The auto policy is very comprehensive and has been constructed to provide coverage for most every situation that might arise. There are a few circumstances which require special attention, and sometimes an endorsement added, to provide coverage. I will touch on a couple of them this month.
In the auto policy, different classes of people receive differing levels of coverage. 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. That's a pretty broad statement. There are some exceptions to that, such as if the driver is using the car in committing a felony. Don't you just love exceptions?
The vehicle's coverage is considered as primary and the driver's coverage is considered to be secondary or excess if it is not an insured vehicle. If you, as an insured on your auto policy, drive another person's uninsured vehicle, your coverage will extend for your liability in using their vehicle. While your policy does not give this other vehicle your collision coverage, still this is broad coverage.
Depending on "given coverage" is what gets some people into trouble. I've heard the saying, "Lend your car, lend your insurance." If an accident to your car happens at the hand of some other driver, that loss is stuck on your loss record and affects your insurability. Parents of teenagers and college students take note. That permissive driver can cause you a lot of headaches. And if your son or daughter says the person can use your car, that is considered giving your permission.
Here's another dangerous exception: let's say your daughter lives in a dorm with three other girls. One has a car that they all share. The keys are hung in the dorm and they each borrow it whenever they need it. Your daughter won't receive liability protection, neither from her own nor from her parent's policy, for the use of that car because it is continually or regularly furnished for her use. The same would be true for your wife driving your company owned car, or your regularly allowed usage of Aunt Minnie's car. Such instances require the addition of a Hired and Non-Owned Vehicles endorsement. Does that situation raise a concern for you?
Most people understand if they purchase an additional vehicle, it receives the same coverage given to the best insured vehicle presently on their policy. This includes similar Collision and Other Than Collision coverage. This protection exists until the 31st day, when it stops completely unless the agent is notified about the vehicle so that it can be properly added to the policy. What is a very important distinction, however, is the coverage given to a replacement vehicle, as opposed to an additional vehicle.
Whenever insureds buy a new car, usually they trade in an older car in exchange. When this occurs, a replacement vehicle receives the same coverage as the car that it replaced. Usually, these older cars no longer have Coverage D - Coverage for Damage to Your Car. This means that the 1999 new car has the same coverage as the 1989 vehicle it replaced, and it will have this until the policy term expires and then there is no coverage at all. So the thing to do, is to promptly notify your agent of vehicle and driver changes to ensure coverage is in place.
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
