2 Hour Webcast
FAIA
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FAIA Copyright 2010
HANG ON TO YOUR HAT!
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Part A consists of the following:
Insuring Agreement
Supplementary Payments
Exclusions
Limit of Liability
Out of State Coverage
Financial Responsibility
Other Insurance
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We will pay damages for "bodily injury" or "property
damage" for which any "insured" becomes LEGALLY
RESPONSIBLE because of an auto ACCIDENT. Damages
include prejudgment interest awarded against the
"insured". We will settle or defend, as we consider
appropriate, any claim or suit asking for these
damages. In addition to our limit of liability, we will
pay all defense costs we incur. Our duty to settle or
defend ends when our limit of liability for this
coverage has been exhausted by payment of
judgments or settlements. We have no duty to defend
any suit or settle any claim for "bodily injury" or
"property damage" not covered under this policy.
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Accident
“sudden, unusual, fortuitous, unexpected,
unforeseen or unlooked for event.”
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The courts have said the test is not whether
the auto is the proximate cause of injury;
rather, that there simply be some causal
connection-some "nexus" (connection, link)
between the auto and the injury-that the auto
is not simply the "situs" (location) of an injury
that could have occurred anywhere.
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A operates B’s car
A has B’s consent and it benefits B
Can be said that B is operating car.
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If A operates B’ car with B’s consent
For A’s sole purpose and no benefit to B
Cannot be said B is operating the car.
Henigson v. Davis
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One who is merely a passenger is not “using
the auto.
Auto Owners v. Jones
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Directing Truck over a ledge.
Wellman-Lord Eng. v. Northwestern
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.In addition to our limit of liability, we will pay
all defense costs we incur. Our duty to settle
or defend ends when our limit of liability for
this coverage has been exhausted by
payment of judgments or settlements. We
have no duty to defend any suit or settle any
claim for "bodily injury" or "property damage"
not covered under this policy.
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“Parenthesis”
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“You”
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Refers to “named insured” or insured.
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Also refers to spouse IF a resident of same
house-hold.
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Unnamed spouse moves out of residence.
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How long can they wear the “You” nametag?
◦ 90 days after the move
◦ when the spouse gets another policy in his or her
name
◦ the expiration date of the current policy
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“bodily injury”
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bodily harm, sickness, disease, or death.
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“property damage”
physical injury to, destruction of, or loss of
use of tangible property
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“We, us, our”
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All three of these refer to the insurer.
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Who is the “insured” under Part A Insuring
Agreement Section B?
1. You or any “family member” for the
ownership, maintenance or use of any auto or
“trailer.
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“Family member”
A person related to you by blood, marriage or
adoption who is a resident of your household.
This includes a ward or foster child.
Children that are temporarily away from
home such as college are still covered under
their parent’s policy.
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Who is the “insured” under Part A Insuring
Agreement Section B?
2. Any person using “your covered auto”
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“Your covered auto”
Those listed in the declarations.
Trailers owned by the insured.
Any temporary substitute auto or trailer.
Newly acquired auto.
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“trailer”
A trailer is designed to be pulled by a private
passenger auto, pickup, or van. The definition
also includes farm wagon or farm implement
while being towed by the above.
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Trailer
Not a trailer
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“Newly acquired auto”
For Non-physical damage coverage (liability,
Med Pay, UM)
 If Replacement Auto then coverage is automatically
covered until policy expires
 If an Additional Auto then automatically covered for 14
days.
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“Newly Acquired Auto”
◦ For Physical Damage-Collision
 If insured has had coverage then the lowest deductible
for 14 days.
 If insured has not had coverage then $500 deductible
for 4 days.
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“Newly Acquired Auto”
◦ For Physical Damage-Other than Collision
 If insured has had coverage then the lowest deductible
for 14 days.
 If insured has not had coverage then $500 deductible
for 4 days.
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“Newly Acquired Auto”
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Number 2 under the definition states:
 2. Is not used for the delivery or transportation of goods
and materials unless such use is:
 (a)Incidental to your "business" of installing, maintaining
or repairing furnishings or equipment; or
(b)For farming or ranching.
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Who is the “insured” under Part A Insuring
Agreement Section B?
3. Any person or organization for liability
arising out of any insured’s use of the
covered auto on behalf of that person or
organization.
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Who is the “insured” under Part A Insuring
Agreement Section B?
4. Any person or organization legally
responsible for the named insured’s or family
member’s use of any automobile or trailer.
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Supplementary Payments:
◦ Cost of Bail Bonds.
◦ Premiums on Appeal Bond.
◦ Interest Accruing after Judgment.
◦ $200 a day for Lost Earnings.
◦ Other Reasonable Expenses Incurred.
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Exclusions
Paragraph A deals with people and
organizations.
Paragraph B deals with vehicles.
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Exclusions
◦ 1. Intentional injury
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Exclusions
◦ 2. Property Owned or Transported
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Exclusions
◦ 3. Care Custody, or Control
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Exclusions
◦ 4. BI to employee of insured
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Exclusions
5. Public or Livery Conveyance
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Exclusions
◦ 6. Garage Business Use
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“Business”
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Includes trade, profession, or occupation.
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Exclusions
◦ 7. Other Business Use
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Exclusions
◦ 8. Reasonable Belief
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Exclusions
◦ Nuclear Energy Liability Losses
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Severability o f Interests
Example:
◦ Father is named insured under PAP. Son is family
member.
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The described scenario brings into play four of
the "A" series of exclusions:
(1) intentionally caused damage
(2) damage to property used by or in the care of
son
(3) use as a public or livery conveyance
(4) use without permission.
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Exclusions
◦ 10. Vehicles with fewer than 4 wheels or designed
for off-road use
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Exclusions
◦ 11. Other vehicles Owned by Insured or Available
for Insured’s Regular Use
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Exclusions
◦ 12. Vehicles Owned by or Available for Family
Members Regular Use
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“Occupying”
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Getting on, in, out, or off a vehicle.
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Exclusions
◦ Racing
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Limit of Liability
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Split limit basis
 Bodily Injury to each person
 Bodily Injury to all persons in each accident
 Property Damage in each accident
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LIMIT OF LIABILITY
A.The limit of liability shown in the Declarations for each
person for Bodily Injury Liability is our maximum limit of liability
for all damages, including damages for care, loss of services or
death, arising out of "bodily injury" sustained by any one person
in any one auto accident. Subject to this limit for each person,
the limit of liability shown in the Declarations for each accident
for Bodily Injury Liability is our maximum limit of liability for all
damages for "bodily injury" resulting from any one auto accident.
The limit of liability shown in the Declarations for each accident
for Property Damage Liability is our maximum limit of liability for
all "property damage" resulting from any one auto accident.
This is the most we will pay regardless of the number of:
1."Insureds";
2.Claims made;
3.Vehicles or premiums shown in the Declarations; or
4.Vehicles involved in the auto accident.
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Limit of Liability
Paragraph B prohibits duplicate of coverage
payments.
 If you receive under Part A then you cannot receive
duplicate payments under Part B or C
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Out of State Coverage
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Financial Responsibility
When this policy is certified as future proof of
financial responsibility, this policy shall
comply with the law to the extent required.
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OTHER INSURANCE
If there is other applicable liability insurance
we will pay only our share of the loss. Our
share is the proportion that our limit of
liability bears to the total of all applicable
limits. 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.
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Review Time
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1. All the following are true concerning the
time frame when an unnamed spouse moves
out of the house and looses “insured” status.
◦ A. 90 days after the move
◦ B. When the spouse gets another policy in own
name.
◦ C. The expiration date of current policy.
◦ D. Signs ISO’s moving out endorsement.
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2. For a “newly acquired auto”, the insured is
covered for how many days for non physical
damage coverage for an additional auto?
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A. 10 days
B. 20 days
C. 14 days
D. 15 days
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3. What is not an exclusion under Part A of
the PAP?
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A. Care, Custody, Control.
B. BI to employee of insured.
C. Carpooling.
D. Garage Business Use.
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Part B Medical Payments
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Insuring Agreement
Exclusions
Limit of Liability
Other Insurance
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Paragraph A of Insuring Agreement
◦ Insurer agrees to pay expenses incurred within 3
years from the date of the accident
◦ The types of expenses included are
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Medical
Surgical
X-Ray
Dental
Funeral Expenses
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Paragraph B of Insuring Agreement
1. The “named insured” and “family members”
are both covered if :
 Injured while “occupying” a motor vehicle OR
 As a pedestrian when struck by a motor vehicle
designed mainly for use on public roads.
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Paragraph B of Insuring Agreement
◦ 2. Any other person while occupying a covered
auto.
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Part B Exclusions
◦ 1. Vehicles with fewer than 4 wheels
◦ 2. Public or Livery Conveyance
◦ 3. Vehicle used as a residence or premises
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Part B Exclusions
◦ 4. Workers Compensation
◦ 5. Other Vehicles owned by insured or available for
insured’s regular use
◦ 6.Vehicles owned by or furnished for regular use
◦ 7. Reasonable Belief
◦ 8. Vehicles used in business
◦ 9. War
◦ 10. Nuclear
◦ 11.Racing
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Part B Limits of Liability
Paragraph A
◦ Stated in the declarations page, usually between
$1,000 and $10,000.
◦ The limit is the maximum amount that will be paid
to each injured person in a single accident,
regardless of the number of insured persons,
claims made, vehicles, or premiums shown on the
policy or vehicles involved in an auto accident.
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Part B Limits of Liability
Paragraph B
◦ Prevents duplicate payments
for the same coverage under A,
B, or C.
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Part B Other Insurance
Pro rates payments with any other available
auto med pay coverage.
Excess when the insured is injured in a non
owned vehicle.
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Review Time
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1. Under Part B Medical, the insurer agrees to
pay only the expenses incurred within:
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A. 3 years
B. 2 years
C. 5 years
D. 10 years
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2. Which of the following are types of
expenses paid under Part B Medical?:
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A. X-ray
B. Surgical
C. Funeral
D. Dental
E. All of the above
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For more information on unauthorized
entities go to FAIA’s website at www.faia.com
and under the Education section you will find
a handout that you can download.
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Thanks for attending!
Jeff Odom
jodom@faia.com
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