Replacement Vehicle Coverage under PAP

December 6, 2011

When a covered auto is replaced, when does coverage cease on the vehicle being replaced? Example: insured goes to agent's office in morning to replace vehicle, but does not pick up vehicle until that night. On way to get new vehicle, the insured has an accident with the old vehicle. In the mean time, the agent has processed the change of vehicle.

New York Subscriber

If you are talking about liability coverage, you have to look at the insuring agreement and the exclusions. The insuring agreement gives the insured liability coverage for the ownership and use of any auto. So, if the insured still owns the old vehicle and/or is using it, the insuring agreement gives him liability coverage. But then, see the exclusions. The PAP does not provide liability coverage for the ownership or use of any vehicle other than “your covered auto” which is owned by the named insured. So, while the insuring agreement provides liability coverage for the old car, the exclusion requires it to be a covered auto. A covered auto is defined in the policy, so you have to see if the definition is met, and what is probably the applicable part of the definition is “any vehicle shown in the declarations”. So, is the old car still shown in the declarations or was it removed? If the old car is still shown, the liability coverage is there. If the old car has been removed from the declarations and the insured is still the owner, the exclusion prevents coverage. So, there may be a gap in coverage here depending on the facts of the situation.

As for physical damage coverage, the PAP states that coverage is present for “your covered auto” or any “non-owned auto”. Both terms are defined. The covered auto definition is noted in the previous paragraph so that information applies to physical damage coverage too. If the old vehicle is not a covered auto by definition, there is no coverage under that part of the physical damage insuring agreement. If the insured does not own the old vehicle anymore at the time of the accident, a case could be made that it is a nonowned auto by definition and that would allow the PAP to provide physical damage coverage.

So, the answer to your question depends a lot on the facts of the situation when compared to the policy language.