When it comes to driving a car you don’t own, the auto coverage situation can become complicated. That’s when drive other car coverage, which broadens coverage for named individuals, comes in.
For example, say Linda is a junior partner in a law firm. She drives a car that the firm owns and insures, and she doesn’t own another car. Since the
Rental Auto Coverage
Most of the time, this doesn’t create any problems for Linda. However, when spring break rolls around, she decides to take her kids to Disney World. She rents a car at the Orlando airport without giving a thought to whether her firm’s insurance would cover an accident in the rental. In this case, a phone conversation with the firm’s insurance agent would have been an important step to take.
While driving to her hotel one night, Linda rear-ends a new Lexus. The damage to the other car is extensive, and Linda looks to her firm’s auto liability coverage for the cost of repairing it. The ISO Business Auto Policy covers the person or organization shown in the policy declarations, or the information page at the beginning. In this case, the name shown in the policy Declarations is the name of Linda’s firm.
The policy goes on to say that, for liability insurance, the firm is insured and so is anyone else using, with the firm’s permission, a covered auto the firm owns, hires, or borrows, with some exceptions. Unfortunately for Linda, the firm didn’t rent the car, she did, in her own name.
Consequently, the firm’s insurance will not cover her liability for this accident. She will be forced to pay for it out of her own funds. However, there are a couple of policy endorsements that her firm could have purchased that would have solved Linda’s problem.
Drive Other Car Coverage
With drive other car coverage, the insurance company will require the insured to list the names of one or more individuals on the endorsement. The change extends several of the policy’s coverages so that they apply to the listed individuals and their resident spouses. This endorsement comes with some significant limitations:
· It extends to the listed individuals’ coverages that the policy already provides; it does not add coverages not provided. If the firm’s policy does not provide collision coverage on its vehicles, Linda would not have collision coverage on a car she rents.
· It covers the named individual’s spouse if they live together. If Linda is married to Jim, Jim automatically has coverage for a car he rents in his name.
· The only family member it automatically covers is the resident spouse. It will not cover any other family members in the household unless the endorsement specifically lists their names.
Individual Named Insured
Another option besides this type of endorsement is to list individuals’ names in the policy declarations along with the firm’s name and to attach an endorsement called Individual Named Insured.
This endorsement covers the individual listed in the declarations and automatically covers the person’s resident spouse and family members. It also covers these individuals should they injure another of the firm’s employees. These policy changes affect several coverages, including liability, uninsured motorists, medical payments, and physical damage.
If you’re considering adding drive other car coverage, you should consult with us to discuss the endorsements’ details and identify the one that will best ensure the concerned individuals. With the right coverage in place, Linda can enjoy her vacation without having to worry about who will pay for the fender-bender.