General Nature of Personal Auto Policy

1. General Nature of Personal Auto Policy • 1. Designed to cover three types of loss: • legal liability • injury to insured or family members • damage to the auto itself • 2. Subject to limitations, the policy covers: • others while driving the insured auto • the named insured and family while driving other autos

2. Personal Auto Policy Eligibility • 1. Auto owned by individual or husband & wife • 2. Private passenger automobile • 3. Pickup, van, or panel truck that • has a GVW of less than 10,000 lbs. • is not used for delivery or transportation of goods unless • incidental to business of installing or repairing furnishings or equipment • for farming or ranching

3. PAP Policy Format • Part A Liability • Part B Medical payments • Part C Uninsured motorist coverage • Part D Coverage for damage to your auto • Part E Duties after an accident or loss • Part F General provisions

4. PAP Liability Insuring Agreement • 1. Insurer promises to pay damages for “bodily injury” or “property damage” for which any “insured” becomes legally responsible because of an auto accident. • 1998 edition of the PAP is written with split liability limits (e.g., 20/40/15). • 2. Key elements in determining coverage, then, are whether the individual is an “insured,” and whether the auto being operated is a covered auto.

5. “Insured” as used in this part means: • 1. You or any “family member” for the ownership, maintenance or use of any auto or “trailer.” • 2. Any person using “your covered auto.” • 3. For “your covered auto,” any person or organization but only with respect to legal responsibility for acts or omissions of a person for whom coverage is afforded under this Part.

6. “Insured” as used in this part means: • 4. For any auto or “trailer,” other than “your covered auto,” any person or organization but only with respect to legal responsibility for acts or omissions of you or any family member for whom coverage is afforded under this part. This provision (B.4.) applies only if the person or organization does not own or hire the auto or “trailer.”

7. J. “Your covered auto” means: • 1. Any vehicle shown in the Declarations. • 2. A “newly acquired auto”. • 3. Any “trailer” you own. • 4. Any auto or “trailer” you do not own while uses as a temporary substitute for any other vehicle described in this definition which is out of normal use because of its: a. Breakdown; b. Repair c. Servicing; d. Loss; or e. Destruction. • This provision (J.4.) does not apply to Coverage for Damage to Your Auto.

8. Newly Acquired Auto • Inclusion of a “newly acquired auto” in “Your Covered Auto” provides coverage for new autos, but on a qualified basis. • 1. auto must meet PAP eligibility requirements • private passenger auto or • a pickup or van that does not exceed the gross vehicle weight limitation and • not used for delivery or transportation of goods except as allowed by the eligibility requirements). • 2. Separate provisions apply for coverages other than physical damage and for the physical damage coverages.

9. Newly Acquired Auto • 3. For liability, medical payments, and uninsured motorists coverages, replacement autos are automatically covered for the remainder of the policy period, without notice to the insurer. • 4. For additional vehicles, the insurer must be notified and coverage must be requested within 14 days of the date of acquisition for these coverages.

10. Newly Acquired Autos - Physical Damage • Replacement and additional vehicles are automatically covered for 14 days, for whatever physical damage coverage is already provided for at least one insured auto. • 1. New auto has the broadest physical damage coverage provided by the policy. • 2. If policy does not include physical damage coverage on any autos, newly acquired autos are automatically covered for 4 days. • $500 deductible. • If coverage is not requested within grace period, coverage begins when requested.

11. PAP Liability Exclusions • A.1. intentional injury or damage • A.2. to property owned or being transported • A.3. care, custody and control • A.4. injury to employees • A.5. while used as a public or livery conveyance • A.6. non-family members employed in auto business • A.7. business use of trucks • A.8. being used without reasonable belief of permission • A.9. nuclear exclusion

12. PAP Liability Exclusions (continued) • B.1. motorcycles • B.2. owned by or furnished for regular use of named insured • B.3. owned by or furnished for regular use of relatives (but this exclusion does not apply to named insured) • B.4. any vehicle located inside a facility designed for racing or competing.

13. Supplementary Payments • 1. Cost of bail bonds required because of an accident covered under the policy, up to $250 • 2. Premiums on appeal bonds to release attachments in suits covered under the policy • 3. Interest on judgments after judgment is entered • 4. Loss of earnings up to $200 a day while attending trials at company’s request • 5. Other reasonable expenses incurred at the request of the insurer

14. PAP Medical Payments Coverage • Medical payments insuring agreement agrees to pay medical expenses for • 1. Insured and family if injured while “occupying or struck by” • 2. Others: while “occupying”

15. Medical Payments Exclusions • 1. Vehicles with less than four wheels (1) • 2. Vehicle used as public or livery conveyance (2) • 3. Owned by/furnished for regular use of named insured (5) • 4. Owned by/furnished for regular use of resident relatives (6) • 5. Operated without permission (7) • 6. Nonowned trucks in business (8) • 7. Located for use as a residence (3) • 8. If workers comp benefits are payable (4) • 9. War (9) • 10. Nuclear (10) • 11. Occupying a vehicle in facility for racing or competing (11)

16. Limitations on Medical Payment Recoveries • 1. Medical payments reduced by liability and UM payments. • 2. Recipient agrees to apply payment against judgment. • 3. Excess over nonowned auto. • 4. Subject to subrogation.

17. Uninsured Motorists Coverage • 1. Pays what an uninsured driver’s insurance company would have paid if he or she had insurance. • 2. Uninsured motorist defined • no insurance • hit-and run • insurer becomes insolvent

18. Uninsured Motorists Coverage • 3. Basis of settlement • judgment against negligent party not conclusive as to existence of liability or amount to which insured is entitled • loss settlement by negotiation or arbitration

19. Underinsured Motorists Coverage • 1. Mutually exclusive with uninsured motorist • 2. Pays when other driver insured, but inadequately

20. Physical Damage Insurance • 1. Loss other than by collision-basically open-peril excluding collision • 2. Loss by collision • 3. Physical damage: nonowned autos • private passenger, pickup or vans • not owned by or furnished for regular use of named insured or family member • includes temporary substitute auto

21. Physical Damage Exclusions • 5 exclusions apply to owned & nonowned autos • while used as public or livery conveyance (1) • wear and tear, deterioration etc. (2) • radioactive contamination, nuclear damage (3) • destruction/confiscation by civil authority (7) • vehicle inside facility for racing, competing (13)

22. Physical Damage Exclusions • 3 exclusions apply to nonowned autos. • nonowned auto used without reasonable belief of permission (7) • nonowned auto used in auto business (11) • loss to a rental vehicle if rental company is precluded from recovery by state law or rental agreement

23. Physical Damage Exclusions • 6 exclusions apply to specific property • sound systems unless permanent (4) • electronic equipment (5) • tapes, records, disks for (4) and (5) above • camper bodies, trailers, motor homes not listed in the policy (6) • fuzz-busters (10) • custom furnishings or equipment in pickup or van (11)

24. Part E: Duties After an Accident or Loss • 1. Give notice to insurer • 2. Cooperate with insurer • 3. Send notices of legal papers • 4. Submit to physical examination • 5. Authorize insurer to obtain records • 6. Submit proof of loss when required • 7. Notify police if a hit-and-run driver is involved • 8. Notify police if the car is stolen

25. Extended Liability Coverage • Extends PAP to cover certain non-owned autos that would otherwise be excluded: • 1. Autos furnished for regular use of of the Named Insured. • 2. Autos furnished for regular use of resident relative. • 3. Non-owned autos that are not private passenger autos used by NI or resident relative in business.

26. Named Non-Owner Policy • 1. Designed for persons who do not own an auto, but want drive other car coverage. • 2. Covers named insured only (even spouse not included). • 3. Coverage is excess over any insurance on the non-owned auto.

27. Miscellaneous Type Vehicle Endorsement • Used with PAP to provide coverage on certain recreational motor vehicles: • motor homes • motorcycles, • mopeds, motorscooters, motorbikes • go-carts • all-terrain vehicles • dune buggies • golf carts • antique autos • classic autos

28. BI Limits Factor $20,000/40,000 1.00 25,000/50,000 1.07 50,000/100,000 1.27 100,000/300,000 1.41 250,000/500,000 1.53 500,000/1,000,000 1.57 PD Limits Factor $15,000 1.00 25,000 1.02 50,000 1.05 100,000 1.10 250,000 1.17 500,000 1.19 Cost of Increased Liability Limits

29. Cost of Increased Limits • Medical Payments • $1,000 limit = $11 • 2,000 limit = 17 • 5,000 limit = 30

30. PAP Deductible Credits • Comprehensive Collision Percent of Percent ofDeductible $100 Deductible $200 Deductible • None 118% --- • $50 109% --- • 100 100% 105% • 200 88% 100% • 250 83% 98% • 500 66% 89% • 1,000 49% 74%