1. Forms
2. PP
3. PP-03-18

What the form is

Endorsement PP 03 18, known as "Excess Custom Equipment Coverage" (or "Customizing Equipment Coverage" in earlier editions ), is designed to be added to a Personal Auto Policy (PP 00 01). Its primary purpose is to provide additional coverage for custom parts and equipment installed in or on an insured vehicle, beyond the typically low limits or exclusions found in the standard auto policy's Part D - Coverage For Damage To Your Auto. This endorsement allows policyholders to insure the value of aftermarket modifications that enhance the vehicle's appearance, functionality, or value. It specifically addresses furnishings and equipment such as thick carpeting, insulation, beds, bars, sinks, cabinets, water heaters, custom hand paintings, decals, and height-extending roofs.

Classes of business it applies to

This endorsement is used in personal auto insurance. It is particularly relevant for individuals who own:

• Customized vans (e.g., conversion vans with special seating, entertainment systems, custom lighting, or cabinetry).
• Modified pickup trucks (e.g., those with custom paint, decals, upgraded wheels, lift kits, special bed liners, or caps if not already covered sufficiently by the base policy).
• Cars with significant aftermarket additions that are not factory-installed options.
• Any private passenger auto, pickup, or van where the value of custom equipment exceeds the base policy's coverage. For example, if a standard Personal Auto Policy provides $1,500 for custom equipment, and a van has $10,000 in aftermarket custom equipment, this endorsement can be used to purchase the additional coverage needed.

Special considerations

• The standard Personal Auto Policy (PP 00 01) often includes a specific, relatively low limit (e.g., $1,500) for custom equipment, or may exclude certain items entirely. This endorsement is crucial for policyholders to avoid a significant out-of-pocket expense if customized parts are damaged or stolen.
• Coverage provided by this endorsement is typically for the Actual Cash Value (ACV) of the custom equipment, unless otherwise specified.
• It's important to clearly schedule the custom equipment and its value on the endorsement or declarations page to ensure proper coverage. The endorsement replaces exclusion 10, part D of the personal auto policy regarding custom equipment.
• Certain items might still be excluded even with this endorsement (e.g., some electronic equipment might need a separate endorsement like PP 03 13 Excess Electronic Equipment Coverage). This endorsement does not apply to furnishings or equipment excluded under exclusions 4, 5, 7, or 9 of Part D of the PAP.
• Policyholders should be advised that adding this endorsement will increase the premium.

Key information for agents and underwriters

• Agents: Proactively discuss custom equipment with clients during the quoting process or policy reviews. Inquire about any modifications made to the vehicle after purchase. If custom equipment is present and its value exceeds the base policy limit, recommend PP 03 18. Clearly explain what is considered custom equipment and how the endorsement works. Document the custom items and their estimated value.
• Underwriters: Carefully review the types and values of custom equipment being insured. Some modifications might increase the risk profile of the vehicle (e.g., performance-enhancing parts that could encourage risky driving, or very high-value cosmetic changes that increase theft appeal). Ensure the premium adequately reflects the increased exposure. Verify that the equipment is permanently installed. Be aware of potential moral hazards if the declared values seem inflated. The endorsement modifies Exclusion 10 under Part D of the PAP to not apply to custom equipment up to the scheduled limit.