Some households face special coverage concerns because of they use vehicles that are either supplied or owned by a business. Another situation is that individuals are using vehicles that are either rented (hired) or borrowed (non-owned). In such circumstances, vehicles need to be handled under a commercial policy. Individuals or families experiencing this situation may face several coverage gaps.
· A basic business auto policy does not cover losses or provide full coverage for personal vehicle use where the drivers are not the owners of the vehicle. Additionally, this policy does not provide liability coverage for operating a hired or non-owned car. The individual is only covered while driving their company owned vehicle.
Example: Tim works for a business that supplies and insures this car, therefore he does not have a personal auto policy. One day Tim is driven by a friend to a bachelor’s party. Later in the evening, his friend drinks too much and asks Tim to drive them both home. On the way, his friend passes out, distracting Tim from noticing a stop sign. Joe crashes into a minivan. The friend had minimum limits on his policy and Tim is left with no insurance coverage for the damages and injury he caused.
· No coverage exists for the individual’s spouse or other family members for medical payments, uninsured motorist or underinsured motorist.
Example: Cindy and her parents do not have a personal auto policy because they drive her dad’s company-owned car. Karen, a friend of Cindy’s, invites her to go shopping at the mall. Just a little before arriving, a pick-up truck crashes into Karen’s car and Cindy was seriously wounded. The other driver (Karen) was uninsured and her policy carried minimum uninsured motorists (UM) limits. Cindy’s family had to cover the expenses that weren’t handled by Karen’s UM coverage.
· Physical damage losses to any rented or borrowed vehicle will not be covered.
Example: Louise was bored of driving her husband’s company car. Her neighbor, Jake, was selling his sports car because he could not afford to insure it. Louise fell head over heels for his car, so she took it for a test drive. She ended up going to fast around a sharp turn, ran off the road, totally wrecking Jake’s car by hitting a tree. Louise had to pay for the damages herself since her husband’s commercial auto policy did not cover the loss.
There is an alternative that will close gaps. A commercial auto policy could be used with Drive Other Car Coverage, which can expand the policy to protect other persons and situations. Typically, the following coverages are provided by options such as liability, auto medical payments, uninsured motorists, underinsured motorists, and physical damage.
Please take the time to read part II.
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