(July, 2016)

DEFINITIONS

K. “Newly acquired auto”

1. This term applies to a private passenger auto, pickup, or van that any insured obtains possession of during the policy period (but after the policy period's inception date). However, van and pickup eligibility is subject to a weight and a use restriction. Pickups and vans are ineligible as covered autos if they are used for business activities. The policy makes an exception for incidental business use as part of a repair or maintenance business. It also allows covered auto status for such vehicles that are used on a farm or ranch business. Though not specifically referenced, SUVs are treated as private passenger autos and are subject to the following weight restriction.

In order to be eligible, a pickup or van has to have a maximum Gross Vehicle Weight Rating of 10,000 lbs or less.

However, even if an additional car, pickup or van clears the vehicle type, vehicle use and date of acquisition hurdles, there are other requirements. Paragraph K.2. covers the issue of when to report an additional vehicle to the insurance company. The timing of reporting the vehicle has a direct impact upon coverage.

Note: The required reporting period varies according to the type of coverage involved and whether the vehicle is a replacement.

2. The coverage that is available for newly acquired autos depends on the type of coverage provided by the PAP. However, in order for coverage to apply beyond the automatically provided coverage, the insured must report the newly acquired auto within the applicable time period. If not reported as required, there is no coverage on the auto between the time of automatic coverage and the date the formal request is made.

a. All coverages other than Coverage D-Coverage for Damage to Your Auto.

The insured has to report a new auto no later than 14 days from its acquisition. During those 14 days, the coverage is equal to the broadest coverage existing for an auto that appears on the policy declarations. If   the new vehicle replaces a vehicle that is listed on the policy, the replacement does not have to be reported.

The issue of a vehicle replacing a vehicle already described and covered by a PAP  is an area that could use clearer policy wording. The implication is that a vehicle would have to be reported by the renewing term because, once the policy renews, the replacing vehicle loses its status as a newly acquired auto. However, since the policy states “If a ’newly acquired auto’ replaces a vehicle shown in the Declarations, coverage is provided for this vehicle without your having to ask us to insure it,” a case may be made that the insured has no obligation to EVER report the vehicle. While there are other portions of the policy which would support an implicit requirement that a vehicle should be reported, it would help matters if the policy specifically stated that such a vehicle would have to be reported at the time of the policy’s next renewal after acquisition.

·         a newly acquired ADDITIONAL car qualifies for coverage if it is reported to the insurer within 14 days of the date it is acquired. Within that timeframe, the vehicle is covered for the broadest level of coverage (i.e., highest insurance limits, etc.) that is written under the policy. If the vehicle is never reported, it is not eligible for any coverage after 14 days. If the vehicle is reported after 14 days, coverage applies on the date it is reported.