| When we drive another
person's vehicle, we make a lot of assumptions about insurance coverage.
Now, we all know what assuming can do, so I'll review some of the sticky
points about non-owned vehicles in this month's column.
First, let's review who is an Insured on your personal auto policy.
The persons receiving the best coverage are the named insured and spouse
- living in the residence. Following that are family members who reside
in the insured's residence, last of all, others using your vehicle with
your permission. Note that family members moving out of the home need to
obtain their own auto policy to gain back better coverage.
Remember also that the vehicle's coverage is considered primary and
the driver's coverage is secondary.
For example: If you borrow a friend's car (with permission), your
friend's third-party liability coverage is primary. If your friend let
his policy lapse, your coverage would provide you protection for
liability in the use of his auto. If the accident was not your fault,
the recovery is up to the party responsible for hitting your friend's
auto, if they had coverage, or else your friend's collision coverage, if
available, or un-insured motorist coverage will pay for the damage to
his auto. That is a big gap in coverage if the vehicle is not on its own
policy.
Coverage under Physical Damage (Coverage for Damage to Your Auto)
does not extend to non-owned autos. It provides coverage only for autos
listed on the policy for which a premium is paid.
The liability section provides coverage for your legal liability for
property damage to non-owned autos, but this coverage is limited to
private passenger autos, trailers, pickups and vans - not moving vans
and commercial type vehicles.
The named insured and family members are covered for third-party
liability claims arising out of the operation of a rented auto, but be
sure to list them on the rental agreement in order for contractual
liability to exist.
If the insured signs an agreement to be responsible for all damage to
the auto, coverage is not limited to an at-fault accident. Weigh this
when considering buying the insurance damage waiver from the rental car
company.
But realize that there is a benefit in having the possible claim fall
under their coverage rather than yours. It may provide for a speedier
settlement and replacement of the rental car, so that you can sooner get
back underway on your planned trip. The waiver also would spare your own
policy a potential loss.
There are several considerations to take into account concerning the
use of an employer's vehicle, or when using your vehicle in a business
activity. Limitations of coverage to fellow employees exist on a
business auto policy, and the personal auto policy excludes certain
business use of an auto.
To be certain that your situation is clearly covered, contact your
insurance agent to discuss how you use your auto, or your employer's
auto, in business. If you're the employer, you should discuss how your
employees are driving for you with your agent. Sometimes an endorsement
for a small cost can mean the difference between not having and having
coverage for an accident.
Russell Janecka is a Certified Insurance Counselor. He is the owner of Janecka Insurance Agency in Victoria, and serves on the board of directors with Germania Insurance Companies. (361) 573-4475 e-mail: info@jiavic.com
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