Chapter 7 – Endorsements to the Personal Auto Policy

 

 

Introduction

 

Due to various exclusion and limi­tations, the PAP may not completely meet the automobile insurance needs of some people.  Several additional cover­ages are available by an appropriate Endorsement to the PAP.  En­dorsements are forms that modify the insur­ance contract in some way.  They may be used to change information in the dec­lara­tions, to add, delete or modify coverages, exclusions or policy provi­sions.  Some may be attached to a policy when it is issued, while others are added at a later date.  Although all Endorsements change the policy, not all En­dorsements require a premium adjust­ment.  It is important that one under­stands the purpose of the various En­dorsements.

 

General Endorsement

 

This form is known as a "Blank" or "Manu­script" Endorsement because it includes blank space for typing in what­ever changes is being made to the policy.  It is used whenever no other preprinted Endorsement is appropri­ate for the kind of change desired.  The Gen­eral Endorsement does have some preprint­ed lines for key information concerning the policy it applies to (such as the policy period, name of insured and effective date of the change).  The blank sections of the form are used to describe the actual changes being made.  Even doing something as simple as correcting a

 

 

misspelling of the insured's name on the declarations must be done by Endorse­ment,

since the policy is a legal document and its conditions say that all changes must be made by Endorsement. Generally this En­dorsement is used whenever no other En­dorsement that describes the desired chang­e.

 

Change Endorsement

 

Whenever any Endorsements are at­tached to the policy at the time it is issued, their En­dorsement number must be typed on the policy declarations page.  When it is nec­essary to add an Endorsement after a policy is in effect, in most cases the Change Endorse­ment must also be is­sued.  The reason for this is that only the General Endorsement and Change Endorsement have places for enter­ing the policy number and effective date of the change.  Keep in mind that most preprint­ed Endorsements do not have a place to indi­cate the policy to which they are being at­tached and to indicate the effective date of the change.  Prepr­inted Endorsement forms, state that if they are issued after the policy has been written; the Endorsement must be at­tached to the Change Endorsement.

 

Basically, the Change Endorsement acts like a cover letter by pro­viding important informa­tion about an accompanying Endorsement.  Some insurance companies print their own Endorsement forms which do include preprinted blanks at the top for indicat­ing policy number, effective date, etc.  This makes the Change Endorsement unnecessary and the insurance company can issue one piece of paper each time an Endorsement is required.

 

Suspension of Insurance Endorsement

 

This Endorsement states, that premiums will be refunded if the suspension ex­ceeds a spe­cific period of time but it does not have a place to indicate how long the insurance is to be suspended.  When a Suspension Endorse­ment is is­sued on a policy, the insured is entitled to a refund if coverage is suspended for at least 30 consecutive days.

 

Example:  Jeremy is planning to take a three-month tour of Asia and wants the coverage suspended for those 3 months.  Jeremy car­ries Liability, Medi­cal Payments, Uninsured Motorists Colli­sion And Other-Than-Collision on his car.  He suspends only the Liability and Collision Coverages because those expo­sures are virtually eliminated while his car sits in his garage.  He keeps other coverages be­cause he continues to have exposures as a passenger or pedestrian and his car still has "Other-Than-Collision" exposures. Joe would be entitled to a premium refund for the 3-month period of suspension.  Also, if a fire destroyed Jeremy's garage during the period of suspension and the car was severely dam­aged, Jeremy would have coverage.  During the period of suspension, just before leav­ing on his trip, Jeremy is driving a car borrowed from a friend and has an accident.  The bor­rowed car is damaged and the friend had no Collision covering the car, Jeremy's insur­ance would not apply.

 

Split Liability Limits Endorsement

 

As you recall, the Personal Auto Policy is designed to provide Liability Coverage with a single limit of insurance per accident.  Op­tional split limits are avail­able and some insureds prefer Split Limits.  In other cases, Split Limits are requested to satisfy the mini­mum requirements of a Financial Responsibil­ity Law, or to satisfy requirements for under­lying Insurance when a Personal Umbrella Liability Policy is being written.  This En­dorsement modifies the Limit of Liability Provision by specifying that Separate Limits apply to each person and to each accident, as well as, to Bodily Injury Losses and Property Damage Loss­es. The Split Liability Limits Endorse­ment applies only to Part A of a Per­sonal Auto Policy.

 

Split Uninsured Motorists Limits En­dorse­ment

 

This Endorsement is similar to the Split Limit Endorsement but applies only to the Unin­sured Motorist Coverage. It chang­es the unin­sured motorist limit from a single limit to Split Limits and is used when state law re­quires Split Limits or when Split Limits are preferred by an insured.

 

Under-Insured Motorists Coverage En­dorsement

 

The Under-Insured Motorists Coverage En­dorsement can be added to the PAP to supple­ment Uninsured Motorists Cov­erage.  Under-Insured Motorists Cover­age is important in those situations where a negligent driver has liability limits that are insufficient to pay the insured's damages. Under-In­sured Motorists Coverage applies when the negligent driver Has Liability Insur­ance at the time of the accident but the limits carried are less than the limits provided by the Under-Insured Motorists Coverage.  Example:  assume that Pat has Uninsured Motorists Coverage in the amount of $100,000/$300,000 and is injured by a negligent driver with a minimum Bodily Injury Liability Limit of $25,000/$50,000 which satisfies the state's Financial Responsi­bility Law re­quirement.  If Pat's actual dam­ages are $75,000, she would recover a maxi­mum of $25,000 from the negligent driver's insurer, since that is the applicable limit of liability.  She would receive an additional $50,000 from her insurer under the Under- Insured Motorist Cover­age.

 

The Under-Insured Motorists Coverage should not be confused with the Unin­sured Motorists Coverage.  The two coverages are mutually exclusive and do not overlap or duplicate each other. An insured can collect under one cover­age or the other depending on the situa­tion but not both.  As previously stated, the Uninsured Motorists Coverage ap­plies when the bodily injury is caused by an uninsured motorist, a hit-and-run driver or a driver whose insurer is insolvent.  In contrast, the Under-In­sured Motorist Coverage applies when the other driver has Liability Insurance at the time of the accident but the liability limits carried are less than the limits provided by the Under-Insured Motorists Coverage.

 

In all cases, the most the insured can receive from Under-Insured Motorists Coverage is the limit for the coverage.  The Limit of Liability for the Under-Insured Motorists Coverage is reduced by an amount recoverable from the under-insured motorist.  This provi­sion varies from state-to-state.

 

Finally, the Under-Insured Motorists Cover­age can be written only if certain conditions are satisfied:

 

• The insured must carry increased limits for the Under-Insured Motorists Coverage       that is higher than the limits required by the state's Financial Respon­sibility Law.

 

• Both the Uninsured and Under-In­sured Motorists Coverage must be writ­ten for the same amount.

 

• The Under-Insured Motorists Cover­age must apply to all automobiles cov­ered under the Personal Auto Policy.

 

Certain Endorsements affect multiple coverages under the PAP:

 

• Miscellaneous Type Vehicle Endorsement
• Named Non-Owner Coverage
• Extended Non-Owner Coverage
• Mexico Coverage
• Snowmobile Endorsement

 

Miscellaneous Type Vehicle Endorse­ment - Many people own motor homes, motor­cycles, recreational and other vehicles that are ineli­gible for coverage under an Endorsement PAP.  To meet the special needs of vehicle owners, the Miscellaneous Type Vehicle Endorsement can be added. It provides cover­age for a motor home, motorcycle or simi­lar type of vehicle, all-terrain vehicle, dune buggy or golf cart.  One excep­tion is a snow­mobile, which requires a sepa­rate Endorse­ment to the PAP.  The Miscellaneous Type Vehicle Endorsement can be used to provide the same covera­ges found in the PAP includ­ing Liabili­ty, Medical Payments, Uninsured Motor­ists, Collision and Other-Than-Collision Loss.  Each insured vehicle is listed in a schedule, which states the applicable coverages, premiums and Limits of Liability.

 

The Miscellaneous Type Vehicle Endorse­ment can also be used to insure a pri­vate passenger auto owned jointly by two or more relatives, other than hus­band and wife, or by resident individu­als.  Resident individuals are persons who are living together but not re­lated.

 

A Passenger Hazard Exclusion - can also be activated as part of the Miscella­neous Type Vehicle Endorsement.  It excludes Liability for Bodily Injury to any person while occupy­ing the covered vehicle.  Example:  if a passenger on a motorcycle is thrown off the vehicle and injured, the PAP Liability Cover­age of the motorcycle owner does not ap­ply.  When the exclusion is activated, the insured pays a lower premium.

 

Finally, under the Miscellaneous Type Vehi­cle Endorsement, the amount paid for Physi­cal Damage Losses is limited to the lowest of (1) the stated amount shown in the schedule of declarations, (2) the Actual Cash Value of the stolen or damaged property, or (3) the amount necessary to repair or replace the prop­erty less any deductible.  In determin­ing the Actual Cash Value, an adjustment is made for depreciation and physical condition of the damaged vehicle.

 

Named Non-Owner Coverage Endorse­ment - The Named Non-Owner Coverage En­dorse­ment provides coverage for some­one who does not own an automobile.  Some people do not own cars because they live in large cities and rely on public transportation, they may not be able to afford expensive parking and garage fees, or they prefer not to drive in congested areas.  However, a person who does not own a car may drive another person's car or may rent a car to go on a trip or vacation.  Liability Loss Exposures arising out of the use of a Non-Owned Auto can be insured by adding Named Non-Owner Coverage to the PAP.

 

The Endorsement Provides Liability, Medical Payments and Uninsured Mo­torists Coverage for a named individual.  Coverage is provided only for the per­son named in the Endorse­ment.  Unlike an unendorsed PAP, the spouse and other resident family members are not automatically covered.  A spouse, fami­ly member, or other individual also must be named in the Endorsement to have coverage.

 

Liability Insurance under the policy is Excess over any other applicable Liabili­ty Insurance on the Non-Owned Auto.  The Endorsement provides important protec­tion to the named insured that is driv­ing a Non-Owned Auto with inade­quate liability limits or perhaps with no insur­ance at all.

 

Finally, if the named insured buys a car, he/she has insurance on the car for up to thirty days.  Coverage automati­cally terminates when the named in­sured purchases insurance on the newly acquired car.

 

Extended Non-Owned Coverage En­dorse­ment - The PAP excludes Liability and Medi­cal Payments Coverages for vehicles fur­­nished or made available for the regular use of the named insurance and family members.  The PAP also excludes the use of a Non-Owned Vehicle (other than a Non-Owned private passenger auto) for business purposes. These exclusions can be eliminated by adding the Extend­ed Non-Owned Coverage Endorse­ment to the PAP.  The coverage applies only to the individual(s) named in the Endorse­ment.  The Liability Coverage provided by the Endorsement is Excess over any other appli­cable insurance on the Non-Owned Vehicle.  There is also a provi­sion for Broadening Medical Payments Coverage as well.  When the Endorsement is added to the PAP, several Loss Exposures excluded under the PAP are now covered:

 

1.   A non-owned car furnished or made available for the regular use of the named individual is now covered.Example: an individual may be furnished            with a company car, have regular access to a car in a car pool, or regularly drive a state car on govern­ment business.  These Loss Exposures are now covered.

 

• A Non-Owned Vehicle used in busi­ness is now covered, except vehicles used in         

the auto business.  (However, business use of a non-owned private passenger auto is automatically covered by an unendorsed PAP).  Example:  if Terry drives a truck for her employ­er, she has coverage under her policy while driving the Non-Owned Truck.

 

3.   Use of a Non-Owned Vehicle as a Public or Livery Conveyance is now covered.        Example:  a taxicab driver has coverage under his/her policy while driving a company taxicab. The Liabili­ty Coverage is excess over any other applicable insurance on the taxi.

 

4.   The named individual also has protection against a fellow-employee suit arising out of a work-related accident.       Example: Rudy is driving a company            truck and a fellow employee in the truck is injured when he is involved in an accident with an­other motorist. If the injured employee sues Rudy, the loss is covered.

 

Mexico Coverage Endorsement - The PAP does not cover driving in Mex­ico.  However, the Mexico Coverage Endorsement can be added to the PAP to extend PAP benefits to a covered person who is involved in an accident within 25 miles of the United States border on a trip of 10 days or less.

 

The Endorsement is effective only if Primary Liability Coverage is purchased from a li­censed Mexican insurer.  The Liability Insur­ance provided by the Endorsement is Excess over the Mexican Insurance and any other valid and Col­lectible Insurance.  The Mexican Insur­ance can be purchased from a licensed agent at the border.  This method can be used by insureds that decide to travel into Mexico on the spur of the moment.  However, if an insured is a member of a foreign association, Liabili­ty Coverage that meets the Republic of Mexico requirements may be added to the existing policy issued by an American insurer.  This method has the advantage of securing protection prior to the trip.

 

Mexican authorities recommend that the liability limits carried should be at least $25,000/$50,000 for Bodily Injury Lia­bility and $8,000 for Property Damage.  The major advantage of the Endorsement is that it pro­vides additional Liabil­ity Insurance on an Excess Basis beyond that provided by the Mexican policy.

 

Snowmobile Endorsement - Snowmobiles can be insured by adding the Snowmobile Endorsement to the PAP.  A snowmobile is defined as a land motor vehicle solely by wheels, crawler-type treads, belts, or similar mechanical devices and designed for use mainly off public roads on snow or ice.  A vehicle propelled by airplane type propellers or fans is not considered to be a snowmobile.  Available coverages include Liability, Medi­cal Payments, Uninsured Motorists, Collision, Loss and Other-Than-Collision Loss.  Each covered snowmobile is listed in a schedule that states the appli­cable coverages, premiums and Limits of Liability.

 

The named insured and family members are covered for Liability Insurance while using any snowmobile.  Example:  if Jose's snow­mobile injures another per­son, the loss is covered.  However, other persons are covered only while using an owned snowmobile and are not cov­ered while using a snowmobile rented or leased by the named insured.

 

Example:  Jose owns a snowmobile that he occasionally lends to his friend, Gip.  If Gip is operating Jose's snowmobile and someone is injured through his care­lessness, the liability portion of Jose's PAP with the Snowmobile Endorsement would provide coverage.  If Jose bor­rows a snowmobile and lends it to Gip and someone is injured through Gip's negligence, Jose's PAP would not pro­vide coverage to Gip. The Liability Coverage has several exclusions and modifications.

 

• Coverage does not apply if the snowmobile is used in any business.

 

• The exclusion of vehicles with fewer than four wheels does not apply.

 

• Coverage is excluded for any person or organization, other than the named insured, while renting or leasing a snowmobile.

 

• Coverage does not apply when the snowmobile is used in a racing or speed      contest.

 

A Passenger Hazard Exclusion can be acti­vated, which excludes Liability for Bodily Injury to any person while occu­pying or being towed by the snowmo­bile.  Example: if a passenger in a covered snowmobile is injured and the insured is sued, the coverage does not apply.  Likewise, if the insured is tow­ing a skier with the snowmobile, Liabili­ty Coverage does not apply.

 

Physical Damage Endorsements

 

Part D - Coverage for Damage to Your Auto can also be broadened by adding certain endorsements to the Personal Auto Policy.  Some of the more widely used Physical Dam­age Endorsements are:

 

• Extended Transportation Expense Coverage
• Towing and Labor Costs Coverage
• Electronic Equipment and Tapes
• Stated Amount
• Covered Property Coverage
• Customized Equipment
• Loss Payable Clause Endorsement
• Additional Insured-Lessor

 

Extended Transportation Expense Coverage Endorsement - When a Covered Auto or Non-Owned Auto is damaged, the insured may be inconvenienced and may also incur sizable expenses in renting a car until the auto is repaired.  This Indirect Loss Exposure can be covered by adding the Extended Transporta­tion Expense Cover­age Endorsement to the Personal Auto Policy.  Under this Endorse­ment, if a Covered Auto or Non-Owned Auto is withdrawn from use for more than 24 hours because of Collision Loss or any loss covered under Part D (except loss by total theft) the insurer will pay up to $15 daily to a maximum of $450 for transportation expenses incurred by the named insured, or for any loss of use expenses for which the named insured is legally liable because of loss to a Non-Owned Auto.  No de­ductible is applied to this pay­ment, however, the Endorsement does not apply when there is total theft of a Covered Auto or Non-Owned Auto since such cover­age is provided under Trans­portation Ex­penses in Part D of the poli­cy.

 

The effect of this Endorsement is to broaden the Transportation Expenses Coverage.  As stated, the total theft of a Covered Auto or Non-owned Auto is covered under the Per­sonal Auto Policy when the insured purchases coverage for Other-Than-Collision Losses.

 

The Extended Transportation Expenses En­dorsement extends the coverage to include Collision Losses and Other Losses.

 

Towing/Labor Costs Coverage Endorsement - A car may break down or fail to start and a repair truck may have to be called for assis­tance.  Under the Towing and Labor Costs Coverage Endorsement, the insurer pays for towing and labor costs each time a Covered Auto or Non-Owned Auto is disabled, up to some stated amount such as $25, $50, or $75.

 

Example:  if a car will not start in cold weat­her because of a dead battery and a repair truck is called, the Labor and Towing Costs are covered up to the stated limits.  The cost of labor, however, is covered only when it is performed at the place of disablement.  Labor costs for work done at a service station or garage are not covered.

 

If a Non-Owned Auto is disabled, the insurer provides the broadest Towing and Labor Costs Coverage that applies to any Covered Auto shown in the schedule or declarations.

 

Example:  Judy borrows her roommat­e's jeep to go on a camping trip.  When one of the jeep's tires blows out, Judy discovers that the jeep has no spare.  Judy has the jeep towed to the nearest service station where the tire can be repaired.  This also would be covered.

 

Example:  Judy is going to be out of town on business and wants her expen­sive car painted while she is away.  She does not trust her roommate's driving ability, so she arranges to have a tow­ing service tow the car to the paint shop.  This would be covered also.

 

 

 

Electronic Equipment and Tapes En­dorse­ment - As noted, the Personal Auto Policy excludes a wide variety of electronic equip­ment, as well as tapes, records, discs and other media.  Coverage for such equipment can be obtained under the Electronic Equip­ment and Tapes En­dorsement for audio, visual and data electronic equipment, tapes, records, discs and other Media Endorsement.

 

Under the Endorsement, the insurer will pay, without any deductible, for direct and acci­dental loss to electronic equip­ment that re­ceives audio, visual, or data signals and is not designed solely for the reproduction of sound.  The elec­tronic equipment must be perma­nently installed in a covered auto at the same time of loss for the coverage to apply.  Thus, the Endorsement can be used to insure a loss for the coverage to apply.  Thus, the Endorse­ment can also be used to insure a citizens band radio, car tele­phone, videocassette recorder, televi­sion receiver, personal com­puter and similar electronic equipment.

 

The maximum amount paid for the total of all losses to electronic equipment and accessories is (1) the stated amount shown in the schedule or declarations, (2) the Actual Cash Value of the stolen or damaged property, or (3) the amount necessary to repair or replace the prop­erty.  However, the maximum amount paid for the total of all losses to tapes, re­cords, discs, or other media is the lowest of (1) $200, (2) the Actual Cash Value of the stolen or damaged proper­ty, or (3) the amount necessary to re­pair or replace the property.

 

Example:  Horace has Physical Cover­age for his auto, and has also pur­chased the Endorse­ment providing cov­erage for tapes, records, or other devic­es.  $150 worth of tapes belong­ing to Horace's wife was stolen out of his car while he and his wife were at the mov­ies.  They would be covered.

 

If $150 worth of tapes were destroyed in a fire, this also would be covered.  However, if $150 worth of tapes that Horace had borrowed from his boss were stolen from his car while he was shopping, they would not be covered. Keep in mind that coverage for audio, visual or data electronic equipment has no deduct­ible and covered equipment must be perma­nently installed and the Limit of Liability is a scheduled amount of insurance.

 

Stated Amount Endorsement - Some people own expensive antique cars or cars with expensive equipment that results in a higher than normal value for the vehicle.  To estab­lish the car's value when the policy is first written, a stated amount of insurance can be inserted in the policy.  This is done by adding a Stated Amount Endorsement to the PAP.

 

Under this Endorsement, each vehicle is described and a stated amount of insur­ance applies to collision Loss and Other-Than-Collision Loss.  The Stated Amount Endorse­ment, however, does not create a valued policy.  The insurer's maxi­mum Limit of Liability for a covered loss is limited to the lowest of (1) the stated amount shown in the schedule or in the declarations, (2) the actual value of the stolen or damaged property, or (3) the amount necessary to repair or re­place the property. The lower of these latter two figures is the amount paid less any deductible.

Finally, in determining the Actual Cash Value at the time of loss, an adjustment is made for depreciation and physical condition of the damaged or stolen property.

 

Covered Property Coverage Endorsement - Under the Covered Property Coverage En­dorsement, the insurer agrees to pay for direct and accidental loss to covered property while it is in, or attached, to the auto shown in the schedule or declara­tions.  Covered Property is defined as awnings, cabanas or equipment de­signed to create additional living facili­ties.  However, losses to business or office equip­ment and articles that are sales samples or used in exhibitions are specifically excluded.  The insurer's Limit of Liability is the lowest of (1) the stated amount shown in the schedule of declarations, (2) the actual value of the stolen or dam­aged property, or (3) the amount nec­essary to repair or replace the property.  In determining the Actual Cash Value, an adjust­ment is made for depreciation and physical condition of the damaged or stolen property.  Finally, the amount paid is reduced by the applicable de­ductible shown in the Schedule of Decla­rations.

 

Example:  Delbert has $500 of cover­age for an awning that is damaged in an accident.  He bought the awning for $500 a year ago. It would cost $450 to replace today and $350 to repair.  If Delbert had a $50 deductible, the insur­ance company would pay $300 for a covered loss.

 

Customized Equipment Coverage Endorse­ment - The Part D Coverage specifically ex­clude custom furnishings and equipment in or on a pickup or van.  This Ex­clusion can be deleted by adding the Customizing Equipment Coverage En­dorsement to the Personal Auto Policy.  Under this Endorsement, the insurer agrees to pay for direct and accidental loss to customized furnishings or equip­ment, which include the following:

 

• special carpeting, insulation, furniture or bars
• facilities for cooking and sleeping
• height-extended roofs
• custom murals, paintings or other decals or graphics

 

Example:  a grease fire in a van caused considerable damage to a built-in stove would be covered by this Endorsement.

 

The Customizing Equipment Endorsement, however, does not apply to the following types of property that are specifically ex­cluded:

 

• electronic equipment that is neces­sary for            the normal operation of the auto or monitoring of the auto's operat­ing systems.

 

• electronic equipment that is both an integral part of the same unit housing any sound reproducing equipment designed    solely for sound reproduction and is permanently installed in the opening of the dash or console of a Covered Auto.

 

• camper body or trailer

 

The amount paid for a loss to custom equip­ment is the lowest of (1) the stat­ed amount shown in the schedule or in the declarations, (2) the Actual Cash Value of the stolen or damaged proper­ty, or (3) the amount neces­sary to re­pair the property.

 

In determining the Actual Cash Value at the time of loss, an adjustment is made for depre­ciation and physical condition of the damaged or stolen property.  The amount paid for a loss is reduced by an applicable deductible.  How­ever, the deductible applies only once if both the vehicle and customizing equipment are damaged.  Example:  if a van is turned over causing both Bodily Injury and Damage to sleeping and cooking facili­ties, only one deductible has to be satis­fied.

 

Example:  Allen has purchased $900 of Customizing Equipment Coverage, writ­ten with a $50 deductible, for his cus­tomized Chevy Blazer which has a camp­er body in­stalled.  In a collision, the camper roof, car­pet, furnishings, stove, television are dam­aged.  The actual value of the damaged cus­tomized equipment is $1,750 or it can be repaired for $1,200.  The maximum amount Allen can recover for the loss would be $850 (stated amount minus the deductible).  If there Is Collision Damage to the body of the pick­up, as well as, damage to the customized equi­pment resulting from the same acci­dent, the insurance company will apply one deductible to the entire loss.

 

Loss Payable Clause Endorsement - Car purchases are frequently financed.  When a driver borrows money to buy a car, both the driver and the lender have an insurable inter­est in the car until the loan is paid off.  To protect its interest in the car, the lender will usually re­quire that the owner purchase insur­ance to cover the auto against theft or dam­age.  The lender in these cases becomes the loss payee.  When an insured indi­cates that another party has an insurable interest in a covered auto, the insurance company attaches the Loss Payable Clause Endorsement to the poli­cy.  Cop­ies of the policy, as well as, all En­dorsements are sent to the loss payee and the insured.  There is no premium that is char­ged for this Endorsement because it does not change the insur­ance exposure; it only affects to whom loss settlements will be paid.

 

The Loss Payable Clause Endorsement does require the insurance company to give the loss payee the same cancella­tion notice that it gives the named in­sured.  However, when the insurance company cancels a policy, it is not obligated by the Loss Payable Clause En­dorsement to pay the loss payee for its insur­able interests in the auto even if the vehicle is completely destroyed in an accident after the date of cancellation.

 

Additional Insured-Lessor Endorse­ment - Leasing companies (lessors) are in a similar position to lending companies, in that they have an insurable interest in autos they have leased to their custom­ers.  Additionally, since the lessor re­mains the legal owner of the leased vehicle, it is possible for a lessor to become legally liable for injury or damage involving the leased vehicles.  For these reasons, leasing companies usually require that they be included as additional insureds on the policies of the lessees (the people to whom the vehicles are leased).  The Addi­tional Insured-Lessor Endorsement is used for this purpose, the insured does not pay an additional premium for this Endorsement.  The Endorsement will not pro­vide Liability Coverage for injuries or damages for which the lessor becomes liable while driving an automobile. The Endorsement does cover the lesso­r's liability for accidents in which the named insured is driving the leased auto.  Also, the Endorsement does cover the lessor's liability for accidents in­volving the named insured's use of a temporary substitute for the leased auto.

 

Summary

 

The coverage of the Personal Auto Policy can be changed by Endorsement. Several endorse­ments affect all covera­ges: the Miscellaneous Type Vehicle Endorsement, the Snowmobile Endorse­ment, the Named Non-owner Cover­age Endorsement, the Extended Non-owner Coverage Endorsement, the Under-In­sured Motorists Coverage Endorsement supple­ments the Uninsured Motorists Coverage in the policy.  This Endorsement provides cover­age when a negli­gent driver insuring the named insured or family member Has Liabil­ity Insur­ance limits that are insufficient to pay damages arising out of the auto acci­dent.

 

Several Endorsements affect only the Physical Damage Coverage.  Some of these involve coverage for certain equi­pment, tapes, re­cords, and discs.  Other Endorsements affect­ing the Personal Auto Policy's Physical Dam­age include the Extended Transportation Expenses Coverage Endorsement, Towing and Labor Costs Coverage and the Stated Amount Endorsement.

 

Chapter 7 - Review Questions

1. Several additional coverages are available by:
A. limitations
B. conditions
C. endorsements
D. limits of Liability

2. An Endorsement known as "Blank" Form, because it includes blank space for the typing in of whatever changes are being made to the policy. Formally, this was called?
A. Under-Insured Motorists Endorsement
B. General Endorsement
C. Limited Endorsement
D. None of the above

3. This Endorsement acts like a cover letter providing important information about an accompanying endorsement.
A. Change
B. Specific
C. General
D. None of the above

4. If an insured wants different amounts of liability per person and per accident they would have this type of endorsement:
A. Towing and Labor Coverage
B. Under-Insured Motorist Coverage
C. Stated Amount Coverage
D. none of the above

5. What Endorsement should be used to protect insureds against individuals that have liability insurance limits that are sufficient?
A. Towing and Labor Coverage
B. Under-Insured Motorist Coverage
C. State Amount Coverage
D. none of the above

 

Answers

1. C
2. B
3. A
4. D
5. B