ISO’s Personal Auto Policy Changes and Basic PAP Information Christopher J. Boggs, CPCU, ARM, ALCM, LPCS, AAI, APA, CWCA, CRIS, AINS Executive Director – Big “I” Virtual University

Today’s Agenda Nine Changes to the PAP 21 Changes to Multistate Endorsements Miscellaneous Information

9 Changes to the PAP

Newly Acquired Auto The current situation: Current policy language gives automatic coverage to a “newly acquired auto” that replaces another one without the need to notify the insurer (except for physical damage). The issue: If the carrier is not notified, no way to change symbol (if necessary) and charge correct premium. The change: When an insured acquires any vehicle, they are required to notify the carrier within 14 days. The effect: New notification requirements

Supplementary Payments The current policy: Supplementary Payments currently pay up to $200 per day for loss of earnings The issue: This limit does not match other ISO programs The change: ISO is increasing the daily limit to $250 The effect: Obvious

Public or Livery Conveyance Exclusion The current situation: Currently the public or livery conveyance exclusionary wording within the PAP is absolute. The PP 23 40 Public or Livery Conveyance Exclusion Endorsement (designed to reinforce the policy exclusion) is also absolute. The issue: There is a concern that this wording may be misapplied when volunteers transport others for charitable purposes. The change: New wording is being incorporated into the exclusion to provide an exception for the ownership or operation of a vehicle or a “your covered auto” when being used for volunteer or charitable purposes. The effect: 1) The exclusionary wording with its exception is being incorporated into the form – the PP 23 40 is being withdrawn; 2) The PP 00 01, PP 23 41 and PP 23 45 are being revised. Overall, a broadening of coverage.

PAP Exclusionary Endorsements The current situation: PP 23 16 Personal Vehicle Sharing Program Exclusion Endorsement; and PP 13 06 Custom Equipment Exclusion Endorsement are currently available for use. The issue: These are required endorsements that require attachment to every PAP. The change: The wording of both exclusionary endorsement is being included in the PAP base form wording. The effect: Both forms are being withdrawn. There is no coverage impact.

Racing Exclusion The current situation: The current PAP racing exclusion excludes under Coverage A, B and D “…coverage for the ownership, maintenance or use of any vehicle located inside a facility designed for racing, for the purpose of competing in, or practicing or preparing for any prearranged or organized racing or speed contest.” The issue: Driver “skill training” activities are not addressed. The change: Wording is changed to also exclude participation in a skill training or driver skill event. The effect: This is a reduction in coverage.

Flying Car Exclusion The current situation: There are no viable flying cars and there is no flying car exclusion in the PAP or by endorsement. The issue: ISO believes technology and economics will soon or eventually allow for flying cars. The change: Injury or damage arising from, related to, or occurring to flying cars will be excluded under all four coverage parts. The effect: There is currently no effect, but eventually this may be a limitation on or reduction of coverage.

Other Insurance Provision The current situation: 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: Personal umbrella polices generally state they are excess over any other insurance. This lead to confusion in the courts since both policies stated they were excess. The change: Adding 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.” The effect: No real effect, just clarification of intent.

Transportation Expense Coverage The current situation: Current unendorsed transportation expense limit in Coverage D is $20 per day / $600 maximum The issue: The limit does not appear to have kept up with market conditions The change: ISO is increasing the base transportation expense limit to $30 per day / $900 maximum The effect: No effect on coverage, just an increase in limit

Duties Provision The current situation: 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. The issue: 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. The change: ISO is adding wording requiring the insured to submit as often as reasonably required to recorded statements. The effect: An additional duty is being placed upon the insured.

21 Multistate Endorsements

Trailer/Camper Body Coverage Endorsement Currently existing endorsement: PP 03 07 New mold exclusionary wording is being added 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.” Adding the definition of “fungi” to the endorsement Two other changes to the endorsement:

Coverage for Damage to Your Auto Endorsement Applies to PP 03 08 Coverage for Damage to Your Auto (Maximum Limit of Liability) ISO is inserting the statement, “Coverage is not provided on an agreed value basis.” Endorsement is for special value autos such as classic and antique autos The endorsement 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 is NOT on an agreed value basis, so there is no effect on the coverage

Change Endorsement Withdrawn PP 03 10 Change Endorsement Currently used to document the date a policy change is to become effective ISO has been told carriers no longer make use of the endorsement The endorsement is being withdrawn from use

Underinsured Motorist Coverage Endorsement PP 03 11 Underinsured Motorist Coverage Three changes are being made to this endorsement to dovetail with changes made to the PAP: The volunteer or charitable use exception wording being added; The personal vehicle sharing exclusionary wording is incorporated into the wording; and The flying vehicle exclusionary wording is added.

Limited Mexico Coverage Endorsement PP 03 21 Limited Mexico Coverage Revising the endorsement’s warning statement due to recent research conducted and information received The new warning shall read: AUTO ACCIDENTS IN MEXICO MAY BE SUBJECT TO THE LAWS OF MEXICO, NOT THE LAWS OF THE UNITED STATES. UNDER MEXICAN LAW, AUTO ACCIDENTS ARE CONSIDERED A CRIMINAL OFFENSE AS WELL AS A CIVIL MATTER. THE COVERAGE WE PROVIDE YOU BY THIS ENDORSEMENT MAY NOT MEET MEXICAN AUTO INSURANCE REQUIREMENTS.

Miscellaneous Type Vehicle Endorsement PP 03 23 Miscellaneous Type Vehicle Endorsement ISO is introducing a mold exclusion under coverage Part D and adding a definition of “fungi” Also revising the exception to Exclusion 7 to reinforce that coverage is excluded for a motor home a named insured does not own when used as a temporary substitute for a covered motor home

Miscellaneous Type Vehicle Amendment PP 03 28 Miscellaneous Type Vehicle Amendment (Motor Homes) This endorsement allows the insured to purchase liability, med pay, comp and/or collision when a motor home that is a “your covered auto” is rented to others for an additional premium ISO made a rules change regarding the rating of these motor homes stating that they would be rated as PPAs used for business purposes Because of the rules revisions, the endorsement removed references to premium since it will now be a rating issue Added checkboxes which can be used to indicate if such coverage will be provided for a particular motor home and which coverages are provided

Joint Ownership Endorsement Changes the PP 03 34 Joint Ownership Coverage Current wording allows resident individuals (other than husband and wife), related or not, and non-resident relatives to have joint ownership The revised form: Provides for a listing of the joint owners If a non-resident relative, entry space for name and address Removes coverage information Replaced “husband and wife” with “spouses” No effect on coverage, allows the carrier increased flexibility

Auto Loan/Lease Coverage Endorsement PP 03 35 Auto Loan/Lease Coverage Revised form: Addresses how interest from deferred payments are to be handled Addresses primacy of coverage when another source of gap coverage applies to the loss The result is a reduction in coverage

Transition Endorsement PP 00 09 This endorsement can be attached to the 01 05 edition of the PAP to make it equate to the 09 18 edition

Full Safety Glass Coverage Endorsement New optional endorsement PP 33 05 Full Safety Glass Coverage Coverage applies when: Other Than Collision coverage is in effect The auto is listed in the endorsement

Key Replacement and Related Services Coverage Endorsement New optional endorsement PP 33 27 Key Replacement and Related Services Coverage Provides coverage for only the scheduled vehicles Pays without application of a deductible for: Reasonable expenses to get into the car if the fob is lost or stolen The cost to replace and program keys or key fobs lost or stolen

Pet Injury Coverage Endorsement New endorsement PP 33 31 Pet Injury Coverage Insured chooses a limit and no deductible applies Coverage extends from Part D and applies only when: Collision and OTC applies to at least one vehicle The pet (limited to dog or cat) owned by a “you” or “family member” is in the car at the time of the accident Covered costs include vet expenses or cost to cremate or dispose of the pet incurred within one year of the date of loss The limit is a per loss limit

Child Restraint System Coverage Endorsement New optional endorsement (To keep up with the market) PP 33 30 Child Restraint System Coverage NHTSA recommendations that systems be replaced after a crash Coverage extends from Part D and applies only when: Collision and OTC applies to at least one vehicle The child restraint system is owned by the you or a “family member” When the child restraint system is inside a “your covered auto” or a “non- owned auto” at the time of the loss Maximum limit is shown in the schedule or declarations and provides replacement with like kind and quality

Replacement Cost Coverage Endorsement New optional endorsement (To keep up with the market) PP 33 10 Replacement Cost Coverage Endorsement To qualify for replacement cost: The covered auto must be added within 24 months of purchase Have less than 24,000 miles No automatic coverage for a newly acquired auto No coverage for a leased vehicle There must be a total loss Coverage is subject to a deductible

Additional Resident of Your Household Endorsement New optional endorsement PP 33 37 Additional Resident of Your Household Developed to accommodate current living arrangement trends This is an “additional insured” type endorsement Allows the naming of an additional resident Amends the definition of “family member” to include the named resident Specifies that the carrier is depending on the insured to be truthful Requires the insured to notify the carrier if residency changes

Suspension of Insurance Endorsement Alters/revises the PP 02 01 Suspension of Insurance Other Than Collision is added to the schedule of coverages that can be suspended

Snowmobile Endorsement PP 03 20 Snowmobile Endorsement Revising the form with no coverage impact. Replacing the word “lesser” with “least”

Personal Property Coverage New optional endorsement (Millennial-based) PP 33 42 Personal Property Coverage Extends homeowner-like personal property coverage to personal property anywhere in the world Open peril coverage ACV basis with replacement cost option No non-auto liability coverage

Named Non-Owner Coverage Endorsement Revising the PP 03 22 named Non-Owner Coverage Physical damage coverage will now be an option

Trust Endorsement A revision to PP 13 03 Trust Endorsement Multiple revisions regarding the naming of the trust, the grantor and the trustee More flexibility to accommodate various trust structures

Miscellaneous Information

Change Effective Date ISO has filed these to be effective September 1, 2018 In a majority of states, the changes are applicable to all policies written on or after September 1, 2018. In Alaska, Connecticut, Florida, Louisiana and Maryland, this rule applies: These changes are applicable to all policies effective on or after September 1, 2018. In certain states, ISO does not establish effective dates. These include: California, Colorado, Texas and Virginia.

Jurisdictions These revisions are applicable in all states, except: Hawaii North Carolina

Uber, Lyft and Other Ridesharing Exposures

“Public or Livery Conveyance” The industry seemed to collectively agree that the public or livery conveyance exclusion in the personal auto policy (PAP) applied to ridesharing. But the unanswered (or unclear) question was, at what point was the car being used as a public or livery conveyance? Was it: When the driver turned on the app and made himself "available" to those needing a ride? When the driver accepted a request for the ride? or When the driver actually picked up the passenger?

ISO Response Insurance Services Office (ISO) created three endorsements to address when the PAP ceases to provide coverage (form numbers differ by state, so only endorsement names are used). Depending on the endorsement attached, PAP coverage may cease: When the driver turns on the app; When the driver has logged in to the app but has NOT accepted a request; When the driver accepts a request but has NOT picked up the rider; or When the driver picks up the rider. 

Depending on the Situation If the Carrier Wants to End Coverage When… They attach the… When the driver turns on the app… Public or Livery Conveyance Exclusion When the driver has logged in to the app but has NOT accepted a request… Limited Transportation Network Driver Coverage (No Passenger) When the driver accepts a request but has NOT picked up the rider Transportation Network Driver Coverage (No Passenger)

Insured Status in the PAP

Liability Coverage Liability Coverage (Coverage Part A)   Liability Coverage (Coverage Part A) Named Insureds / Extended Insureds “You”1 “Family Member”2 For the ownership, maintenance or use of ANY auto or trailer causing BI or PD. Automatic Insureds Any person using “your covered auto”4 with permission Any person or organization legally responsible for the actions of an insured for the use of a covered auto, trailer or other vehicle not owned by the insured or the organization, or provided for the insured’s regular use. Additional Insureds Joint Ownership Coverage (PP 03 34): Extends status as a “You” to other than husband/wife co-owners or non-resident relatives when the named insured and the scheduled individual jointly own a vehicle eligible for a PAP. Additional Insured – Lessor (PP 03 19): Extends vicarious liability and physical damage protection to the lessor of a vehicle leased by a “You.” Additional Resident of Your Household (PP 33 37): Allows for the extension of “family member” to include non-related individuals such as nannies, live-ins and room mates (college exposure) who do not own an insured vehicle, but have access to it. (Effective 9/1/18)

Medical Payments Medical Payments (Coverage Part B)   Medical Payments (Coverage Part B) Named Insureds / Extended Insureds “You”1 “Family Member”2 Injured while “occupying” a motor vehicle designed for use on public roads or when struck as a pedestrian by such a vehicle. Automatic Insureds Any other person “occupying”5 “your covered auto”4 Additional Insureds Joint Ownership Coverage (PP 03 34) Additional Resident of Your Household (PP 33 37)

Uninsured (UM) Motorist3 UM/UIM   Uninsured (UM) Motorist3 (Coverage Part C) Named Insureds / Extended Insureds “You”1 “Family Member”2 BI or PD caused by an accident resulting from the ownership, maintenance or use of an auto by an at-fault uninsured driver. Automatic Insureds Any other person “occupying” “your covered auto” Consequential damages suffered by a third party due to injury to any insured person for this coverage part Additional Insureds Joint Ownership Coverage (PP 03 34) Additional Resident of Your Household (PP 33 37)

Physical Damage Physical Damage (Coverage Part D)   Physical Damage (Coverage Part D) Named Insureds / Extended Insureds Attaches to a vehicle that qualifies as a “Your Covered Auto”4 rather than an individual or entity. Automatic Insureds Additional Insureds Joint Ownership Coverage (PP 03 34) Additional Insured – Lessor (PP 03 19)

Definitions “You”: Named insured and spouse if resident of the same household (and for up to 90 days after common residency ends) “Family Member”: An individual related to the “You” by blood, marriage or adoption, including a ward or foster child, who is a “resident” of the “You’s” household. A resident includes someone away attending school. An individual in active military service with any of the US armed forces shall not be included as resident in the same household unless such individual customarily operates the auto. Uninsured (UM) / Underinsured (UIM) Motorist: No liability coverage or bond applies at the time of the accident Liability coverage or bond does apply but is less than the state minimum limits A hit-and-run vehicle whose driver cannot be identified Coverage applies but the insurance carrier denies coverage (not liability) or becomes insolvent “Your covered auto”: Any vehicle listed in the declarations A newly acquired auto (must be a PPV or a pickup or van with a GVW of 10,000 lbs. or less not used primarily for delivery or transportation of goods) Any trailer “you” own A temporary substitute auto “Occupying”: In; upon; getting in, on, out or off

Executive Director, Big “I” Virtual University Chris.boggs@iiaba.net CPCU, ARM, ALCM, LPCS, AAI, APA, CWCA, CRIS, AINS Executive Director, Big “I” Virtual University Chris.boggs@iiaba.net 703-706-5380