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Question: Our insured was drivinga non-owned auto. While driving the non-ownedauto our insured struck the non-owned auto owner's building. Isthere coverage under our liability coverage? We were thinking thatperhaps liability exclusion 2 may be applied, since the owner ofthe car and the owner of the building are the same. A side note,brake failure on the non-owned auto is what caused thedamage.

— Connecticut Subscriber

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Answer: Exclusion 2 would not apply because thecar and building are owned by one person, but the insured is notthat person. If the insured owned the building, exclusion 2 wouldapply. But in the described scenario, the exclusion does notapply.

Exclusion 3 wouldn't apply because the property damage happened to the building, whichwas not rented to, used by, or in the care of the insured.(However, the damage to the non-owned auto might be excludedbecause it was being used by the insured.)

The section “coverage for damage to your auto” says “we will payfor direct and accidental loss to your covered auto” or any“non-owned auto”. For a non-owned auto, it says “we will providethe broadest coverage applicable to any covered auto” shown in thedeclarations. (One exception might be if the car was available forthe regular use of the insured).

We don't believe any other exclusion applies in thisscenario.

So, since it was property damage that the insured caused and forwhich is the insured is legally responsible due to the autoaccident, coverage should be provided. The building should becovered under liability and the car should be covered underproperty damage, and no other exclusions should apply.

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Double the coverage

Question: Our insured was driving anon-owned car that is insured by its owner for physical damagesubject to a $500 deductible. He was involved in an accident thatdamaged the car. He carries physical damage on owned vehicles witha $100 deductible, and has filed a claim on his policy for $400,which is the difference between the deductibles.

— CaliforniaSubscriber

Answer: A personal auto policy pays for damageto a non-owned vehicle on an excess basis over any othercollectible source of recovery. In this case, the physical damagecoverage held by the owner of the car will pay first, with theinsured driver's non-owned coverage applying as excess. The excessamount is therefore the difference in deductibles, or $400.

Teenagers happen

Question: Our insured rented a car for usewhile her vehicle was being repaired. Her 15 year-old daughter stole the vehicle and wasrear-ended by an unknown motorist. Our insured reported the vehiclestolen, and had not given her daughter permission to use thevehicle. Does the exclusion for “loss to any non-owned auto” whenused by you or any “family member” without a reasonable belief thatyou or that “family member are entitled to do so” apply in thissituation?

— Ohio Subscriber

Answer: The rental car does qualify as anon-owned auto, and the daughter is a family member who wouldotherwise be covered for physical damages to the car while drivingthe rental. However, because she took the car without permission,she did not have a reasonable belief that she was entitled to drivethe vehicle. Therefore, exclusion 9 under Part D of the PAP wouldapply to preclude coverage for the damage to the rental car by theuninsured motorist.

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One more rental car question

Question: I am hoping you could help meinterpret the policy language regarding non-owned autos on thepersonal lines auto policy under Damage to Your Auto. If an insuredrents a vehicle for 3 months, would that be considered availablefor his regular use?

— IndianaSubscriber

Answer: Although “non-owned auto” under Damageto Your Auto, Section C of the PAP often includes rental cars, therental vehicle still must otherwise meet the definition of anon-owned auto and not be furnished or available for the regularuse of the named insured.

In determining whether a vehicle has been “furnished for regularuse,” courts consider the general availability of the vehicle andthe frequency of use by the insured. A few years ago, the SupremeCourt, Appellate Division of New York, found that a rental vehicledid not meet the definition of a non-owned vehicle when it wasavailable for regular use for 55 days. See Elrac, Inc. v. GECapital Ins. Co., 57 A.D. 3d 833 (N.Y.A.D. 2 Dept., 2008).

So although there is no single objective guideline fordetermining when a rental car becomes furnished for regular use,most court decisions are pretty consistent with Elrac. Thus,whereas a week's or perhaps even a month's rental of a car wouldprobably qualify as a non-owned auto not readily available for theregular use of the insured, a three month rental— wherein the insured would probably beusing the car every day on a regular basis— probably would not.

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