Definition of Replacement vs. Additional Vehicles The PAP defines "newly acquired auto" as "any of the following types of vehicles you become the owner of during the policy period." It also says that "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." Our question is, what is commonly viewed as a "replacement vehicle?" For example, if an insured sells one of their two vehicles and calls in to remove the vehicle that was sold, and then acquires another vehicle a period of time later, is the newly acquired vehicle a replacement for the vehicle that was sold, or is it an additional vehicle? I have seen in another Q&A article that a vehicle is a replacement if it's procured after issuance of the policy and the described vehicle is disposed of by the policyholder or is otherwise inoperable at the time of replacement. But what if the described vehicle was disposed of weeks, months or years ahead of the purchase of the newly acquired vehicle, is that still considered a "replacement?"
California Subscriber
ISO has changed the wording from the 2005 form and the 2018 form. In the 2005 edition, it states that: "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. "
Replace is not a defined term, and in general, courts turn to a standard desk reference in such instances. Merriam-Webster online defines replace as: to take the place of especially as a substitute or successor or to put something new in the place of.
So a vehicle that is added to a policy in place of a vehicle that had been removed from the policy would be a replacement vehicle, even if it was a few weeks/months down the road. However, if another new vehicle had been added to the policy but not necessarily with the idea of replacing that old vehicle, that could cause significant confusion. For example, an insured takes a pickup truck off the policy, adds a sports car a month later, and then another month after that adds a pickup truck to replace that original pickup truck. That could be a problem. In general, it's always best if an insured notifies the insurer as soon as a new vehicle is purchased.
The 2018 edition of the policy has been revised and has removed that language regarding replacement of a vehicle without the insured having to ask the insurer for coverage. Now insureds are required to notify the insurer of any newly acquired vehicle, whether a replacement or not, within 14 days if collision and other than collision coverage apply and within 4 days if it does not.
In revising the policy, ISO stated that insurers could be faced with a need to change the symbol for liability/PIP/medical payments coverage when a vehicle is newly acquired. ISO also understands that most insureds inform the insurer or agent of a replacement vehicle due to state registration and insurance requirements. Therefore, the policy language was changed to require notification of any new or replacement vehicle within the 14/4 day requirement. That policy form number is PP 00 01 09 18. The earlier form number is PP 00 01 01 05.
Christine G. Barlow, CPCU
Christine G. Barlow, CPCU, is Executive Editor of FC&S Expert Coverage Interpretation, a division of National Underwriter Company and ALM. Christine has over thirty years’ experience in the insurance industry, beginning as a claims adjuster then working as an underwriter and underwriting supervisor handling personal lines. Christine regularly presents and moderates webinars on a variety of topics and is an experienced presenter.