30 Changes
TO ISO ’ S PERSONAL AUTO POLICY by Maria Dressman , CIC , CAWC
O n May 8 , I spent some time at the KAIA office watching the Big “ I ” Virtual University webinar “ ISO ’ s Personal Auto Policy Changes ,” by Chris Boggs , with Krista Rowley , KAIA Executive Director Dave Hulcher and KAIA Attorney Will Larson .
ISO has filed 30 changes to its Personal Auto Program ( PAP ) to go into effect on Sept . 1 , 2018 , except in Hawaii and North Carolina . Nine of the changes are being made to the base PAP form itself and 21 endorsements were revised , removed or created . Exclusions previously requiring the attachment of three endorsements are now included in the base PAP .
Nine Changes to the Personal Auto Program
1 . Newly Acquired Auto - Currently , policy language gives automatic coverage to a “ newly acquired auto ” that replaces another without a requirement to notify the insurer ( except for physical damage ). However , if the carrier is not notified , there is no way to change the Symbol ( if necessary ) and charge the correct premium . Now when an insured acquires ANY vehicle ( regardless if it ’ s new or a replacement ), they are required to notify the carrier within 14 days . Therefore , new notification requirements are taking place and essentially no more automatic longterm coverage is provided . This will probably be the hardest change for clients to realize .
2 . Supplementary Payments - Currently , the supplementary payments pay up to $ 200 per day for loss of earnings , but this limit does not match other ISO programs , therefore the daily limit is being increased to $ 250 . This item was derived from the Mid-America Insurance Conference ( MAIC ).
3 . Public or Livery Conveyance Exclusion - Currently , the public or livery conveyance contains exclusionary wording within the PAP that is absolute . Designed to reinforce the policy exclusion , the PP2340 Public or Livery Conveyance Exclusion Endorsement is also absolute , which starts the exclusionary coverage the minute the transportation network app is turned on . Therefore , there is a concern that this wording may be misapplied when volunteers transport others for charitable purposes . Now , language is being incorporated into the exclusion to provide an exception for the ownership or operation of a vehicle , or a “ your covered auto ,” when it ’ s being used for volunteer or charitable purposes . In these cases , the Limited Coverage when you are on the Network with no passengers , PP2341 , will provide coverage when you are logged in and have accepted a request for a ride , and the Limited Coverage endorsement , PP2345 , will provide coverage while logged on the network , but coverage ends when you accept a ride . The transportation networks are to provide coverage once you pick the person up and are physically transporting them . Will Larson is not sure if this is legal in Kansas due to State Statue 403107 . This item was derived from MAIC .
4 . PAP Exclusionary Endorsements - Currently , both the Personal Vehicle Sharing Program Exclusion PP2316 and the Custom Equipment Exclusion Endorsement PP1306 are required to attach to every PAP . Now , they are being included in the PAP base form wording , therefore no coverage impact is being changed .
5 . Racing Exclusion - Currently , the PAP racing exclusion does not address driver “ skill training ” activities , and the wording that is being changed now excludes participation in a skill training or driver skill events . Therefore , this will be a reduction in coverage . Will Larson does not believe this will be allowed in Kansas .
6 . Flying Car Exclusion - Currently , there are no viable flying cars , and therefore there is no current flying car exclusion in the PAP or by endorsement . However , ISO believes technology and economics will soon or eventually allow for flying cars , so they have amended the PAP to state that injury or damage arising from , related to , or occurring to flying cars will be excluded under all four coverage parts . There is currently no effect , but eventually this may be a limitation on or reduction of coverage .
7 . Other Insurance Provision - Currently , under Part A , the current policy wording reads : “ However , any insurance we provide for a vehicle you do not own , including any vehicle while used as a temporary substitute for “ your covered auto ,” shall be excess over any other collectible insurance .” The issue is that the Personal umbrella polices generally state that they are excess
Maria Dressman MAIC Board Member
over any other insurance . This led to confusion in the courts since both policies stated that they were excess . Therefore , ISO is adding the wording to the Other Insurance provision in Part A to recognize the possibility of an umbrella and state that it is not excess over a policy that is intended and is specifically an excess policy “ except insurance written specifically to cover as excess over the limits of liability that apply in this policy .” This change is for clarification purposes .
8 . Transportation Expense Coverage - Currently , the policy includes an unendorsed transportation expense limit in Coverage D . It is $ 20 per day / $ 600 maximum ; however this has not kept up with the market conditions . Therefore , ISO is increasing the base transportation expense limit to $ 30 per day / $ 900 maximum .
9 . Duties Provision - Currently , the Duties After an Accident or Loss provision in the B . 3 . b . of Part E requires that the insured must submit , as often as reasonably requested , to examination under oath . Also , there is currently no specific requirement that the insured provide a recorded statement , if requested . The insured could refuse without violating the duties owned and endangering coverage . ISO is adding wording requiring the insured to submit , as often as reasonably required , to recorded statements . An additional duty is being placed upon the insured . You will no longer be able to decline a recorded statement or you would be going against your “ duties ”; the unknown factor is what “ reasonably ” often means . The term is not a limited or defined term and could cause some issues .
21 Changes to Multistate Endorsements
1 . Trailer / Camper Body Coverage Endorsement - New mold exclusionary wording is being added to PP0307 ; according to ISO , apparently RVs , camper bodies and trailers are or can be especially susceptible to mold damage . New exclusionary wording in the endorsement reads : “ We will not pay for : Loss due to “ fungi ,” wet or dry rot , or bacteria meaning the presence , growth , proliferation , spread or any activity of “ fungi ” wet , or dry rot , or bacteria .” Therefore adding the definition of “ fungi ” to the endorsement .
2 . Coverage for Damage to Your Auto Endorsement - ISO is inserting the statement , “ Coverage is not provided on an agreed value basis ” to PP0308 . This endorsement is meant for special value autos , such as classic and antique autos , and it allows vehicles to be written on a stated value basis ; the loss settlement provision states that losses will be settled for the lesser ( least ) of stated value or ACV . The new wording simply reinforces that coverage , and it is NOT on an agreed value basis , so there is no effect to coverage .
3 . Change Endorsement Withdrawn - Currently , PP0310 is being used to document the date a policy change is to become effective , but ISO has been notified that carriers are no longer making use of this endorsement , therefore it will be withdrawn from use .