In case you proceed to subscribe to this weblog within the coming weeks, months and hopefully years, you're in all probability going to get uninterested in me writing about this concern. In case you subscribed to the Massive "I" Digital College publication for the previous 17 years, I KNOW you're uninterested in listening to about this concern. However, it entails such a probably catastrophic protection hole in most private auto insurance policies, that I really feel compelled to proceed to deliver this to the eye of as many individuals as attainable, together with brokers, underwriters and customers. Particularly, that is the liability exclusion (B.3.) I'm referring to within the ISO PAP: Any car, aside from "your coated auto", which is:
Owned by any "member of the family"; or
Furnished or obtainable for the common use of any "member of the family".
Nevertheless, this Exclusion (B.3.) doesn't apply to you while you're sustaining or "occupying" any car which is:
Owned by a "member of the family"; or
Furnished or obtainable for the common use of a "member of the family".
Variations of this exclusion exist in just about each private auto coverage I've reviewed, in some circumstances being much more restrictive. Initially, there are MANY situations the place this exclusion can preclude protection for multi-million greenback claims or fits. The instance on this publish got here at present from an internet insurance dialogue board the place a shopper requested: "I've 4 automobiles and 3 drivers. I wish to have the 3 drivers and 2 automobiles on one coverage and 2 drivers (exclude 1 driver) and the opposite 2 automobiles on one other coverage. Can that be accomplished? One driver won't be driving 2 of the automobiles in any respect and won't have entry to them. He's our little one and will probably be away in faculty. He could have entry to the opposite 2 automobiles although. No ticket points, simply attempting to save cash." The query is convoluted however principally the scenario is a husband and spouse who've a son going off to school. Apparently the husband and spouse every drive an auto (Auto 1 and Auto 2, respectively) and the son is taking two autos to school (Auto 3 and Auto 4) and allegedly won't be driving both of the mother and father' automobiles (thus the driving force exclusion talked about above is hooked up to their PAP). We have no idea how the son's automobiles are titled, one thing that might influence the protection observations under. Let's assume that the son remains to be thought-about a "member of the family" within the family, as most courts have held. Let's additional assume, for the sake of dialogue, that the mother and father will insure their Auto 1 and Auto 2 on Coverage A with excessive limits, excluding their son who allegedly "won't have entry to them," and they'll insure Auto 3 and Auto 4 in school on Coverage B protecting mother, dad and son. Let's say the son has an at-fault accident in school in Auto 3 (Coverage B) that ends in demise and everlasting incapacity to individuals in one other car (in truth, it doesn't matter who has the accident…if the son let a buddy drive who had the accident leading to a lawsuit in opposition to the relations). He's sued and his mother and father are sued for a number of million . They submit the claims/fits to each insurers. The son's Coverage B covers all of them for the reason that driver exclusion naming the son doesn't apply to Coverage B, solely Coverage A. Nevertheless, Coverage B is written at minimal limits. Coverage A with the excessive limits (and possibly even a "following kind" extra coverage) doesn't cover the son as a result of he's excluded beneath the driving force exclusion endorsement hooked up to the mother and father' Coverage A. As well as – and that is the actually, actually dangerous information – neither dad or mum is roofed by their very own coverage (Coverage A) due to exclusion B.3. above. Beneath Coverage A, the son's auto is excluded beneath each the primary a. and b. above since it's owned by or obtainable to the son, and the second a. and b. exception doesn't apply as a result of neither dad or mum was sustaining or occupying the auto on the time of the accident. [Note: If the parents own Auto 3 and Auto 4, both autos would be excluded anyway under the parents' Policy A under Exclusion B.2.a. (not discussed in this article), so the "furnished or available" issue in Exclusion B.3. would be moot.] The ethical of this story is that it's normally a good suggestion to cover all resident relations beneath one private auto coverage. If that's not attainable, it's finest to be sure that all insurance policies are comparable phrases and limits…and even that's not foolproof as a result of a state of affairs is feasible the place somebody would don't have any protection beneath their very own coverage due to exclusion B.3. and likewise be an excluded driver beneath one other coverage. In case your company is a Massive "I" member, you'll be able to entry a number of different articles on this concern at their Virtual University, most of that are even simpler than this one. When you login to the VU, search utilizing phrases like "children kars" and "parental liability."
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