Individual state laws may impact what types of exclusions are named in an insured's auto policy. (Photo: iStock)
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Question: This inquiry is regarding a personal auto policy that has two specifically described autos.
Auto No. 1 has Liability & Collision. Auto No. 2 has just Liability.
If Auto No. 1 is driven by the named insurer, who is the owner of both vehicles, I assume that Liability exclusion No. 2 ("We do not provide Liability Coverage for any 'insured': 2. For 'property damage' to property owned or being transported by that 'insured'…) would apply if Auto No. 1 hit Auto No. 2.
The exclusion would eliminate coverage for damaging his owned property?
What if the insured's resident relative, his son, was driving Auto No. 1. Would the exclusion not apply since the son does not own Auto No. 1?
— Michigan Subscriber
Answer: The liability exclusion applies in both situations. Both cars here are owned by the named insured, who is also the owner of the insurance, and both policies have the liability exclusion. The resident relative son is an insured, even if he does not own either vehicle involved in the collision.
Spouse smashes company car
Question: Our insured has two cars — a company car insured by his employer and his wife's car, insured in our agency. When backing out of the garage, the insured's wife hit the company car in the driveway and damaged it. The insurer has refused to pay for the damage to the company car, based on two separate exclusions in the personal auto policy: vehicles provided for the regular use of an insured, and the care, custody, or control exclusion.
— Kansas Subscriber
Answer: It is our opinion that neither exclusion applies, and that the claim should be paid under the property damage section by the personal auto insurer. The company car was not in the spouse's care, custody, or control; nor was she operating it.
Who's right?
You are correct. The car that was damaged by the wife, i.e., the husband's company car, was not in her care, custody, or control. Also, the liability did not arise out of her use of the company car. The policy excludes liability coverage for loss or damage arising out of the use of vehicles that are not covered autos that are "furnished or available for the regular use" of any family member. Hitting the company car with the family car clearly does not qualify as making use of the damaged vehicle.
The situation is really no different from those where an insured damages a stranger's vehicle with the insured car. Just because the vehicle in this instance was her husband's company car makes no difference.
When moms attack (their kid's car)
Question: A named insured's adult son currently resides with his mom. He has his own vehicle and auto insurance all in his name only. One morning, his mom backed into her son's vehicle and damaged both cars. Her carrier paid for her damages, and her son's carrier paid for his damage and then subrogates against the mom's carrier. The mom's carrier declined/denied the subrogation claim.
We have contacted several other carriers who have indicated that if they were the mom's carrier, they would pay for the son's damage. However, the mom has a proprietary form which reads: There no coverage for an Insured for damage to property while it is: Owned by, rented to, used by, in the care of, or transported by you, a resident relative, or the person who is legally liable for the damage.
Based on the above language, there would be no coverage under her policy for damages she did to her son's auto, correct?
— Vermont Subscriber
Answer: We do agree. The language in the exclusion you cite makes the exclusion very expansive. It would prevent coverage for the mother in this instance. She is the insured and there was property damage to property owned by a resident relative (the son living with her), so this exclusion fits that situation.
Coverage for an insured's relative
Question: Our insured's son has returned from Iraq, and he will be stationed in Texas. The son, with his parents' permission, rented a vehicle in his name in Maryland (where parents live) for 12 days. The son does not own a vehicle, and does not have auto insurance.
Does the son have coverage under the parent's auto policy for liability and physical damage for the rental car? The parents have full coverage on their vehicles. The rental company did not call to verify coverage on the vehicle. Our insureds gave their policy information to the company.
— Maryland Subscriber
Answer: In order to be considered an insured, the family member has to be a resident of the household.
So the question becomes, where is the son's residence? Does he have his own home or apartment anywhere? Where does he get his mail?
While he may consider the parent's house "home," that doesn't make him a resident. A 12-day visit between orders doesn't establish a residence for the son.
Even though the parents gave permission for him to provide their insurance information, they are not the owners of the vehicle, so the policy does not provide coverage since he is not a resident relative. If the vehicle is rented solely in the son's name, there is no coverage.
Deadly parked car accident
Question: Our insured had a son that did not live at home.
The son brought his uninsured auto to our insured's home to work on it.
The car slipped off of the son's car jack while in our insured's garage, and the son was killed.
We filed a claim under our insured's ISO form homeowner's policy for a liability claim by the son's estate. I feel that there is coverage under the homeowner's policy. I feel that there would also be liability coverage for our insured under his own auto policy (which we do not write) for a liability claim if they have a standard ISO policy form.
Do you agree that there is coverage under both the ISO homeowners and the ISO auto policies?
— Pennsylvania subscriber
Answer: Let's start with the homeowner's policy.
The son who was not a resident relative was using the insured's property with permission. So far so good.
The exclusions for medical payments, however, exclude coverage if a vehicle is registered for use on public roads; was the son's vehicle registered? Vehicles can be registered but uninsured at the same time although it's not supposed to happen. If the vehicle was registered there is no coverage.
If this and the other A.1. exclusions do not apply (not registered but required to be to be used at the place of the occurrence, operated/practicing for a race/competition, rented to others, used to carry persons/property for a fee, used for business purposes) then the vehicle is further excluded unless it is in dead storage on the insured property, used to service the premises or assist the handicapped. From what you've said the son was working on repairing the vehicle so it doesn't sound like it was in dead storage so there is no coverage due to the exclusions.
As for the auto policy, the son is not a family member by definition since he did not reside in the household. The son was not using the insured's auto, he was using his own.
While we cannot make a determination of legal liability, none of the insured's vehicles listed on the auto policy were involved in the accident, so there would be no coverage under the auto policy. It would be like a runaway truck hitting the pizza delivery person on the insured's property; it's a vehicle the insured doesn't own or use, so the auto policy would not provide coverage to the pizza delivery person.
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