2018 auto insurance changes you should know

Here’s an overview of changes and revisions to the 2018 ISO personal auto policy language.

This revised policy and the accompanying endorsements have been specifically crafted to provide for several emerging issues such as keyless entry and flying cars. (Shutterstock)

Editor’s Note: The original version of this article contained an error. There was no change to the street racing exclusion in the new 2018 Personal Auto form.

Insurance Services Office, Inc. (ISO), an acknowledged leader in writing policy language to cover property and liability risks, recently released a revised personal auto policy (PAP) that will be effective on Sept. 1, 2018. The revised policy and accompanying endorsements have been specifically crafted to provide for several emerging issues such as keyless entry and flying cars. It also allows for some higher limits in areas where prices may be rising.

These changes were worded specifically to make sure that both the insured and the insurer are protected to the fullest intent of the policy. The following discussion highlights some of the more important changes in the 2018 version of the PAP.

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Newly acquired auto

Previously, if a “newly acquired auto” replaced a vehicle listed in the declarations, coverage other than “Coverage for Damage to Your Auto” would have been provided without the named insured having to ask the insurer to write a policy for the new vehicle.

ISO realized though, that insurers may be faced with a situation in which their insured purchases a new vehicle that changes the symbol and rating factor, which should involve a re-evaluation of the policy, and perhaps a raised or lowered premium price. ISO also noted that most insureds generally inform their insurer or agent of a replacement vehicle because it must be registered and reported to the relevant state’s Department of Motor Vehicles. Now, insureds must notify their insurer of any vehicle they acquire for any coverage other than “coverage for damage” to apply.

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Public conveyance exclusion

ISO has also enacted changes to the public or livery conveyance exclusion. It has been altered in all four parts of the personal auto policy to incorporate an exception to the exclusion for when the insured owns or operates a vehicle or a covered auto while it is being used for volunteer or charitable purposes. This change broadens coverage by allowing insureds to recover for damages that occur while they’re using their vehicle for good. The definition of “transportation network platform” had been included in an endorsement and is now included in the PAP.

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Racing exclusion

Previously, the racing exclusion of the ISO form excluded liability coverage for the ownership, use or maintenance of a vehicle inside a racing facility, for competing in, practicing or preparing for a prearranged racing or speed contest. Some organizations, though, have started to train drivers in educational skill development sessions that occur on race tracks.

The new version of the PAP adds an exclusion for these driver skill training or driver skill events. Although the courses intend to train drivers on how to safely execute the high-speed maneuvers necessary in racing, it is still a risk most insurers don’t intend to cover.

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Flying cars

The authors of the new version of the PAP have determined that the looming issue of flying cars is coming too close for their comfort, so they added in a flying car exclusion. The exclusion specifically explains that there are some unique and unforeseeable risks associated with the emergence of flying cars or roadable aircrafts. The manual indicates that coverage for these vehicles would be better accommodated in a specialty policy.

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Key fob

We all know how much of a pain it is to lose the key fob to the car, particularly when a replacement costs about $200. The PAP has a new endorsement that allows for replacement of a key fob if it is lost or stolen and, on a per vehicle basis, will pay for reasonable expenses incurred for services to access a covered car if the key or key fob for that vehicle is lost or stolen.

Pet injury coverage

The new PAP also introduces an endorsement for pet injury coverage, so if an insured is involved in an accident with a pet in the front seat, the endorsement will provide veterinary expenses or services incurred as a result of bodily injury to the pet. This coverage only applies if at least one covered car is insured for Other Than Collision and Collision Coverages, and the pet is inside a covered car at the time of the loss or injury.

Transportation expenses

Previously the PAP allowed for transportation expenses of $20 per day, up to $600. The authors of the form have determined that inflation and other market influences affect transportation expenses, so they have raised that limit to $30 per day with a maximum limit of $900 per day, which is generally supported by current trends in the U.S. rental car market. The new form changes the duties of the insured, now requiring the insured to submit, as often as reasonably required, to recorded statements. This provision has been included to help insurers gather information about an insured’s claim. A recorded statement may be taken at a convenient time for both parties, over the phone, and it allows for increased flexibility and accountability on behalf of both parties.

Child restraint system

Another new endorsement is the Child Restraint System Coverage Endorsement. Car seats can be expensive, and the National Highway Traffic Safety Administration recommends that they be replaced after a collision. With the new ISO endorsement, the replacement cost of a restraint system would be covered in the event of an accident.

These are a few of the highlights of the newly revised personal auto form. As always, a thorough reading of the form and accompanying manual is necessary to fully understand the changes in coverage, but these are some specific areas that agents and brokers should review.

Hannah Smith (hsmith@alm.com) is an editor with FC&S Online, the authority on insurance coverage interpretation and analysis for the P&C industry.

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