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Over the years, I've had clients tell me, after an accident, that they had this immediate sense of panic that maybe, just maybe, they wouldn't be covered for the accident.

This sense of panic comes from a lack of understanding of how their insurance contract will perform after an accident. Why the lack of understanding? Well, most people don't bother to read their policy and/or ask questions of their agent; most people just want to know how much they will be saving. 

Fortunately, I'm  here to share the knowledge that 95.6% of agents don't bother to share because they are just order takers. (Ok, I made the percentage up but the rest is true.)

So, if you're in an auto accident how can you be confident you have liability coverage? Well, you have to ask:

The Big 3 Questions
  1. Is the auto involved a covered auto under your policy?
  2. Is the person seeking coverage an insured?
  3. Does any liability exclusion apply to the situation?
if the answers to these questions is Yes, Yes, and No in that order, there is coverage.

I will cover the specifics of these 3 question in a series of three blog posts and point out where you can find the answers in your own policy (not all policies are the same) so you can verify exactly how your policy will cover or not cover you.

Question 1
Is the auto involved a covered auto under your policy?
You have to look at the DEFINITIONS section of your policy which exactly defines "Your Covered Auto". This section can be found at the beginning of your policy and is very important to review. BTW, any words or phrases in your policy surrounded by asterisk or the font is bold will be defined in the policy.

So, what is a "Covered Auto"?  (Wording from a Kemper auto insurance policy) 
  1. Any vehicle shown on the Declarations Page.
  2. A "Newly Acquired Auto".
  3. Any "Trailer" you own.
  4. Any auto or "Trailer" you do not own while used as a temporary substitute for any other vehicle described in this definition which is out of normal use because of its:
    • Breakdown
    • Repair
    • Servicing
    • Loss, or
    • Destruction
This provision (4) does not apply to Coverage for Damage to Your Auto.


The definition of a "Covered Auto" seems broad on the surface but there could be some hidden pitfalls if you don't review these definitions. For example I compared the wording above to a Safeco auto insurance policy and the definition of a "Newly Acquired Auto" is different and significant.

The Kemper policy states a "Newly Acquired Auto" includes a pickup or van with a GVWR of less than 10,000 lbs while the Safeco policy states the vehicle must be less than 12,000 GVWR.

In addition, the Safeco policy includes a motorhome or "trailer" as a newly acquired vehicle type where as the Kemper policy does not include the Motorhome vehicle type in their definition of "Newly Acquired Auto". 

There you have it. The first of the Big 3 Questions briefly explained. Look for the explanation to Question 2 in a few days in which I'll delve into WHO is an INSURED on your policy.

Author Richard Morris

Richard Morris, an independent insurance agent in Chandler, Arizona, has been serving and helping Arizona families with all their insurance needs for over 23 years. Visit his website at to see all the ways he can help you with your insurance needs or call the office at (480) 336-2707 or toll free at (888) 907-9349. Connect with Rich on Google+ and Twitter.
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Arthur said...
Great post! It is pretty important to know that you will be covered in the event of an accident. After all, nobody wants to pay for the auto collision repairs the next day!

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