Insurance? Yes

Owns the damaged vehicle or property? No… Will a mother’s misbehaving teenager be covered for rental car damage? (Photo: iStock) Analysis brought to you by the experts at FC&S Online, the unquestioned authority on insurance coverage interpretation and analysis for the P&C industry. To find out more — or to have YOUR coverage question answered — visit the National Underwriter website, or contact the editors via Twitter: @FCSbulletins. Question: Our insured was driving a non-owned auto. While driving the non-owned auto our insured struck the non-owned auto owner’s building. Is there coverage under our liability coverage? We were thinking that perhaps liability exclusion 2 may be applied, since the owner of the car and the owner of the building are the same. A side note, brake failure on the non-owned auto is what caused the damage. — Connecticut Subscriber Related: 6 parking lot perils property owners need to pay attention to Answer: Exclusion 2 would not apply because the car and building are owned by one person, but the insured is not that person. If the insured owned the building, exclusion 2 would apply. But in the described scenario, the exclusion does not apply. Exclusion 3 wouldn’t apply because the property damage happened to the building, which was not rented to, used by, or in the care of the insured. (However, the damage to the non-owned auto might be excluded because it was being used by the insured.) The section “coverage for damage to your auto” says “we will pay for direct and accidental loss to your covered auto” or any “non-owned auto”. For a non-owned auto, it says “we will provide the broadest coverage applicable to any covered auto” shown in the declarations. (One exception might be if the car was available for the regular use of the insured). We don’t believe any other exclusion applies in this scenario. So, since it was property damage that the insured caused and for which is the insured is legally responsible due to the auto accident, coverage should be provided. The building should be covered under liability and the car should be covered under property damage, and no other exclusions should apply. Related: In praise of personal umbrellas Double the coverage Question: Our insured was driving a non-owned car that is insured by its owner for physical damage subject to a $500 deductible. He was involved in an accident that damaged the car. He carries physical damage on owned vehicles with a $100 deductible, and has filed a claim on his policy for $400, which is the difference between the deductibles. — California Subscriber Answer: A personal auto policy pays for damage to a non-owned vehicle on an excess basis over any other collectible source of recovery. In this case, the physical damage coverage held by the owner of the car will pay first, with the insured driver’s non-owned coverage applying as excess. The excess amount is therefore the difference in deductibles, or $400. Teenagers happen Question: Our insured rented a car for use while her vehicle was being repaired. Her 15 year-old daughter stole the vehicle and was rear-ended by an unknown motorist. Our insured reported the vehicle stolen, and had not given her daughter permission to use the vehicle. Does the exclusion for “loss to any non-owned auto” when used by you or any “family member” without a reasonable belief that you or that “family member are entitled to do so” apply in this situation? — Ohio Subscriber Answer: The rental car does qualify as a non-owned auto, and the daughter is a family member who would otherwise be covered for physical damages to the car while driving the rental. However, because she took the car without permission, she did not have a reasonable belief that she was entitled to drive the vehicle. Therefore, exclusion 9 under Part D of the PAP would apply to preclude coverage for the damage to the rental car by the uninsured motorist. Related: 8 facts about credit cards and car rental insurance One more rental car question Question: I am hoping you could help me interpret the policy language regarding non-owned autos on the personal lines auto policy under Damage to Your Auto. If an insured rents a vehicle for 3 months, would that be considered available for his regular use? — Indiana Subscriber Answer: Although “non-owned auto” under Damage to Your Auto, Section C of the PAP often includes rental cars, the rental vehicle still must otherwise meet the definition of a non-owned auto and not be furnished or available for the regular use of the named insured. In determining whether a vehicle has been “furnished for regular use,” courts consider the general availability of the vehicle and the frequency of use by the insured. A few years ago, the Supreme Court, Appellate Division of New York, found that a rental vehicle did not meet the definition of a non-owned vehicle when it was available for regular use for 55 days. See Elrac, Inc. v. GE Capital Ins. Co., 57 A.D. 3d 833 (N.Y.A.D. 2 Dept., 2008). So although there is no single objective guideline for determining when a rental car becomes furnished for regular use, most court decisions are pretty consistent with Elrac. Thus, whereas a week’s or perhaps even a month’s rental of a car would probably qualify as a non-owned auto not readily available for the regular use of the insured, a three month rental — wherein the insured would probably be using the car every day on a regular basis — probably would not. See also: 4 insurance musts for couples getting married — or divorced Is that claim covered? 7 ways auto technology is impacting insurance coverage Originally published on FC&S Legal: The Insurance Coverage Law Information Center. FC&S Legal is the industry’s ONLY single-source, comprehensive portal developed specifically for insurance coverage law professionals. To find out more, visit All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. This article is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting or other professional service. If legal advice is required, the services of a competent professional person should be sought.

About John Fagan

John is a Jacksonville native who grew up on the First Coast. He graduated from Bishop Kenny High School in 1975 and went to college at Florida State University where he completed a 4-year program in 3 years. John graduated from the Florida State University College of Business in 1978 and went straight into Florida State University College of Law. While in law school, John earned a position on the prestigious Law Review Board serving as its Business Editor. As a law student, John studied in the Oxford program. He also interned with the Florida Legislature working in the Florida House of Representatives Criminal Justice Committee. John was admitted to the Florida Bar in 1981. John began his legal career as a law school intern in the State Attorney's Office in Jacksonville in 1981. After his internship, legendary State Attorney Ed Austin hired John as a full-time Assistant State Attorney for the Fourth Judicial Circuit (Clay, Duval, and Nassau Counties). As a prosecutor, John tried jury and non-jury trial on charges ranging from DUI to Murder. In 1983, John moved from the State Attorney's Office to begin his career in private practice. He has practiced law for 30 years on the First Coast. For the last 20 years, John and his family have made Clay County their home. John limits his practice to personal injury and disability cases. While there are many fine attorneys in Clay County, John is one of only a few Clay County attorneys who limit their practice to personal injury and disability cases. John takes pride in helping clients resolve injury claims in ways that avoid the stress, uncertainty, and the expense of unnecessary litigation. Professional Activities John is the past President of the Clay County Bar Association and has served on the Board of the Clay County Bar Association from 2009-2013. He is an active member of the Florida Bar, and the Federal Bar of the Middle and Southern Districts of Florida. He is also a member of the American Association of Justice, the Florida Association of Justice, the National Organization of Social Security Claimants' Representatives, and the National Organization of Veterans' Advocates. Service to the Community John is involved in the Clay County Community serving as a member and Director of the Rotary Club of Orange Park, of the Clay County Bar Association, and the Putnam County Bar Association.
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