Garret

Your child is away at college and lives with three roommates, each with their own vehicle. They frequently borrow each other's vehicles to run to the laundromat, get a pizza or go to the student union to socialize. Chances are good they are insured on their parent's personal auto policy, but do they have liability coverage if they hit a pedestrian or cause an accident? Here's another common situation. Your business provides a company vehicle for your business and personal use. You have a personal auto policy for your other vehicles, but will your policy provide liability coverage for the car supplied by your company?

It would pay to have a look at your personal auto policy and see if coverage is afforded in these situations. If you look deep enough into the policy language, specifically in the liability coverage section exclusions, you may find text that reads: 'B. We do not provide Liability Coverage for the ownership, maintenance or use of:' (jump to subsection 2) 'Any vehicle, other than "your covered auto", which is: a. Owned by you; or b. Furnished or available for your regular use.' (policy language from 2005 ISO PAP)

Exclusion B.2.b, 'Furnished or available for your regular use', is where the danger lies. In the above situations, your college student has multiple vehicles 'available for his/her regular use', and your company vehicle is 'furnished for your regular use'. Liability protection has been specifically excluded via the B.2.b policy language. What happens if you cause an accident? God forbid, what if you injure or kill someone? You might be envisioning that nice retirement nest egg flying out the window.

There is a way to plug that coverage gap and afford liability protection for those autos that are furnished or available for your regular use. There is an endorsement available for the personal auto policy called Extended Non-owned Coverage for Named Individuals (PP 03 06). This endorsement eliminates the regular use liability exclusion and will provide liability coverage to those named on the endorsement. Other situations where this endorsement may be needed would be fleet cars, boyfriend/girlfriend vehicles or family vehicles.

If you discover this exclusion on your personal auto policy, and your insurance company does not or will not offer the Extended Non-owned Coverage endorsement, you can also fix the coverage gap by having a Named Non-owner policy. This solution will cost more than the inexpensive Extended Non-owned Coverage endorsement, but it will provide coverage for those vehicles that are furnished or available for your regular use.

The author is a licensed property/casualty insurance agent in Nebraska. His Nebraska insurance agency is an independent agency specializing in farm and agricultural risks, personal lines and commercial lines. He also provides online marketing and insurance agency websites for other independent insurance agencies throughout the United States.