Understanding the Standardized PAP Structure

The Personal Auto Policy (PAP) is the standard insurance contract used across the United States to provide protection for individuals and families. For those preparing for the complete Claims Adjuster exam guide, mastering the six distinct sections (Part A through Part F) is essential. Each section defines specific obligations, coverages, and exclusions that determine how a claim is handled.

The PAP is designed to be a package policy, combining both liability (protection against lawsuits from others) and property (protection for the insured’s own vehicle) coverages. While state laws vary regarding which parts are mandatory, the structural logic of the policy remains consistent in the eyes of the Insurance Services Office (ISO).

Part A: Liability Coverage

Part A is arguably the most critical section for an adjuster. It protects the insured against legal liability for Bodily Injury (BI) and Property Damage (PD) caused to others in an auto accident. Crucially, Part A also includes the insurer's duty to defend the insured in court, which is provided in addition to the policy limits.

Liability limits are often expressed as split limits, such as 25/50/25. In this scenario:

  • $25,000: The maximum paid for bodily injury to any one person in an accident.
  • $50,000: The total maximum paid for bodily injury to all persons in a single accident.
  • $25,000: The maximum paid for damage to the property of others.

Adjusters must remember that Part A follows the insured while driving their own vehicle or a non-owned vehicle, but generally, the insurance on the vehicle is primary, and the driver's insurance is excess.

Summary of Coverages A through D

FeatureCoverage PartType of ProtectionKey Feature
Part ALiabilityThird-party protection for BI and PD.
Part BMedical PaymentsFirst-party, no-fault medical coverage.
Part CUninsured MotoristsCovers the insured when the at-fault party lacks insurance.
Part DDamage to Your AutoCollision and Other Than Collision (Comprehensive).

Part B and Part C: First-Party Protections

Part B: Medical Payments (Med Pay) provides coverage for reasonable medical and funeral expenses incurred by an insured person due to an auto accident. This is a no-fault coverage, meaning it pays out regardless of who caused the accident. It typically covers the named insured and family members while occupying any motor vehicle or when struck as a pedestrian by a motor vehicle.

Part C: Uninsured Motorists (UM) Coverage steps in when the insured is involved in an accident with a driver who is at fault but has no insurance, or is a hit-and-run driver. Underinsured Motorists (UIM) coverage is a related concept that applies when the at-fault driver has insurance, but their limits are insufficient to cover the total damages. These coverages ensure the insured receives the same amount of compensation they would have received from the at-fault party's liability policy, had it existed or been adequate.

Part D: Coverage for Damage to Your Auto

Part D is where physical damage to the insured's own vehicle is addressed. It is divided into two primary categories:

  • Collision: Coverage for the upset of the vehicle or its impact with another vehicle or object.
  • Other Than Collision (OTC): Often called Comprehensive, this covers perils like fire, theft, explosion, earthquake, windstorm, hail, flood, vandalism, glass breakage, and contact with birds or animals.

Adjusters must pay close attention to the Limit of Liability under Part D, which is usually the lesser of the Actual Cash Value (ACV) or the amount necessary to repair or replace the property with other property of like kind and quality. Deductibles are typically applied separately to Collision and OTC claims.

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Exam Tip: Identifying the Insured

On the exam, be careful to distinguish between the Named Insured (the person listed on the declarations page and their resident spouse) and an Insured (which can include any person using the vehicle with permission). Coverage extensions often differ based on this distinction.

Part E and Part F: Duties and Provisions

Part E: Duties After an Accident or Loss outlines the requirements the insured must meet to receive coverage. Failure to comply can result in a denial of the claim. These duties include providing prompt notice to the insurer, cooperating with the investigation, and submitting a proof of loss when requested. For Part D claims, the insured must also protect the property from further damage and allow the insurer to inspect the vehicle.

Part F: General Provisions contains the rules governing the policy as a whole. This includes the Policy Period and Territory (usually the US, its territories, and Canada), Cancellation and Non-renewal procedures, and the Legal Action Against Us clause, which prevents an insured from suing the insurer until all policy terms have been met.

To prepare for scenarios involving these provisions, you should review practice Claims Adjuster questions to see how policy conditions apply to real-world claims disputes.

Frequently Asked Questions

Yes, under Part C of the PAP, a hit-and-run driver who cannot be identified is typically classified as an uninsured motorist, provided there is physical contact with the vehicle (in most jurisdictions).
Collision covers impact with another object or vehicle and vehicle roll-overs. OTC (Comprehensive) covers almost everything else, such as falling objects, animal strikes, theft, and natural disasters.
No. Part B is first-party coverage for the insured and their passengers. The other driver's injuries would be covered under the insured's Part A (Liability) coverage if the insured is at fault.
Standard PAP forms generally exclude coverage for vehicles used to carry persons or property for a fee (such as delivery services), though many states have specific endorsements for ride-sharing or delivery.