Training, the Manual looks at whether there are more than one car in the family, or if the number of youthful drivers exceeds the number of autos insured, situations where there are more than one car, etc.  The provisions would be similar to the following:

 

5. Single Car Risks

a. If the number of youthful operators exceeds the number of autos, the Youthful Operator Classifications with the highest Primary Rating Factors apply. In determining such classifications any Driver Training and/or Good Student qualification shall apply.

b. Multi‑Car Risks

(1) The applicable Multi‑Car Rating Factor applies if more than one private passenger auto is owned by an individual or owned jointly by two or more relatives or resident individuals, and two or more such autos are insured in same company for any of the following coverages:

single limit liability, bodily injury liability, property damage liability, medical payments, no‑fault, comprehensive or collision insurance.

(2) The applicable "Youthful Operator" Classifications shall be applied as follows:

Determine the number of Youthful Operators and the Primary Rating Factor for each at the Pleasure Use Classification.

(a) If there are more cars than Youthful Operators, or an equal number of cars and Youthful Operators, assign operators to cars as follows:

(i) Each principal Youthful Operator to the car principally operated.

(ii) Remaining youthful Operators to remaining cars in the order of highest rated Youthful Operator to the car with the highest Total Base Premium without regard to the cars operated.

(iii) Any remaining cars at the appropriate No Youthful Operator classification.

(b) If there are more Youthful Operators than cars, assign Youthful Operators to cars as follows:

Select the Youthful Operators with the highest Pleasure Use rating factors equal to the number of cars.

Of those selected, assign any principal operators to the cars they principally operate.

Of those selected and remaining after principal operator assignment, assign operators to cars in the order of highest rated Youthful Operator to the car with the highest Total Base Premium.

After assigning Youthful Operators to cars on the basis of the primary Pleasure Use factors, each factor must be adjusted for the actual car use before determining and applying the Secondary Rating Factor.

(3) If the TOTAL BASE PREMIUM is the Same for each car, the classification for any youthful operator who is not the principal operator of any of the autos is applied to the auto with the lowest rated use classification.

TOTAL BASE PREMIUM is the sum of the base premiums for single limit liability or bodily injury and property damage liability, medical payments, no‑fault, comprehensive and collision coverages that apply to the auto.

(4) If all operators in the household are age 65 or over, the "Principal Operator Age 65 or Over" classification applies to all autos.

If there are operators in the household under age 65, apply the "Principal Operator Age 65 or Over" classification to the auto principally operated by the Age 65 or Over operator, unless a Youthful Operator classification is applicable. The age of the operator shall be disregarded for the purpose of rating autos in excess of the number of Age 65 or Over operators.

 

Many of the newer vehicles produced today have anti-theft devices, from burglar-proof locks, to devices that will notify the policy as to the location of the car in case the car is stolen.  The satellite technology in the police-notification system is so new that manuals don’t seem to give it a special consideration, but it will be taken into consideration soon as the anti-theft device becomes more popular (and less expensive).

 

6. Vehicles Equipped With Anti‑Theft Devices

These discounts apply to comprehensive coverage only. To qualify, the vehicle must be equipped with:

a. a hood lock which can be released only from inside the vehicle, and

b. a device meeting the criteria of either paragraph 1. or 2. below.

If a vehicle is equipped with more than one qualifying device, only the single highest discount shall apply.

Refer to Company for required evidence of installation of anti‑theft devices meeting the following criteria prior to granting a discount.

I. Alarm ONLY (Cov. Code 1) and Active Disabling Devices (Cov. Code 2)

A 5% discount on Comprehensive Coverage shall be afforded on vehicles equipped with

(1) alarm only devices which sound an audible alarm that can be heard at a distance of at least 300 feet for a minimum of three minutes, or (2) active disabling devices which disable the vehicle by making the fuel, ignition or starting system inoperative. A disabling device is categorized as active if a separate manual step IS required to engage the device.

(2) Passive Disabling Devices (Cov. Code 3)

A 15% discount on Comprehensive Coverage shall be afforded on vehicles equipped with passive disabling devices which disable the vehicle by making the fuel, ignition or starting system inoperative. A disabling device is categorized as passive if a separate manual step is NOT required to engage the device.

Seat belts and Shoulder straps are installed in all newer vehicles by law.  However, there has been some provisions for a discount for “passive restraints.”  

 

7. Passive Restraint Discount

The following discounts apply to Medical Payments and/or any No Fault Coverage only. To qualify, the private passenger auto must be equipped with a factory installed automatic occupant restraint, conforming to the federal crash protection requirements, and meeting the criteria of either paragraph a. or b. below:

a.  20% discount shall be afforded when the restraint is installed in the driver‑side only position.

b. 30% discount shall be afforded when the restraints are installed in both front outboard seat positions.

8. Panel trucks, pickups and vans

a.  Liability and Physical Damage: Rate as private passenger.  For non‑symbolized pickups, determine a symbol based on original cost new from the tables on page 1 of the Symbol and Identification Section.

b. When a pickup is used to transport a non‑permanently attached camper body, or to transport a camper body or cover with no facilities for cooking and sleeping:

(1) Add the cost of the camper body or cover to the cost of the pickup and determine a symbol from the tables on page 1 of the Symbol and Identification Section.

(2) Rate according to Paragraph a.

c. When a pickup is used to transport a permanently attached camper body with facilities for cooking and sleeping, refer to the Motor Homes Section of the Miscellaneous Types Rule.

 

5. SAFE DRIVER INSURANCE PLAN (SDIP)

SECTION I

 

The experience of insurance companies varies, as described earlier, so that various methods have been initiated to become more competitive for the “Good Driver.”  The insurance companies’ statistics show that if a person has a history of being a “safe driver” (as defined in this section of the Manual), the likelihood is that they will continue to be Safe Drivers. 

 

Using a “point system”, which is also used by most state Motor Vehicle Departments, allows the “Safe Driver” to make a mistake, and still be eligible for the Safe Driver program, depending upon the severity of the accident, the culpability of the insured, etc. 

 

Another important factor is the usage of the automobile in the determination of who is a “Safe Driver.”  This is the “exposure” of the auto.  Obviously, a person could be a Safe Driver if they only used their car 3 or 3 times a month to go to the grocery store, while that same person driving a car 50 to 100 miles a day in downtown Chicago (or Atlanta, or Jacksonville, etc.) would have to have a full-time, on-premises, Guardian Angel to have the same driving record as the person who seldom drove. 

 

Experience is another factor, because an inexperienced driver would be more likely to “panic” in a tight traffic situation, whereas an experienced driver would automatically (it is hoped) make the right decisions.  If Peter has never had an accident, or a ticket, and drives to work each day, a distance of 3 miles – and annual mileage is less than 12,000 miles – in his one year-old Ford Taurus (the safest car in its category).  He lives and keeps his car garaged in an upper-middle income area which is a gated community with security guards 24 hours a day.  He is active in his church and has never been known to drink, even socially.  However, he has only been driving for a year as he immigrated to the United States from England, where he did not drive, 2 years ago, and is now 26 years old.

 

The fact that he is inexperienced offsets the positive factors, however according to the Manual, he would simply be assigned one point, and his rates would be higher than one with more experience.  (Note: To receive full benefits (no points) the insured must have driven for 3 years).

 

The SDIP applies to policies written in companies authorizing its use. For companies electing not to use the Plan see Section 11 of this Rule.

When SDIP is used it is to be applied to all eligible autos.

A. Eligibility

An auto is eligible for rating under this Plan if it is:

1. Owned by an individual or owned jointly by two or more relatives or resident individuals.

2. Furnished to an individual by a corporation, partnership or unincorporated association owning less than 5 motor vehicles and not used for business purposes.

3. Owned by a family partnership or family corporation, provided the vehicle is:

a. garaged on a farm or ranch; and

b. not rated as part of a fleet; and

c. not used in any occupation other than farming or ranching.

 

EXCEPTIONS:

1. The SDIP does not apply to an auto that is used in the business of driver training.

2. The SDIP does not apply to policies written for a term in excess of 12 months unless such policy provides for an annual adjustment of premium.

For a private passenger auto not eligible for the Plan add 0.20 to the Rating Factor otherwise applicable. Refer to Statistical Plan for codes.

B. Definitions

1. Driving Record Points

Convictions

Points shall be assigned for convictions during the experience period for motor vehicle violations of the applicant or any other currently resident operator as follows:

(1) Three points are assigned for conviction of:

(a) driving while intoxicated or under the influence of drugs; or

(b) failure to stop and report when involved in an accident; or

(c) homicide or assault arising out of the operation of a motor vehicle; or

(d) driving while license is suspended or revoked.

(2) Two points are assigned for the accumulation of points under a State Point System or a series of convictions requiring the filing of evidence of Financial Responsibility under any Financial Responsibility Law as of the effective date of the policy.

(3) One point is assigned for conviction of any other moving traffic violation resulting in:

(a) suspension or revocation operator's license, or

(b) the filing of evidence of financial responsibility under any Financial Responsibility Law required the effective date of the policy

C. Accidents

Points shall be assigned for each accident that occurred during the experience period, involving the applicant or any current resident operator, while operating an auto.

(1) One point is assigned for each auto accident that results in:

(a) bodily injury, or death; or

(b) total damage to all property including his or her own in excess of $300.

(2) One point is assigned if, during the experience period there were two or more accidents each of which resulted in damage to property but have not been assigned a point under (1) above.

 

EXCEPTIONS

1. No points are assigned for accidents incurred by an operator demonstrated to be a named insured or a principal operator of an auto insured under a separate policy; and

2. No points are assigned for accidents occurring under the following circumstances:

a. auto lawfully parked (if the parked vehicle rolls from the parked position then any such accident is charged to the person who parked the auto); or

b. the applicant, owner or other resident operator reimbursed by, or on behalf of, a person who is responsible for the accident or has judgment against such person; or

c. auto is struck in the rear by another vehicle and the applicant or other resident operator has not been convicted of a moving traffic violation in connection with this accident; or

d. operator of the other auto involved in the accident was convicted of a moving traffic violation and the applicant or resident operator was not convicted of a moving traffic violation in connection with the accident; or

e. auto operated by the applicant or any resident operator is struck by a "hit‑and‑run" vehicle, if the accident is reported to the proper authority within 24 hours by the applicant or resident operator; or

f. accidents involving damage by contact with animals or fowl; or

g. accidents involving Physical Damage, limited to and caused by flying gravel, missiles, or falling objects; or

h. accidents occurring when using auto in response to an emergency if the operator of the auto at the time of accident was a paid or volunteer member of any Police or Fire Department, First Aid Squad, or any law enforcement agency. This exception does not include an accident occurring after the auto ceases to be used in response to such emergency.

 

 

c. Inexperienced Operator

If the principal operator of the auto has no surcharge for an accident, but has been licensed less than three years, one point is assigned.

d. Refund of Surcharged Premium

If a point has been assigned for an accident and it is later determined that the accident falls under one of the exceptions in this rule, the company shall refund to the insured the increased portion of the premium generated by the accident.

2. Experience Period

The experience period shall be the three years immediately preceding the date of application or the preparation of the renewal.

 Driving Record Sub‑Classification

The driving record sub‑classification shall be determined from the number of Driving Record Points accumulated during the experience period as follows:

Number of Driving Record Points 0 1 2 3 4 or more

 

D. Multi‑Car Risk

1. Two Car Risk

Driving Record Sub‑Classification 0 1 2 3 4

The Driving Record Sub‑Classification, as determined above, shall apply to each auto as shown under the Multi‑Car Section in the Secondary Table.

Three or More Car Risk

Any points developed under SDIP are assigned to the two cars with the highest Total Base Premiums. The remaining autos are rated at Sub‑Class 0.

 

TOTAL BASE PREMIUM is the sum of the base premium for Single Limit Liability, or Bodily Injury and Property Damage Liability; Medical Payments: No‑Fault; Comprehensive; Collision Coverages that apply to the auto.

Use the following Secondary Rating Factors and Codes:

E. Administration of SDIP                                      

• New Business                             

a.  Initial information necessary to assign the proper Driving Record Sub‑Classification shall be obtained from an application signed personally by the applicant‑

b.  The signature of the applicant on all applications received from an agent, broker or solicitor shall be certified by such agent, broker or solicitor.                                                           

2. Renewal Business Information necessary to assign proper renewal Driving Record Sub‑Classification shall be determined from any one or combination of the following:          

a.  Company’s own records; or                     

• Motor Vehicle records; or                          
• An application signed by the applicant and producer.

 

SECTION II

For companies electing not to use SDIP, rate eligible private passenger autos by adding 0.20 to the Rating Factor otherwise applicable.

Use the following Secondary Rating Factors and Codes:

 

     1991 and Later Model Autos

Single Car                                                            Code                            Factor

Standard Performance                                      19                                       +0.00

Intermediate Performance (i)                            39                                       +0.15

High Performance (h)                                        59                                       +0.30

Sports (s)                                                           79                                       +0.15

Sports Premium (p)                                           99                                       +0.15

     Multi-Car

Standard Performance                                      29                                        -0.15

Intermediate Performance (i)                            49                                       +0.00

High Performance (h)                                        69                                      +0.15

Sports (s)                                                             89                                      +0.00

Sports Premium (p)                                           09                                       +0.00

 

     1990 and Prior Model Autos

Single Car                                                   Code                                     Factor

Non‑High Performance                                     19                                       +0.00

High Performance                                             59                                       +0.00

Multi‑car

Non‑High Performance                                     29                                        ‑0.15

High Performance                                             69                                        ‑0.15

 

6. MODEL YEAR/AGE GROUPS FOR COMPREHENSIVE AND COLLISION COVERAGES

A. Where Model Year Is Used in Rating

1. The model year of the auto is the year assigned by the auto manufacturer.

2. Rebuilt or Structurally Altered Autos ‑ the model year of the chassis determines the model year of the auto.

If the rates for a model year are not displayed in the rate pages, use the rates shown for the latest model year.

B. Where Age Is Used in Rating

1. Age is determined as follows:

Age Group Definition

1. Autos of current model year

        2. Autos of first preceding year

3. Autos of second preceding year

4. Autos of third preceding year

5. Autos of fourth preceding year

6 All Other Autos

The "current model year," as used in this section, changes effective October 1 of each calendar year regardless of the actual introduction of the makes and models.

2. Rebuilt or Structurally Altered Autos ‑ the age of the chassis determines the age of the autos.

C. Coding applicable whether Model Year or Age is used in rating:

1. Policies effective July 1, 1980 and subsequent:

Code the last two digits of the model years for example, code 1981 vehicles as 1 9 8 1 as 8 1, etc.

2. Policies effective prior to July 1, 1980:

Description                                                         Code

Current Model Year                                          1

First Preceding Model Year                              2

Second Preceding Model Year                         3

Third Preceding Model Year                            4

Fourth Preceding Model Year                          5

Fifth and Prior Model Years                             6

 

7. MINIMUM PREMIUM RULE

The Minimum Premium Rule is used because if premium payments are less than $10, administratively it is not cost effective.  If the premium amount is less than $10 (can be higher with some companies) the usual procedure is to have the policyholder chose a quarterly mode, or bi-monthly if available.

 

The minimum annual premium charge is $10 for each policy, certificate, declaration or binder covering one or more of the following perils;

Comprehensive,

Single Limit Liability,

Bodily Injury Liability, or

Property Damage Liability.

Premium for other coverages which may also be included in the policy shall be in addition to the minimum annual premium.

The minimum annual premium charge is not subject to reduction except  in the event of cancellation or short term policy, the minimum annual premium charge shall be adjusted on a pro rata or short rate basis, as the conditions require.

 

8. POLICY PERIOD

It is obviously more expensive to send a premium notice every month, than it would be to send a premium notice once a year.  Premiums are quoted and calculated basically on an annual basis, therefore any payment mode other than annual would require an additional premium charge.

If the company allows an automatically bank-draft payment, the premium is either the same as the annual premium, or the premium charge is quite low.  Experience has shown that the persistency of a policy on an automatic bank draft equals (and in some cases, betters) persistence of those premiums paid on an annual basis. 

Long-term Physical Damage policies may be paid on a longer period of time than 12 months.  These are usually written to protect a lien-holder and the insurance company may receive the full annual, 2-year or 3-year premium as the first (and only) premium payment.

 

A. No policy may be written for a period longer than 12 months for Liability Coverage or 36 months for Physical Damage Coverage.

B. Premium charged for policy terms not exceeding 12 months is as follows:

1. Twelve Month Policies ‑

Charge the annual premium or minimum premium whichever applies.

2. Three and Six Month Policies ‑

For a specified 3 or 6 month period the premium charge is 25% or 50% respectively, of the annual or minimum annual premium whichever applies.

3. Policies issued for a 3 or 6 months period with an effective date on the 29th, 30th, and 31st of any month -

The first policy can be extended from the effective date to the first day of the calendar month following the expiration of the policy.

Premium for this extended coverage of 1 to 3 days may be waived.

4. Other Short Policies written for less than 12 months and other than 3 or 6 months ‑

Such policies shall be written on a pro rata basis in accordance with the Pro Rata Table in the Cancellation rule.

EXCEPTIONS:

The premium is computed Pro Rata

1. When coverage is written to secure a common policy date with other coverages or lines of insurance.

2.  When a policy is issued on a short rate basis to replace an outstanding policy of a company in liquidation, provided the new policy is based upon the rules and rates in effect at the time replacement is made and shall be in effect for a period equal to the unexpired term of the outstanding policy.

3. When a statutory policy is required by a state or municipality to expire on a fixed date and the policy is written to expire on such date.

Long Term Physical Damage Policies written for a term in excess of 12 months ‑ Determine premium as follows:

1. 1st 12 months:

Charge the first year premium or minimum premium, whichever applies.

2.  2nd 12 month:

In addition to the above, charge the second year premium or minimum premium whichever applies.

If the term is more than 12 months but less than 24 months, charge pro rata of such second year premium or minimum premium whichever is larger, for the period in excess of 12 months.

3.  3rd 12 months:

In addition to the premium for the 1st and 2nd 12 months periods, charge the third year premium or minimum premium which ever applies.

If the term is more than 24 months but less than 36 months charge the pro rata of such third year premium or minimum premium, whichever is larger, for the period in excess of 24 months.

Note: Calculation of the premium for the 2^nd and 3rd 12 month periods, or pro rata part thereof shall recognize:

1. The attained age of operator(s) during a previous 12 month period;

2. Any change in the model year/age group of the insured auto, during a previous 12

    month period;

3. Any change in sub‑classification under the Safe Driver Insurance Plan;

4. A change in symbol assignment based on a review of loss experience.

 

9. CHANGES

This section of the Manual lists the rules for adjusting and changing the policy coverages.  The following section described the cancellation and termination procedures.  While the cancellation and termination provisions are well described in the policy, the changes described below will not appear on the policy.

These changes are those outlined in the manual, and deviations may arise from company to company. However, it is of considerable interest to an agent to be aware of what procedure(s) used in case a question arises with a policyholder.  If the agent is aware of what the insurance company needs to effect the requested change, it can save a lot of time and money by submitting the necessary information initially. 

 

A. All changes requiring premium adjustments shall be computed pro rata

B. If an auto or a form of coverage that was cancelled from a policy at the request of the insured is reinstated within 30 days, the premium shall be the same as the amount that was returned at the time of cancellation.

C. Adjustments of $5 or less:

• If an outstanding policy is amended and results in a premium adjustment of $5 or less, the amount &
  a.  may be waived, or

b. may be made subject to a minimum of $5.00, except that the actual return premium shall be returned at the request of the insured.

2. Minimum premium of $5 applies if an insured requests the following during the policy period:

a. additional coverage,

b. an increase in limits of liability,

c. a reduced deductible.

3. Companies need not refund a return premium of less than $5 if the insured requests the following:

a. cancellation of coverage,

b. reduction of limits of liability,

c. increase in deductible,

            except that actual return premium shall be returned at the request of the insured.

 

If the limits of liability are increased because of a change in the limits prescribed under any financial responsibility law, the additional premium charge shall be the actual difference in premium charges. If $5 or less, it may be charged or waived.

10. CANCELLATION

A. If a policy, vehicle or form of coverage is cancelled,

1. By the company:

Compute return premium pro rata

2. By the insured:

a. For one‑year policies ‑

Compute return premium at 90% of the pro rata unearned premium for one year.

b. For two‑year or three‑year policies ‑

(1) If cancelled during the first year, the return premium shall be the sum of (a) 90% of the pro rata unearned premium for the first year, and (b) the full annual premium for the second and third year.

(2) If cancelled after the first year, the first year premium shall be fully earned and the full pro rata unearned premium for the remaining policy term shall be returned.

c. For Three‑Month and Six‑month policies or other policy terms of less than one year -

Compute return premium at 90% of the pro rata unearned premium for the policy term.

 

EXCEPTION

Compute return premium on a pro rata basis in the following cases:

1. If the insured has disposed of the insured vehicle and takes out a new policy in the same company on another vehicle, to become effective within thirty days of the date of cancellation.

2. If the insured auto is repossessed under terms of a financing agreement

3. In a multi‑car situation:

a. if one vehicle is cancelled from the policy and the policy remains in force on other vehicles, or

b. if a policy is cancelled and there remains in force with the same company in the name of the insured or spouse, residents in the same household, a concurrent policy covering another vehicle.

4. If the insured enters the armed forces of the United States of America

5. If the insured auto is stolen or destroyed (total or constructive loss) and cancellation is requested by the insured

a. within 30 days following the date the auto is stolen or destroyed, or

b. within 15 days of the time the auto was determined by the company

(1) to be unrecoverable if stolen, or

(2) to be a total or constructive loss.

6. If a vehicle or form of coverage is cancelled from a policy and the policy remains in force.

 

B. Instructions for Use of PRO RATA TABLES

• Express the date of cancellation by year and decimal part of a year by combining the calendar year with the decimal appearing opposite the month and day in the Pro Rata Table, e.g., March 7, 1996 is designated as 1996.181.
• In like manner, express the effective date of the policy by year and decimal part of a year and subtract from the cancellation date.
• The difference in the case of 1 year Policies, represents the percentage of the annual premium which is to be retained by the company.
• For 6 Month Term Policies, the difference between cancellation date and effective date multiplied by two represents the percentage of the semi‑annual term premium which is to be retained by the carrier.
• For 3 Month Term Policies, the difference between cancellation date and effective date multiplied by four represents the percentage of the quarter‑annual term premium which is to be retained by the carrier.

 

 

Note: As it is not customary to charge for the extra day (February 29th) which occurs one year in every four years this table shall also be used for each such year.

 

 

 

 

PRO-RATA TABLE

(FIRST SIX MONTHS)

 

   January        February                    March            April             May                June

 Day   Day            Day  Day                            Day  Day             Day  Day           Day  Day              Day  Day

  of    of                 of     of                               of     of                  of    of                 of     of                  of     of

 Mo.  Yr.  Ratio  Mo.  Yr.  Ratio                 Mo.  Yr.  Ratio  Mo.  Yr.  Ratio   Mo.  Yr.  Ratio      Mo.  Yr.  Ratio

 1      1     .003      1       32   .088                     1       60    .164    1       91    .249     1      121   .332      1      152    .416

 2      2     .005      2      33    .090                     2       61    .167    2       92     .252    2      122   .334     2       153    .419

 3      3     .008      3      34    .093                     3       62    .170    3       93    .255     3      123   .337     3       154    .422

 4      4     .011      4      35    .096                     4       63    .173    4       94    .258     4      124   .340     4       155    .425

 5      5     .014      5      36    .099                     5       64    .175    5       95    .260     5      125   .342     5       156    .427

-------------------------------------------------------------------------------------------------------------------------------------------

 6      6    .016      6      37    .101                      6       65    .178    6       96    .263     6      126    .345     6       157    .430

 7      7    .019      7      38    .104                      7       66    .181    7       97    .266     7      127    .348     7       158    .433

 8      8    .022      8      39    .107                      8       67    .184    8       98    .268     8      128    .351     8       159    .436

 9      9    .025      9     40     .110                      9       68    .186    9       99    .271     9      129    .353     9       160    .438

 ------------------------------------------------------------------------------------------------------------------------------------------

 10    10   .027      10   41     .112                    10      69    .189    10    100   .274    10    130    .356     10     161   .441

 11   11   .030      11   42     .115                     11     70     .192    11    101  .277     11    131    .359     11     162   .444

 12   12   .033      12   43     .118                     12     71     .195    12    102   .279    12    132    .362    12     163    .447

 13   13   .035      13   44     .121                     13     72     .197    13    103   .282    13    133    .364    13     164    .449

 14   14   .038      14   45     .123                     14     73     .200    14    104   .285    14    134    .367    14     165    .452

 15   15   .041      15   46     .126                     15     74     .203    15    105   .288    15    135    .370    15     166    .455

 ------------------------------------------------------------------------------------------------------------------------------------------

 16   16   .044      16   47     .129                     16     75     .205    16    106    .290    16    136    .373    16     167    .458

 17   17   .047      17   48     .132                     17     76     .208    17    107    .293    17    137    .375    17     168    .460

 18   18   .049      18   49     .134                     18     77     .211    18    108    .296    18    138    .378    18     169    .463

 19   19   .052      19   50     .137                     19     78     .214    19    109    .299    19    139    .381    19     170    .466

 20   20   .055      20   51     .140                     20     79     .216    20    110    .301    20    140    .384    20     171    .468

 -------------------------------------------------------------------------------------------------------------------------------------------

 21   21   .058      21   52     .142                     21     80      .219   21    111    .304    21    141    .386    21      172    .471

 22   22   .060      22   53     .145                     22     81      .222   22    112    .307    22    142     .389   22      173    .474

 23   23   .063      23   54     .148                     23     82      .225   23    113    .310    23    143     .392   23      174    .477

 24   24   .066      24   55     .151                     24     83      .227   24    114    .312    24    144     .395   24      175    .479

 25   25   .068      25   56    .153                     25      84      .230   25    115    .315    25    145     .397   25      176    .482

 -------------------------------------------------------------------------------------------------------------------------------------------

 26   26   .071      26   57    .156                     26      85      .233   26    116    .318    26    146     .400   26      177    .485

 27   27   .074      27   58    .159                     27      86      .236   27    117    .321    27    147     .403   27      178    .488

 28   28   .077      28   59    .162                     28      87      .238   28    118    .323    28    148     .405   28      179    .490

 29   29   .079                                                 29      88      .241   29    119    .326    29    149     .408   29      180    .493

 30   30   .082                                                 30      89      .244   30    120    .329    30    150     .411   30      181    .496

 31   31   .085                                                 31      90      .247   31                           31   151     .414

 

 

(Note:  This table is for the first six months of the year and is shown here for illustrative purposes only.

Please refer to text for an explanation as how to use this table.

 

 

 

11. WHOLE DOLLAR PREMIUM

The premium for each exposure shall be rounded to the nearest whole dollar, separately for each coverage provided by the policy.

 

A premium involving $.50 or more shall be rounded to the next higher whole dollar.

 

This procedure shall apply to all interim premium adjustments, including endorsements or cancellations at the request of the insured. In the case of cancellation by the company, the return premium may be carried to the next higher whole dollar.

 

The phrase "each exposure" as used herein shall mean each premium developed (after the application of ail applicable adjustments) for (1) each auto, if written on a per car basis, and (2) for all other business.

 

12. RULES FOR DETERMINING PHYSICAL DAMAGE BASE RATES FOR SYMBOLS NOT DISPLAYED ON STATE RATE SHEETS

 

This section of the Rating Manual simply refers the user to the State Exception Pages for Comprehensive and Collision Coverage, which is beyond the scope of this text.

 

13.  SUSPENSION

 

Certain rules regarding the suspension of coverage must also be included in a Rating Manual.  The following are some of the provisions of this section.

 

• Under any policy providing just physical damage coverage, only Collision may be suspended.
• Liability coverages may not be suspended for risks for which a financial responsibility filing is in effect.
• Insurance may be suspended by endorsement in according with the following provisions, provided the period of suspension is at least 30 consecutive days.
• Insurance be reinstated upon the named insured’s request effective not earlier than receipt of such request by the company or authorized representatives.
• The reinstatement of insurance endorsement shall not extend the policy beyond its original expiration date.
• Pro-rata premium credit shall be granted for the period of suspension upon reinstatement.  Companies can retain a minimum of 90 days premium calculated on a pro rata basis for the policy period.
• If the policy expires during the period of suspension, the insured shall be entitled to a pro rata return of premium in accordance with provisions of the policy.
• If the collision coverage is written under other than the PAP or Liability coverages, is suspended on all owned autos, coverages for which separate premiums apply (including Uninsured Motorists, Medical Payments, etc.,) shall be continued in force without any premium adjustment for those coverages.
• Insurance covering a private passenger auto which is withdrawn for a period of at least 30 consecutive days, because of a strike. may be suspended.  Pro rata return of premium shall be granted if requested by letter from the insured.

 

14.  MISCELLANEOUS COVERAGES

Uninsured Motorists Coverage

Uninsured Motorists Coverage must be included in a policy that also provides (at least) Bodily Injury liability coverage.  The rates for Uninsured Motorists Coverage can be found in the State Exception pages.

Uninsured Motorists Coverage is one of the easiest coverages to rate because the published rates are not subject to adjustment as there are no rating factors or territorial rates to apply.

Be aware that in some states Uninsured Motorists Coverage is combined with Underinsured Motorists Coverage, and in other states can be obtained independently.  Either way, the table will reflect whichever applies in your state.

 

Manual rules regarding Uninsured Motorists Coverage would be similar to the following:

 

A. Uninsured Motorists Coverage

1. Owners ‑ (Class Code ‑ Refer to Statistical Plan)

This form of coverage may be afforded only if single limit liability or bodily injury liability coverage has been purchased.

If this form of insurance is purchased it must apply to all vehicles on the policy.

a. Basic Limits ‑ The rates shown on the State Exception or Rate Pages are the minimum limits available and are the financial responsibility law limits of the state.

b. Increased Limits ‑ Increased Limits may be afforded but may not be in excess of the single limit liability or bodily injury liability limits on the policy. Rates are shown on the State Exception or Rate Pages.

c. Rates ‑ Rates apply in accordance with the following designations:

(1) Individual or Husband and Wife:

The insured named in the Declaration of the policy is an individual or husband and wife.

(2) All Others:

The insured named in the Declarations of the policy is other than an individual or husband and wife.

(3) Additional Persons:

This insurance may be extended only to an executive officer, partner or employee of the named insured who does not own an auto at the additional persons rate for each named individual.

(4) Rates:

The rates are not subject to classification rating or modification by any rating plan.

Non‑owners (Class Code 9900)

If a named non‑owned policy is extended to afford Uninsured Motorists coverage, the rate for such extension of coverage shall be the applicable uninsured motorist rate for the first auto shown on the State Exception or Rate Sheet for owners.

B. Underinsured Motorists Coverage

1. Basic Limits ‑ Protection for this coverage up to the Financial Responsibility law limits is provided under the Uninsured Motorists Coverage endorsement.

2. Increased Limits ‑ Increased limits of underinsured motorists coverage may be afforded under the following conditions:

a. only if increased limits uninsured motorists coverage is afforded.

b. increased limits uninsured and underinsured motorists insurance must be afforded at the same limits.

c. underinsured motorists coverage must apply to all vehicles insured under the policy.

3. Rates

a. Rates are displayed on the State Edition Pages.

b. Rates are not subject to classification rating or modification by any rating

C. Deductible Insurance

1. Deductible Liability Insurance ‑ is not available for vehicles classified and rated according to the rules of this manual.

2. Comprehensive Deductibles For Which No Premium Is Shown ‑ Refer to State Exception Pages.

3. Collision Deductibles For Which No Premium is Shown ‑ Refer to State Exception Pages.

4. Percentage Of Loss Deductibles For Comprehensive And Collision Coverages ‑ Refer to State Exception Pages.

D. Extended Transportation Expenses Coverage

1. Eligibility. Only policies providing Comprehensive Coverage may be afforded either Extended Transportation Expenses Coverage or Increased Limits Transportation Expenses Coverage.

• Rating. The rates for this coverage are not subject to classification rating or modification by any rating plan.

 

  Annual Rate

Coverage                                                                                                           Per Auto

 

$ 15/$450 Extended Transportation

Expenses Coverage (Cov. Code 704)                                                                        $12

 

$30/$900 Increased Limits

Transportation Expenses

Coverage (Cov. Code 706)                                                                                        $25

 

3. Endorsement. Attach the extended transportation expenses coverage endorsement to the policy.

 

E. Towing and Labor Costs

1. This coverage may be written only for Private Passenger Autos.

2. The available limits and rates are:

Limit Per Disablement                         Rate per car per year

$25                                                                     $4

$50                                                                     $6

$75                                                                     $8

 

3. Attach the towing and labor costs coverage endorsement

F. Audio, Visual, and Data Electronic Equipment and Tapes, Records, Discs and Other Media Coverage (Cov. Code 0 14).

The following coverage of Audio, Visual and Data Electronic Equipment, etc., is quite important to many vehicles in today’s world of technology as the quality of the  audio in newer cars is almost “concert hall” in quality.  Some of the younger generation seem to have an attraction to huge speakers in their cars, which may entertain them and their passengers when played at a loud volume, but it quite disconcerting to other motorists.  In any event, the theft of this type of equipment is quite prevalent, especially in some of the more urban areas.

As new technology is developed for automobiles, they become more of a target for theft.  Some “family vans” are offering installed television sets with stereo sound.  Many of the more luxurious automobiles have expensive telephones installed, with the ability to operate by the owners voice.  Computers are an integral part of the new cars, but laptop computers are used mostly by auto occupants, however computer-operated facilities, such as providing detailed maps and instructions, are targeted by thieves.

It has been noted before, but should be reiterated in this section:  The policy covers that equipment that is permanently installed in the automobile.

 

 

 

  1. Coverage is available for loss to any of the following, if at the time of loss they are contained in a vehicle described in the policy for which this coverage is provided:

a. tapes, records, discs or other media used with audio, visual or data reproduction, receiving or transmitting equipment permanently installed in the auto.

b. any electronic equipment not specifically designed solely for the reproduction of sound, that receives or transmits audio, visual or data signals.

This coverage applies only if the equipment is:

(1) permanently installed in the auto at the time of loss;

(2) not necessary for the normal operation of the auto or monitoring of the auto's operating systems; and

(3) not an integral part of the same unit housing any sound reproducing equipment permanently installed in the opening of the dash or console of the auto. This opening must be normally used by the manufacturer for installation of a radio.

Types of electronic equipment not specifically designed solely for the reproduction of sound for which coverage may be purchased include, but are not limited to:

(1) citizens band radios;

(2) telephones;

(3) two‑way mobile radios;

(4) scanning monitor receivers;

(5) television monitor receivers;

(6) video cassette recorders;

(7) audio cassette recorders; and

(8) personal computers.

Note: Electronic equipment which is specifically designed solely for the reproduction of sound and permanently installed in the auto at the time of loss, along with accessories used with such equipment, is automatically covered under the policy without additional premium charge.

c.  accessories used with electronic equipment permanently installed in the auto, and not specifically designed solely for the reproduction of sound.

Refer to the coverage for audio, visual, and data electronic equipment and tapes, records, discs and other media endorsement for extent of coverage.

2. Coverage is not available for radar detectors.

3. Develop the premium independently for each covered auto as follows:

Audio, visual and electronic equipment including its accessories (Cov. Code 0 14).

(1) Determine the limit of liability based upon the total cost new of the electronic equipment permanently in­stalled in that auto and the cost new of its accessories. Do not include the cost of tapes, records, discs or other media in determining this limit.

(2) Additional coverage for $200 worth of tapes, records, discs or other media applies at no additional charge when coverage is provided for audio, visual and data electronic equipment.

(3)  Select the premium from the table below:

NOTE:  These premiums are provided for illustrative purposes only.

Total Cost New of Equipment and Accessories Premium

$ 0‑ 500                                                                                             $              30

501 ‑ 1,000                                                                                                        60

1,001 ‑ 1,500                                                                                                     90

1,501 ‑2,000                                                                                                    120

2,001 ‑2,500                                                                                                    150

2,501 ‑3,000                                                                                                    180

3,001 ‑3,500                                                                                                    210

3,501 ‑4,000                                                                                                    240

4,001 ‑4,500                                                                                                    270

4,501 ‑5,000                                                                                                    300

5,001 and over                                                       Refer to Company

 

b. Tapes, records, discs and other only (Cov. Code 064).

When coverage is not purchased for audio, visual and data electronic equipment coverage for $200 worth of tapes, records, discs and other media is available for an additional premium charge of $1 per auto, per year.

4. Attach the coverage for audio, visual a data electronic equipment and tapes, records, discs and other media endorsement to the policy.

G. Customizing Equipment Coverage

Comprehensive and Collision coverage for customizing equipment may be purchased on a stated amount basis for any panel truck, pickup or van insured for physical damage coverage. Refer to the customizing equipment coverage (stated amount insurance) endorsement for extent of coverage.

1. The cost of customized equipment should not be considered when determining the symbol of the vehicle.

2. The customizing charge determined in this rule is the only charge for customized equipment on a vehicle.

3. The charge for customizing is made only when the customizing equipment coverage (stated amount insurance) endorsement is attached.

Rate as follows:

1. Refer to state rate pages, use the territory and any physical damage deductible applicable to the vehicle.

2. Multiply the Symbol 5 rate for the current model year by the following factor to obtain the stated amount rate per $100 of customizing:

Comprehensive ‑ For all model years: .032

Collision ‑ For all model years: .014

3. Multiply the stated amount rate for customizing by the desired limit of coverage to obtain the stated amount customizing Base Rate.

4. Multiply the customizing Base Rate by the vehicles classification rating factor to determine the premium for stated amount B. Owners Comprehensive and Collision customizing coverage.

Notes: (a) The customizing equipment coverage (stated amount insurance) endorsement shall be attached.

           (b) If Comprehensive or Collision coverage for customizing is purchased, the
                         vehicle must have the corresponding Comprehensive or Collision coverage.

           (c) The customizing deductibles shall be the same as the vehicle deductibles.

H. Mexico Coverage

1. At the option of the company, and at the request of the insured, a policy may be extended to apply to accidents occurring in Mexico on a trip of ten days or less if within twenty‑five miles of the United States border.

2. Rate ‑ $6 per year.

3. Attach the Mexico coverage endorsement

4. Modification ‑ This premium shall not be subject to classification rating or modification by the Safe Driver Insurance Plan.

 

15. CERTIFIED RISKS ‑ FINANCIAL RESPONSIBILITY LAWS

 

Surcharges are added to the Liability premium if the insured has been driving while intoxicated, hit and run, homicide, etc.  The major factors have a 50% surcharge, graded down to 5%.  Please note that if an insured is insured under the Safe Driver Insurance Plan (SDIP), there is an automatic addition of 10%.

 

A. Surcharges

1. Surcharges apply to Liability coverages only.

2. For SDIP rated risks, the Rating Factor shall be increased by .10.

3. In all other cases the appropriate charges shown below shall be applied to the final premium for the affected coverages for the period of time the certificate is required but not more than three years (after 3 years a 5% surcharge applies) as follows:

a. 50% for driving a motor vehicle while intoxicated, or failing to stop and report when involved in an accident, or homicide or assault arising out of the operation of a motor vehicle.

b. 25% for driving a motor vehicle at an excessive rate of speed or in a reckless manner, where an injury to person or damage to property actually results therefrom.

c. 5% for any other reason requiring filing.

B. Owners

1. If an owner is required to file evidence of financial responsibility for owned autos and for the operation of autos which he does not own, the additional premium shall be computed by applying the proper surcharge to the sum of the premium for the highest rated auto owned by the insured and the total non‑ownership liability premium, modified in accordance with any applicable rating plan.

2. In all other cases, the additional premium shall be computed by applying the proper surcharge to the premium for the highest rated auto owned by the insured modified in accordance with any applicable rating plan.

C. Non‑owners

1. If a policy is written to insure a named individual, the additional premium shall be computed by applying the proper surcharge to the premium for the policy.

If coverage is provided under a policy which has been extended to cover a named individual in accordance with Rule 17. ‑ Extended Non‑Owned Liability Coverage, the additional premium shall be computed by applying  the proper surcharge to:

a. the rates for the highest rated auto insured under the policy for the rating territory in which the named individual is located, or

b. if there is no auto at such location, 170% of the private passenger Base Rates for the territory in which the named individual is located.

 

16. NAMED NON‑OWNER POLICY

For individuals who do not own an auto, such as those who are furnished an automobile by their employer, special rules apply. 

 

A. Liability and Medical Payments Coverage ‑charge 50% of the premium that would apply if such individual owned an auto.

B. Uninsured motorists Insurance ‑ Refer to the State Exception or Rate Sheets. Charge the "first auto" Uninsured Motorists rate applicable to owners.

Attach the named non‑owner coverage endorsement.

 

17. EXTENDED NON‑OWNED LIABILITY COVERAGE

A. Liability coverage ‑ Liability coverage may be extended to an individual described
              below:

1. The insured named in the policy, the spouse if a resident of the same household, or a resident relative who is furnished an auto for regular use but is NOT employed by a garage:

a. When no Primary Liability insurance is in effect on the auto, charge 50% of the liability premium which would apply if the furnished auto were being specifically insured as an owned auto by the individual.

b. When there is Primary Liability insurance in effect on the auto or if the auto is used in the business of the United States Government, charge the premiums per person shown in the table below. The premiums are for the minimum financial responsibility requirement limits in the State.

 

Note:  All premiums are provided for illustrative purposes only.

 Person Named                                         Bodily                                 Property     Single

                                                                   Injury                                  Damage     Limit      .

Insured Named or Spouse                                     $4                                        $1     $6

Relative                                                                  $8                                       $2     $12

 

2. The insured named in the policy, the spouse if a resident of the same household, or a resident relative who is furnished an auto for regular use and is employed by a garage:

a. When garage has no liability insurance charge 170% of Base Rate for Liability.

b. When garage has liability insurance, refer to Company.

3. In all other situations, charge the premiums per person shown in the table below. The premiums are for the minimum financial responsibility requirement limits in the State.

 

 Person Named                                                     Bodily                     Property     Single

                                                                              Injury                       Damage     Limit      .

Insured Named or Spouse                                     $3                                        $1                $5

Relative                                                                                $5                         $2                $9

 

B. Medical Payments ‑ Premiums per person ‑available only if Single Limit Liability or Bodily Injury and Property Damage coverages are extended.

 

Medical Payments                                Auto Furnished                    Auto Not

   Limit of Policy                                   For Regular                        Furnished for

 To Which Attached                                      Use                              Regular Use

  $500                                                                     $4                                        $2

  $1,000                                                                  $5                                        $3

  $2,000                                                                  $6                                        $4

  $5,000                                                                  $9                                        $7

  $10,000                                                                $17                                   $15

 

 

I8. INCREASED LIMITS

Special premiums are used for increased amounts above the state dictated minimum amounts.  It will be noted that the premium increase by increased limits increase, but not in direct proportion to the increase.  In other words, for Medical Payments illustrated below (remember, these premiums are for illustrative purposes only, but do reflect a “ball-park” figure) the increase for $50,000 is not 5 times that of $10,000.  The reason for not having a level premium progression, is that the higher the claim, the less it occurs.  Loss experience is what drives the premiums, and the loss experience is different as the amount is increased or decreased.

 

A. Refer to State Exception Pages to determine the factors to be applied to the appropriate basic limits rates for Single Limit Liability, Bodily Injury or Property Damage Liability.

For limits not displayed on a State Exception Page, refer to company.

B. Medical Payments Increased Limits

Medical Payments coverage for limits greater than $5,000 may be afforded. The base rates for higher limits shall be the $5,000 Medical Payments Base  Rates increased by the following:

 

Total Medical Payments Limits           Additional Base Rate Above $5,000

$10,000                                                                 $  8

25,000                                                                     23

50,000                                                                     35

75,000                                                                     45

100,000                                                                   50

 

19. MISCELLANEOUS TYPES

 

A. Motor Homes A motor home is a self‑propelled motor vehicle with a living area that is an integral part of the vehicle chassis, or a pickup with a permanently attached camper body. The living area or camper body must consist of facilities for cooking and sleeping.

Attach the miscellaneous type vehicle and the miscellaneous type vehicle amendment (motor homes) endorsements to the policy.

LIABILITY, MEDICAL PAYMENTS/NO‑FAULT, UNINSURED AND UNDERINSURED MOTORISTS COVERAGES

1. Motor Homes used in driving to or from work or used in business ‑ Classify and rate as private passenger autos.

2. Pleasure Use Motor Homes ‑ Charge 50% of the otherwise applicable All Other Class/Pleasure Use rates for private passenger autos. (The Safe Driver Insurance Plan does not apply.)

a. Expense Fees ‑ add the appropriate expense fees, according to the Premium Determination rule.

PHYSICAL DAMAGE

3. Determine the stated amount value, including the value of any custom built additions.

4. For all model years, assign a symbol based on the stated amount, from the table for 1981 and Subsequent Model Years on page 1 of the Symbol and Identification Section.

a. To determine base rates for symbols not displayed on rate pages, use the factors in rule 12. for 1981 and Later Model Years and the Symbol 5 rate for the model year of the motor home.

b. For Motor Homes with a stated amount value of $65,001 and over, increase the Symbol 20 base rates (as calculated in a) as follows: (Statistical Code ‑ Use the code for Symbol 21 (A))

(1) Comprehensive ‑ 1.7% for each $1,000 or part of $1,000 in excess of $65,000.

(2) Collision ‑ 1.4% for each $1,000 or part of $ 1,000 in excess of $65,000.

c. Motor Homes used in driving to or from work or used in business ‑ Classify and rate as private passenger autos, using the base rates calculated in a. and b.

d. Pleasure Use Motor Homes ‑ Charge 35% of the base rates calculated in a and b. (The Safe Driver Insurance Plan does not apply.)

e.. Expense Fees ‑ add the appropriate expense fees, according to the Premium Determination rule.

f. For custom built Motor Homes, the model year of the chassis determines the model year of the motor home.

 

Covered Property Coverage

Attach the covered property coverage endorsement to the policy.

Deductible                                             Rate Per $ 100

$50                                                               $1.45

100                                                               $1.15

 

RENTAL COVERAGE

5. Liability, Medical Payments, Comprehensive, Collision and Covered Property Coverages may be extended to apply while a motor home is rented to others. To determine the additional premium, apply the following factor separately to the otherwise applicable motor home coverage premium:

 

Number of Weeks Rented Per Year            Factor

1 ‑4                                                                   .50

Over 4                                                                   1.00

 

 

B. Trailers Designed for Use With Private Passenger autos

LIABILITY

A Personal Auto Policy affording liability coverage covers trailers designed for use with a private passenger auto, pickup, panel truck or van without additional premium charge and without specific description of the trailer.

Exceptions: Coverage is not provided for a trailer

(1) used for business purposes with other than a private passenger auto or owned pickup, panel truck or van, or

(2) when no auto is owned by the insured.

MEDICAL PAYMENTS

Personal Auto Policy affording medical payments coverage provides coverage for trailers without additional premium charge and without specific description of the trailer if designed for use with a private passenger auto, pickup, panel truck or van.

Exceptions: Coverage is not provided for a trailer

(1) used for business purposes with other than a private passenger auto or owned pickup, panel truck or van, or

(2) when no auto is owned by the insured, or

(3) located for use as a residence or premises.

 

LIABILITY AND MEDICAL PAYMENTS

Liability and Medical Payments Coverage is afforded without additional premium charge for farmwagons and farm implements when attached to a private passenger auto, pickup, panel truck or van.

PHYSICAL DAMAGE

Trailers are to be insured as separate items with separate premiums shown for each unit. The deductible applies separately to each unit.  Attach the coverage for damage to your auto (stated amount maximum limit of liability) endorsement.

1. Recreational Trailers (Refer to State Plan) Non‑self ‑propelled recreational units equipped as living quarters (including cooking, dining, plumbing or refrigeration facilities). To be eligible for coverage, insured must maintain a separate and permanent residence other than the recreational trailer.

Comprehensive and Collision ‑ Use Motor Home rates.

Coverage Property Coverage ‑ Use Motor Home rates. Attach the covered property coverage endorsement.

2. All Other Trailers (Refer to State Plan)

For rates refer to State Rate Pages or Exception Pages.

 

C‑ Motorcycles, Mopeds, Motorscooters, Motorbikes, Go Carts And Any Other Similar Motor Vehicles Not Used For Business Purposes.

Attach the Miscellaneous Type Vehicle Endorsement.

 

LIABILITY

Charge the following percentages of the Private Passenger Liability Base Rate:

(Following this heading in the Manual would be a list by Engine Size (cc), Operator under Age 25 column with the Code  and the percentage, and a column of All Other Operators.  As an example, Engine Size 201cc to 360cc, would be 120% of the base rate for those under age 25, and 75% for all other drivers.)

Passenger Hazard Exclusion ‑ Reduce Split Limit Bodily Injury Liability rate by 40% or the Single Limit Liability rate by 20%.

Uninsured Motorists ‑ 200% of private passenger rate.

Medical Payments ‑ Refer to company.

PHYSICAL DAMAGE

1. Comprehensive ‑ All Vehicles

Charge the following percentages of the Symbol 5 private passenger Comprehensive rate for the applicable model year:

(For Physical Damage the percentages are based upon the original new cost of the car, generally in $3,000 increments. 

2. Collision ‑ All Vehicles

Charge the following percentages of the Symbol 5 private passenger Collision rate for the applicable model year:

(Again, a similar percentage table is shown)

 

D. Snowmobiles and All‑Terrain Vehicles

 

A snowmobile is a motor vehicle designed for use principally on snow or ice, using wheels or crawler ‑ type treads or belts for locomotion across land, ice or snow. This does not include Coverage a vehicle using airplane type propellers or fans. Attach the snowmobile endorsement.

An all‑terrain vehicle (ATV) is a four or six wheel motor vehicle equipped with balloon tires or crawler treads, designed for use on rugged terrain or rugged terrain and water. Attach the miscellaneous type vehicle endorsement.

All premiums apply for the period of coverage.

LIABILITY, MEDICAL PAYMENTS AND UNINSURED MOTORISTS

a. ability ‑ Charge 50% of private passenger base rates.

b. Passenger Hazard Exclusion ‑ Reduce Split Limit Bodily Injury Liability rate by 40% or the Single Limit Liability rate by 20%.

c. Medical Payments ‑ $500 limit only ‑ Charge 200% of Private Passenger base rate subject to a $10 minimum.

d. Uninsured Motorists ‑ Charge private passenger rate.

PHYSICAL DAMAGE

(For Physical Damage, rates are given for Comprehensive Coverage, with Deductibles of $100 or $200, and the Rate per $100 is given for each.  The same applies for Collision Coverage).

 

E. Dune Buggies

A dune buggy is a motor vehicle of the private passenger type designed or modified for use principally off public roads.

All premiums apply for the period of coverage.

Attach the miscellaneous type vehicle endorsement.

1. Registered Dune Buggies - Classify and rate as private passenger autos

2. Non‑registered Dune Buggies

LIABILITY, MEDICAL PAYMENTS AND UNINSURED MOTORISTS

a. Liability ‑ Charge 90% of private passenger base rates.

b. Passenger Hazard Exclusion ‑ Reduce Split Limit Bodily Injury Liability rate by 40% or the Single Limit Liability rate by 20%.

c. Medical Payments ‑ Charge private passenger base rate.

d. Uninsured Motorists ‑ Charge private passenger rate.

PHYSICAL DAMAGE

(For Physical Damage, rates are given for Comprehensive Coverage, with Deductibles of $100 or $200, and the Rate per $100 is given for each.  The same applies for Collision Coverage).

 

F. Golf Cart

A golf cart is a three or four wheel motor vehicle with limited speed capabilities designed to carry golfers and their equipment around a golf course.

All premiums apply for the period of coverage.

Attach the miscellaneous type vehicle endorsement

LIABILITY

Charge 25% of Private Passenger base rates. The premiums are subject to a minimum premium (applicable to the minimum financial responsibility requirement limits in the State) of:

$ 10 ‑ Bodily Injury

$ 5 ‑Property Damage

$15 ‑ Single Limit Liability

PHYSICAL DAMAGE

(For Physical Damage, rates are given for Comprehensive Coverage, with Deductibles of $100 or $200, and the Rate per $100 is given for each.  The same applies for Collision Coverage).

 

G. Antique Autos (Class Code 962000)

An antique auto is a motor vehicle of the private passenger type which is 25 or more years old and is maintained primarily for use in exhibitions, club activities, parades and other functions of public interest, and occasionally used for other purposes.

 

LIABILITY

Charge 40% of private passenger base rates. The premiums are subject to a minimum premium (applicable to the minimum financial responsibility requirement limits in the State) of:

$ 10 ‑ Bodily Injury

$ 5 ‑ Property Damage

$15 ‑ Single Limit Liability

 

MEDICAL PAYMENTS, UNINSURED AND UNDERINSURED MOTORISTS AND NO‑FAULT

Charge private passenger base rates or premiums.

Note: No‑Fault coverages are to be afforded only where required.

PHYSICAL DAMAGE

Attach the coverage for damage to your auto (stated amount maximum limit of liability) endorsement.

(For Physical Damage, rates are given for Comprehensive Coverage, with Deductibles of $100 or $200, and the Rate per $100 is given for each.  The same applies for Collision Coverage).

 

H. Electric Autos

An electric auto is a motor vehicle of the private passenger type that is run by electric power and it is not used for commercial purposes.

LIABILITY

Charge 75% of the applicable private passenger base rate.

MEDICAL PAYMENTS, UNINSURED AND UNDER­INSURED MOTORISTS AND NO‑FAULT

Charge private passenger base rates or premiums.

PHYSICAL DAMAGE

Charge the applicable private passenger base rate.

 

I.  Classic Autos

A classic auto is a motor vehicle of the private passenger type which is 10 or more years old and may be used on a regular basis. Its value is significantly higher than the average value of other autos of the same make and model year.

LIABILITY, MEDICAL PAYMENTS, UNINSURED AND UNDERINSURED MOTORISTS, NO‑FAULT

Classify and rate as a private passenger auto.

PHYSICAL DAMAGE

Attach the coverage for damage to your auto (stated amount maximum limit of liability) endorsement.

1. Determine the stated amount of coverage applicable to the vehicle.

2. Assign a symbol based on the stated amount, from the table for 19 8 1 and subsequent model years on Page 1 of the Symbol and identification Section.

3. Classify and rate as a private passenger auto using the base rate for the current model year.

 

20. RATING TERRITORIES

A. The State Rate Pages display rates by territory.

B. The Territory Pages contain the definition and code for each rating territory.

1. Each territory includes a specific area for rating purposes. The following provisions apply:

a. Any city, town, borough or village not mentioned within a defined territory, but falling within its boundaries, shall take the rate for that territory.

b. If a city, town, borough or village extends into more than one territory, the rates for the higher rated territory apply to the entire city, town, borough or village.

c. If a street or other public way serves as a dividing line between two territories, except when the public way serves as a boundary line of any political subdivision such as a state, county, city, town, etc., the rates applicable to the lower rated of the two territories shall apply to autos principally garaged on either side of the street

• The Territory Pages also contain a List of Important Cities and Towns indicating the territories to which they are assigned. Refer to a map to determine the rating territory for a town not listed.

 

STUDY QUESTIONS

 

1. Charles and his wife retired and decided to purchase a motor home to travel and see the USA. They found a 32 foot motor home that contained what they were looking for. They discovered that the motor home was actually rebuilt a year earlier, and the original motor home was 15 years old. The body had been designed by a local businessman and was rebuilt to his specifications. All of the furniture and appliances were 1 year old including the electric generator. They applied for insurance on the motor home by endorsement on their PAP. How would be premium to cover the motor home be determined.
A. It would be rated as a new vehicle.
B. It would be rated as a vehicle that was 15 years old.
C. It would be rated as a vehicle that was built on the date that the first reconstruction commenced (1 year ago).
D. It would be rated as a vehicle that was 16 years old.

2. Sunset Farms has 3 pickups and a SUV which are driven to and from work by the 4 family members active in the farm, but who live 15 miles away in the city. These trucks (are) (are not) eligible to be classified as private passenger automobiles because
A. are - they are used primarily on the farm.
B. are not - they are not garaged on the farm.
C. are - they are driven by family members.
D. may be - in some states, an SUV is never considered as a farm vehicle.

3. Henry is a real estate broker and uses his car very heavily for business purposes. It is necessary for him to maintain a new, well maintained auto, so he has elected to lease an auto for his business on an annual basis.
A. A leased car, according to the Manual, cannot be considered a private passenger vehicle for a PAP.
B. A leased car, according to the Manual, can be considered a private passenger vehicle if all drivers are over age 25, and the names insured is the only driver of the vehicle.
C. This leased car can be considered as a private passenger vehicle under the Manual, if the lease period is for more than 6 months.
D. The car qualified as a private passenger vehicle as it is not used to carry passengers for a fee of rented to others.

4. Which of the following uses of automobiles would be classified as “business use?”
A. Ron covers Georgia, Florida and Alabama as a Manufacturers Representative but usually flies and uses his own car to travel to and from the airport.
B. Sam is an auditor for a company that has 4 locations in the state. He uses his car to travel to each location for a period of one week at each location, and then to return home at the end of each day.
C. Barbara lives on a Tomato farm and drives her pickup around the farm each day, and uses it for personal use, such as going to town for repairs for farm machinery.
D. Betsy uses her minivan to take her children to a private school every day.

5. Which of the situations below mean that the operated vehicle is a “pleasure vehicle” under the definitions in the Rating Manual?
A. Coleen drives her car to and from work on Mondays and Fridays. On the other three days, she drives her car to call on customers in the local area.
B. Sean drives his car to and from work every other work day, a one way distance of 13 miles. He rides with a neighbor on alternate days.
C. Grant drives his car to and from work each day, a one way distance of 2 miles.
D. Ruby drives her car to work 3 days a week, one way distance of 23 miles.

6. Cynthia attends Georgia Tech and lives with her parents in a suburb of Atlanta. From her parents’ home to her campus is a one – way distance of 24 miles. What is the classification as to usage of her car?
A. Business use.
B. Pleasure use.
C. Work 15 miles or more.
D. Commercial use.

7. Bertram is 20 years old and has been independent since age 18. He lives in an apartment with 2 other young men. He works as an accountant for a large accounting firm part time, but goes to school time also, working for his Masters Degree. He drives to work and takes a commuter bus to school as the school is located 105 miles from his home. He is the owner and principal driver of a 1998 Honda Accord. He would be classified as:
A. Youthful unmarried male operator.
B. Youthful unmarried male owner or principal operator.
C. Youthful married male owner or principal operator.
D. Youthful male resident driver.

8. John applied for his Driver’s license on May 8th, 1994. He was born on December 4, 1977. How old was John for insurance purposes?
A. 17
B. 16
C. 15
D. 17 ½.

9. If a policy is terminated because the auto has been repossessed, but PAP premiums have been paid for one year and there are still 6 months left on the policy period,
A. the vehicle owner will not receive any premium refund because the auto was repossessed.
B. the policyowner will receive one-half (50%) of the premium.
C. the policyowner will receive the unearned premium.
D. the policyowner will receive only the commission paid to the agent as a refund.

10. Bob has a 1988 Toyota Camry. It is absolutely in “mint” condition, although Bob drives it back and forth to work each day, one way distance of 4 miles. A local car dealer has offered him 10% above the “blue book” price. For rating purposes, is his car considered a “Classic Auto?”
A. No, because it is not “significantly” higher in value than other 11 year old autos.
B. Yes, but only because the condition of the car is exceptional.
C. Yes, because the car is over 10 years old and he uses it on a regular basis and its value is significantly higher in value than other 11 year old autos.
D. No. To be a “Classic”, the card must be at least 20 years old.

 

 

ANSWERS TO STUDY QUESTIONS

 

1B     2C     3D     4B     5C     6B     7B     8C     9B     10C