Medical Payments Coverage Uninsured Motorists Coverage Physical Damage Coverage Insured Responsibility in Case of Accident or Loss Policy Conditions Available Endorsements Conclusion

Introduction

The AAIS personal auto program includes a multi-state base form, state mandatory endorsements, and more than 60 optional endorsements. Those endorsements are said to be the most valuable feature of the new program, providing flexibility to address a variety of newly arising coverage categories, some of which are not addressed by ISO endorsements. When compared to the ISO auto policy form, the specific wording of the AAIS personal auto program is different, but the outcome is generally the same. Differences between the two forms will be specifically mentioned.

Definitions

Both AAIS and ISO place their definitions at the front of their policies. In the definition of “you” and “your” the AAIS and the ISO forms both cover the named insured and a spouse that is a resident of the same household, although in the ISO form the named insured must be shown in the declarations in order to be considered “you” or “your.”

ISO's Personal Auto Policy (PAP) has one definition for a “newly acquired auto,” and within that definition distinguishes between a vehicle that is obtained in addition to the cars listed in the declarations, and a vehicle that is obtained as a replacement for a vehicle that is listed in the definitions. The AAIS form has separate definitions listed for that distinction, “additional auto” and “replacement auto. The main difference in coverage provided is that ISO provides automatic coverage on a newly acquired vehicle or van with a gross vehicle weight (GVW) of up to 10,000 pounds,. while AAIS provides automatic coverage on an additional auto or replacement pickup or van with a GVW of up to 12,000 pounds.

AAIS and ISO both define “business” and begin with the same language, covering a trade, profession or an occupation, but the AAIS form includes full-time, part-time, and occasional work, and also includes farming or ranching in their definition of “business.” Later in the ISO form farming and ranching are both listed as exceptions to the business exclusion.

AAIS has a separate definition for “auto business” which is the “business” of: selling, leasing, renting, repairing, servicing, road testing, delivering, storing, parking, or towing vehicles that are designed for use mainly on public roads.

AAIS defines “performance activity” as a:

(a) Racing;

(b) Speed;

(c) Pulling;

(d) Pushing;

(e) Demolition; or

(f) Stunt;

activity or contest,

while the ISO form lists the activities that are subject to the racing exclusion as “any vehicle located inside a facility designated for racing, for the purpose of competing in or practicing or preparing for any prearranged or organized racing or speed contest.” While the two definitions basically cover the same activities, the AAIS form also excludes pulling, pushing, demolition and stunting activity, all activities not mentioned in the ISO form. An insured could use his vehicle in a pulling contest at a local fair and be covered under the ISO form for such an activity as it is not a racing or speed contest.

Both the ISO and AAIS forms define “bodily injury” as bodily harm, sickness or disease, including resulting death, but differentiate when the AAIS definition specifically excludes mental or emotional injury, suffering, or distress that does not result from physical injury to a person. For example, the PAP would cover emotional distress that manifests itself physically, but without a physical injury to cause the distress the AAIS form would exclude coverage for a physical manifestation of something like stress or anxiety.

AAIS uses the phrase “covered auto” instead of “your covered auto,” the phrase used in the ISO form. The big difference in definitions are that the AAIS definition of “covered auto” includes “additional auto” and “replacement auto” while the ISO form definition for “newly acquired auto” covers both additional and replacement vehicles. Overall the coverage is the same despite small differences in phrasing.

AAIS adds definitions for several words that are not defined in the PAP.

“Declarations” means all pages labeled as declarations, supplemental declarations, or schedule that pertain to this policy.

“Deductible” means the dollar amount of a loss for which the insured is liable.

“Diminution in value” means the real or perceived decrease in market or resale value in result from an accident or loss.

“Limit” is the amount of insurance.

“Named insured” is the person shown on the declarations as the named insured.

“Terms” is defined as all provisions, limitations, exclusions, conditions, declarations, and definitions that are used in the policy.

“Transportation network platform” is an online-enabled program, often an application, used to connect customers with drivers who are using vehicles to provide prearranged transportation services for compensation. A transportation network platform is used by Uber, Lyft, and other ridesharing drivers to make contact with potential riders.

“War” is defined using the standard war exclusionary language, including undeclared or civil war, warlike action by a military force, including action in hindering or defending against an actual or expected attack, and other such actions.

Common Exclusions

While both the ISO and the AAIS forms have public or livery conveyance exclusions, the AAIS has additional exclusions that preclude liability coverage while a vehicle is being used to deliver or transport food or other goods in exchange for compensation. The AAIS adds some language to the exclusions section that excludes coverage for any of the insureds liability or loss that occurs at any time the insured is using a vehicle while logged into a transportation network program as a driver, with or without a passenger in the vehicle. More specific exclusions about this subject are becoming increasingly necessary because of the rapid expansion of ride-sharing applications. Unless there is an endorsement that modifies this exclusion, the AAIS policy would preclude coverage for a pizza delivery driver, a driver for an app based ride-sharing company, or any other delivery for which the driver will receive compensation. The AAIS policy provides an exception to the exclusion that allows coverage for the use of a vehicle for a volunteer or charitable activity for which the insured receives no compensation or the only compensation is the repayment of the expenses incurred to carry out the activity. So any loss that occurs when the insured uses their car to drop off pies to the church's charity banquet or to shuttle people from the parking lot to the golf benefit should be covered by the AAIS policy. The only listed exception to the public or livery conveyance exclusion in the ISO policy is for share-the-expense car pools.

The AAIS policy excludes coverage for any insured while that person is employed or otherwise engaged in an “auto business.” The definition of “auto business” is listed above. By contrast the ISO form lists several excluded activities including while employed or otherwise engaged in the business of selling, repairing, servicing, storing or parking vehicles designed for use mainly on public highways, including road testing and delivery. The AAIS form excludes leasing, renting, repairing, and towing which are activities not mentioned in the ISO form.

The performance activity exclusion in the AAIS form is similar to the racing exclusion in the ISO form, and excludes coverage while a vehicle is damaged while located inside of an area designed for a performance activity for the purpose of participating in, practicing, or preparing for that activity. The AAIS definition is listed above, and includes racing, speed, pulling, pushing, demolition, or stunt activity or contest. As an example, if a vehicle was damaged while participating in a demolition derby, truck pull, or pushing match under the AAIS form coverage would be excluded.

The AAIS form excludes liability coverage for a covered auto that is enrolled in a personal vehicle sharing program and being used in connection with a vehicle sharing program and being used in connection with a vehicle sharing program by someone other than the named insured or a family member. The ISO policy does not contain any similar exclusions.

Liability Coverage

There are some other differences in the exclusions between the two forms, specifically dealing with liability coverage. The AAIS intentional injury exclusion excludes intentional acts and acts that are expected by or directed by the insured, or injuries that result from an insured's intentional and malicious act. The exclusion applies even if the resulting bodily injury or property damage is different from the expectations of the insured, or suffered by a party, entity, or property that the insured did not intend to harm. The ISO form only excludes liability coverage for any insured who intentionally causes bodily injury or property damage. For example, if a pedestrian stepped into the street as an insured gunned his or her engine in order to hit a rival further down the road and the pedestrian was struck and injured, the insured might be covered by the ISO form but coverage would be excluded under the AAIS form.

Both forms have an exclusion for off-road vehicles and vehicles with fewer than four wheels. The AAIS exclusion specifically excludes motorcycles. Although motorcycle isn't defined, this language was specifically added to exclude liability coverage for an insured driving a 4-wheeled motorcycle, the popularity of which has increased over the past few years.

The AAIS form explicitly excludes liability coverage for exemplary or punitive damages. Punitive damages, also known as exemplary damages, are intended to deter the offender and others from participating in the same or similar conduct to what formed the basis of the lawsuit. This solidifies the liability agreements statement that limits coverage to compensatory damages, so if the question of punitive damage coverage arises, this language can be pointed to directly. The ISO form does not mention punitive or exemplary damages in this section.

Medical Payments Coverage

The differences between the AAIS form's medical payments exclusions and the ISO PAP's medical payments parallel the differences in the liability exclusions, discussed above. Apart from that and some differences in wording and structure, the AAIS forms med pay coverage is comparable to that provided by the ISO PAP.

Uninsured Motorists Coverage

The differences between the AAIS form's uninsured motorist exclusions and the ISO PAP's uninsured motorists parallel the differences in the liability exclusions, discussed above. Apart from that and some differences in wording and structure, the AAIS forms uninsured motorists coverage is comparable to that provided by the ISO PAP.

Physical Damage Coverage

AAIS uses the distinction “comprehensive” rather than ISO's “other-than-collision” label to describe coverage for non-collision losses. At one point ISO also used the “comprehensive” label, but removed the term under concern that the term “comprehensive” might be taken to mean that coverage was provided with no exclusions, as the dictionary definition of the word is “complete; including all or nearly all elements or aspects of something.” Despite the substitution of “other-than-collision” for “comprehensive,” many insurers continued to use the more simple term. AAIS chose to adopt the simpler term for their personal auto form.

The AAIS form has included a section called “additional covered expenses,” which are expenses that will be paid without a deductible being applied. This section only has one inclusion: Child Safety Seat Expense. In consideration of the extraordinary prices of child safety seats, AAIS has included additional coverage that is not found in the ISO personal auto policy form. The inclusion provides for payment of up to $250 when there is a loss to a covered auto or non-owned auto and a child safety seat belonging to the insured and installed in the vehicle is damaged, has its integrity compromised, or is lost due to total theft of the vehicle.

ISO will pay up to $600 for temporary transportation expenses, up to $20 per day incurred by the insured in the event of a loss of use, subject to certain exclusions listed in the form. AAIS provides transportation expenses of up to $30 a day with a $900 limit.

Wear and tear in the AAIS form are more extensive than those in the ISO form. The AAIS form covers what is excluded in the ISO PAP but also specifically excludes physical damage coverage for manufacturing defects, faulty material or parts, and deterioration, rust, or corrosion. These physical damages might be excluded under the wear and tear exclusion in the ISO form, but listing the damages specifically limits potential liability of the insurer.

The AAIS form explicitly excludes coverage for diminution in value, and although the ISO PAP form doesn't include an exclusion for diminution in value, often an endorsement excluding diminution in value is added to the policy.

Insured Responsibility in Case of Accident or Loss

The AAIS form is more detailed than the ISO form is when specifying what must be done by an insured when they seek coverage under any part of the policy for an accident or loss. The AAIS form specifically states that the insurer must be given assistance in enforcing any right of recovery it might have against a party that caused the accident or loss.

Policy Conditions

As said before, there is different wording used, and the AAIS form tends to be more detailed, but there is no major difference between the two forms.

Available Endorsements

When it initially released the personal auto policy, AAIS stated that the program's defining feature was the optional endorsements, not the policy itself. The following is a list of endorsements and a short description of their provisions.

Endorsements Setting Policy Conditions

Accident Forgiveness: An endorsement that ensures that, upon agreement of the company and the named insured, a policy can be endorsed to allow for the exclusion of consideration of one previous at-fault accident. PA 9603

Intra-Family Liability Exclusion: An endorsement that amends Liability Coverage in order to exclude coverage for an insured for bodily injury to the named insured or a family member can be added to a policy. PA 4502

Named Driver Exclusion Endorsement: An endorsement that excludes any or all coverages for damages, expenses, or losses that arise from the maintenance or use from any named driver. Form PA 4800.

Suspension of Insurance: This endorsement suspends insurance. The vehicles and coverages for which the suspension is in effect must be indicated on the form. Form PA 9601.

Reinstatement of Insurance: Upon mutual agreement of insurer and insured, insurance that has been suspended may be reinstated. Form PA 9602.

Underinsured Motorist Coverage: This endorsement allows for payment for compensatory damages that an insured is legally entitled to recover when the insured suffers bodily injury that is caused by the owner or operator of a car that is uninsured. Form PA 2200.

Combined Single Limit – Liability Coverage: This endorsement provides a combined single limit that applies on a per accident basis that may be attributed to bodily injury and property damage liability. Form PA 0600.

Combined Single Limit – Uninsured Motorist Coverage: This endorsement allows for a single limit that applies on a per accident basis. Form PA 0700.

Combined Single Limit – Underinsured Motorist Coverage: This endorsement allows for a combined single limit that applies on a per accident basis. Form PA 0800.

Named Driver Exclusion: This endorsement excludes all coverage for damages, expenses, or loss that arises from maintenance or use of any vehicle by any named driver.

Endorsements Addressing Components and Personal Property

Audio Visual, or Data Electronic Equipment Coverage: This endorsement allows provisions of coverage for damage to auto, visual, or described vehicle or non-owned vehicle. No deductible applies to this coverage. Form PA 9402.

Excess Audio, Visual, or Data Electronic Equipment Coverage: This endorsement allows coverage under Physical Damage Coverage for Your Auto for damage to audio, visual, or data electronic equipment in or on a described vehicle or non-owned vehicle. Form PA 9403.

Pet Injury Coverage (first party): This endorsement adds coverage for injury to or death of a pet when the pet is inside a vehicle and the injury or death is the result of a collision. In order to get this endorsement at least one vehicle described on the policy must have Collision Coverage for the pet injury coverage to apply. Form PA 3701.

Custom Equipment Coverage: This endorsement provides for coverage under Physical Damage Coverage for Your Auto for custom equipment in or on any described vehicle. Form PA 9401.

Custom Equipment Exclusion: This endorsement amends Physical Damage Coverage for Your Auto to exclude coverage for any custom equipment in or on any vehicle. Form PA 4503.

Tapes, Records, Discs, Or Other Media Coverage: This endorsement provides coverage for damage to tapes, records, discs, or other media owned by the named insured or a family member that is in or on any described vehicle. Form PA 9404

Excess Tapes, Records, Discs, Or Other Media Coverage: The endorsement provides coverage under Physical Damage Coverage for Your Auto for Damage to tapes, records, discs, or other media owned by the named insured or a family member that is in or on any described vehicle or non-owned vehicle. Form PA 9405.

Endorsements Addressing Ownership Arrangements

Additional Insured — Lessor: An endorsement that provides coverage to additional insureds for liability resulting from an insureds ownership, maintenance or use of a covered auto. The endorsement provides insurance for additional insureds who are listed in the endorsement.

Joint Ownership Coverage: This endorsement covers the interests of multiple owners of a listed vehicle, including two individuals who are not married and live in the same house or two individuals who live in separate houses and are related by blood, marriage, or adoption. Form PA 1200.

Trust As An Insured: An endorsement that allows for the interests of trustees in the described vehicle to be covered. Form PA 1300.

Endorsements Addressing Non-Owned Auto Coverage

Extended Non-Owned Coverage – Named Person: This endorsement allows for coverage to a named person who does not own a vehicle. This coverage does not cover an owned vehicle. Form PA 1600.

Extended Non-Owned Coverage – Named Person (Auto Business): This endorsement provides coverage to a named person for the use of a vehicle while employed or otherwise engaged in an auto vehicle. Coverage does not extend to an owned vehicle. Form PA 1900.

Extended Non-Owned Coverage – Vehicles Available or Furnished for use as Public or Livery Conveyances: This endorsement provides coverage to a named individual or to that named person and any resident family member for his or her use of a vehicle available or furnished for his or her work as a public or livery conveyance. Coverage does not apply to an unowned vehicle. Form PA 1800.

Extended Non-Owned Coverage — Vehicles Available or Furnished for Regular Use: This endorsement provides coverage to a named person or to the named person and any resident family member for the use of a vehicle available or furnished for regular use of the named person. This coverage does not apply to an owned vehicle. Form 1700.

Named Non-Owner Coverage: An endorsement that allows for the coverage to a named person, or to that named person and any resident family member, who does not own a vehicle. This coverage does not apply to a vehicle owned by, furnished, or available for the regular use of the named person unless otherwise indicated. Form PA 1500.

Other

Federal Employees using Autos in Government Business: This endorsement amends the terms of Liability Coverage to exclude the US government, or any other person while operating a vehicle during the course of his or her employment by the US government, as an insured. Form PA 4501.

Coverage for Vehicles Other than Personal Autos

Farm Motor Vehicle Coverage: This endorsement provides coverage for certain motor vehicles for farming and ranching purposes which are not otherwise covered under PA 0001. May obtain Liability Coverage, Medical Payments Coverage, Uninsured Motorists Coverage, and Physical Damage Coverages. Form PA 9405.

Low Speed Vehicle Coverage: This endorsement allows for coverage for certain low speed vehicles not otherwise covered under the terms of PA 0001. May obtain Liability Coverage Medical Payments Coverage, Physical Damage Coverage, and Uninsured Motorists Coverages. Form PA 8402.

Miscellaneous Type Vehicle Coverage: This endorsement allows for coverage for certain miscellaneous type vehicles otherwise not covered under PA 0001. May obtain Liability Coverage, Medical Payments Coverage, Uninsured Motorist Coverage, and Physical Damage Coverage. Form PA 8401.

Trailer and Camper Bodies: This endorsement provides coverage under Physical Damage Coverage for Your Auto, for your trailers, camper bodies, and their equipment. Form PA 8404.

Snowmobile Coverage: This endorsement provides coverage for snowmobiles. Form PA 8403.

Coverages for Traveling

Emergency Roadside Service Coverage: This endorsement allows the inclusion of coverage for costs incurred to obtain emergency roadside assistance when a described vehicle becomes disabled as a result of a covered emergency. Form PA 3502.

Towing and Labor Costs Coverage: This endorsement allows coverage for labor and towing costs incurred when a vehicle becomes disabled. Form PA 3501.

Mexico Collision Coverage: This endorsement extends Collision Coverage under Physical Damage Coverage for Your Auto for direct or accidental loss to a vehicle that occurs in Mexico. Form PA 7611.

Limited Mexico Coverage: This endorsement extends any coverage for a described vehicle to apply to accidents and losses that occur in Mexico within 25 miles of the United States border. Coverage is only extended for a period of 10 consecutive days. Form PA 6601.

Trip Interruption Coverage: This endorsement allows for the inclusion of coverage for costs incurred for transportation expenses, food, and lodging when a described vehicle is disabled while away from the insured's residence. The disablement must be the result of a loss or failure of a mechanical or electrical system that is necessary for the operation of the vehicle. Form PA 3801.

Optional Limits Transportation Expenses Coverage: This endorsement is applied in order to increase the limit applicable to Transportation Expense under Physical Damage Coverage for Your Auto for a described vehicle. Form PA 3601.

Equivalent Vehicle Transportation Expenses Coverage: This endorsement replaces the Transportation Expense provision under Physical Damage Coverage for Your Auto for a described vehicle. Coverage is provided without a specific limit to pay the reasonable expenses for a rental vehicle equal in class and body to the described vehicle for up to 30 days. Form PA 3602.

Coverage Solutions for Specific Vehicles

Collision Deductible Waiver: This endorsement provides that the deductible applicable to Collision Coverage under Physical damage Coverage for Your Auto is waived when a loss meets specific criteria. Form PA 7603.

Auto Loan/Lease Coverage: This endorsement allows for payment above the actual cash value under the Physical Damage Coverage for Your Auto to pay the balance due on a loan or lease on that vehicle at the time of the loss. Form PA 7608.

Diminishing Deductible: This endorsement amends the application of the required deductible after a covered loss under Physical Damage Coverage for Your Auto for a described vehicle when an insured meets specific criteria. Form PA 7606.

Mechanical Breakdown Coverage: This endorsement is included to provide coverage for costs incurred to repair a described vehicle that meets specific criteria when it sustains a failure of a mechanical, electrical, or electronic system that is necessary for the operation of the vehicle. Form PA 3503.

Physical Damage Coverage for Your Auto – Stated Maximum Value Coverage: This endorsement includes a maximum amount for a vehicle with coverage provided under Physical Damage Coverage for Your Auto. Losses are settled at the lesser of the stated value, actual cash value, or the necessary amount to repair or replace the stolen or damaged property. Form PA 7601.

Physical Damage Coverage for Your Auto – Agreed Value Coverage: This endorsement includes an agreed value amount for a described vehicle for which coverage is provided under Physical Damage Coverage for Your Auto. Losses are settled at the lesser of the agreed value or the amount necessary to repair or replace the stolen or damaged property. Form PA 7602.

Physical Damage Coverage for Your Auto – Collision Deductible Waiver: This endorsement provides that the deductible applicable to Collision Coverage under Physical Damage Coverage for Your Auto is waived when a loss meets specific criteria. Form PA 7603.

Physical Damage Coverage for Your Auto – Participating Coverage Amendment: This endorsement includes with the policy a stated value amount for a described vehicle for which coverage is provided under Physical Damage Coverage for Your Auto. Losses are settled at the lesser of the stated value or the amount necessary to repair or replace the stolen or damaged property. The deductible is a percentage of the stated value. Form PA 7614.

Physical Damage Coverage for Your Auto – Loss Settlement Amendment: This endorsement provides that no payment will be made under Physical Damage Coverage for Your Auto for existing damage to a described vehicle when an insured was previously compensated for that damage and failed to replace or repair the damaged property. Form PA 7607.

Rental Vehicle Physical Damage Coverage: This endorsement provides coverage under Physical Damage Coverage for Your Auto for a rented vehicle as if it were an owned, described vehicle. This includes coverage for loss of use of the rental vehicle after a covered loss. Form PA 7612.

Physical Damage Coverage for Your Auto – New Vehicle Replacement Cost Coverage: This endorsement provides full replacement cost under Physical Damage Coverage for Your Auto for a described.

Physical Damage Coverage for Your Auto – Diminution of Value Coverage: This endorsement provides coverage for diminished value claims under Physical Damage Coverage for Your Auto. Form PA 7604.

Foreign Made and Discontinued Makes of Auto Exclusion: This endorsement amends Physical Damage Coverage for Your Auto to exclude coverage for loss or expenses that result from the unavailability of stock repair parts or repair services. Form PA 4504.

Full Safety Glass Coverage: This endorsement includes payment for damaged safety glass of a described vehicle without payment of a deductible under Physical Damage Coverage for Your Auto. Both Comprehensive Coverage and Full Safety Glass Coverage must be applicable to the described vehicle. Form PA 7609.

Full Window Coverage: This endorsement includes payment for the windshield glass without a deductible under Physical Damage Coverage for Your Auto. Comprehensive Coverage must also apply to the vehicle. Form PA 7610.

New Vehicle Replacement Cost Coverage: This endorsement allows full replacement cost under Physical Damage Coverage for Your Auto for a described vehicle that meets specific criteria in the event of a total loss. Form PA 7606.

Vehicles Used for Delivery or Transport: This endorsement provides coverage for a described vehicle for use in commerce for delivery or transportation of food or other goods. This includes coverage provided when an insured is logged into a transportation network program and prior to or during fulfillment of a request for service. Form PA 6605.

Endorsements for the Sharing Economy

Personal Vehicle Sharing Physical Damage Coverage: This endorsement provides coverage under Physical Damage Coverage for Your Auto for use of a described vehicle by someone other than an insured driver connected with a vehicle sharing program. Form PA 7613.

Transportation Network Program Coverage: Also known as “Phase III,” this endorsement provides coverage for a described vehicle for public or livery conveyance, specifically providing coverage while an insured driver is logged into a transportation network program while a passenger is in the vehicle. Form PA 6604.

Transportation Network Program Coverage – No Passenger: Also known as “Phase II,” this endorsement provides coverage for a described vehicle for public or livery conveyance, providing coverage while an insured driver is logged into a transportation network program with an accepted request for service buy no passenger occupying the vehicle. Form PA 6603.

Transportation Network Program Coverage – No Accepted Passenger: Also known as “Phase I,” this endorsement provides coverage for a described vehicle for public or livery conveyance, specifically providing coverage while an insured driver is logged into a transportation network program, prior to the acceptance of a request for service and without a passenger occupying the vehicle.

Conclusion

The AAIS personal auto program is the most recent program of its kind and includes many exclusions, exceptions, endorsements and coverage categories not addressed in the comparable ISO form. The new AAIS personal auto policy has been thoughtfully crafted in order to address the insurance risks and concerns of the day. This comparison of the ISO auto policy program and the AAIS auto policy program shows that there are similarities and differences in wording and coverage between the two forms. Despite these differences, the majority of the coverages that are provided are still very similar. The addition of several endorsements using up-to-date language allows the AAIS personal auto program to be tailored to fit many situations for which the slightly dated ISO personal auto program falls short in providing coverage.