Ah, Spring! Flowers bloom, grass greens, and baseball returns. If your insurance brain has been hibernating, start stretching those muscles and get back in the game.
Let's warm up with an exercise on rental cars and the personal auto policy (PAP). I specifically speak of the liability insurance protection that may not be provided by the ISO PAP when the rental car is driven by anyone other than the renter named on the agreement at the time of an accident.
A rental car company informed a reader that although he and his wife have liability coverage, his mother-in-law would not be covered unless she was specifically added as a driver to the agreement—for an extra charge, of course. The agent wanted to know (a) if the rental car company was correct; (b) if his PAP wouldn't cover her anyway as a permissive user; and (c), if all else failed, would she be covered for the rental car liability under her own PAP.
As to (a), within the limits of applicable law, the rental company can put what it darn well wants into that rental contract. Analyze the specific auto rental contract and find out the answer. Short of that, you have no choice but to take the rental company's word for it.
On to (b). There are policy provisions clearly applicable to determining Part A – Liability coverage:
B.1. and 2. under the liability Insuring Agreement: "Insured" as used in this Part means: You or any "family member" for the ownership, maintenance or use of any auto or "trailer" or any person using "your" covered auto.
A family member is defined as a person related to you by blood, marriage or adoption who is a resident of your household, including a ward or foster child.
Liability Exclusion A.8: Using a vehicle without a reasonable belief that that "insured" is entitled to do so. This Exclusion (A.8.) does not apply to a "family member" using "your covered auto" which is owned by you.
Because the renter and spouse are considered "You," they are insureds under their PAP. But the mother-in-law (MIL) may have a problem because a "family member" must be "a resident of your household." Unless she lives with the renter, she will not be considered a "family member," and the second provision is no help, because an auto rented for personal use is not a "your covered auto" unless it meets the definition of temporary substitute.
Even if you could shoehorn the MIL into the "insured" category, Exclusion A.8. is a deal breaker. Because the rental company has told our renter there is no coverage for anyone but he and his wife under the contract, he can't argue they had a "reasonable belief" they had permission. Eliminating the exclusion does nothing to make her an "insured."
So we turn to question (c). Assuming MIL has an ISO PAP, then the above provisions apply under her policy as well. Is there a difference?
Yes. Because she is "You" under her own PAP, B.1. now applies and she is an "insured." Don't forget to deal with Exclusion 8. And here is where the additional charge to add her to the rental agreement pays off. By paying the charge, she will not only have coverage under the rental contract, but by eliminating the applicability of Exclusion 8, her PAP now also rides to the rescue.
So while April showers may bring May flowers, personal vacations may bring rental car aggravations. Start stretching those insurance muscles, and get back in the game. Play ball!
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