© 2012 Insurance & Risk Management Knowledge Alliance
Your insureds’ 21-year old daughter finally saved enough money to move out of her parents’ house and into her own apartment. When she moves, she takes "her" car with her. It is not really "her "car, as it is titled to her mom and dad, so the car remains on her parents’ personal auto policy on which both her mom and dad are the Named Insureds.
The Problem
Several months later, while jogging, the daughter is hit by an uninsured car and seriously injured. Her parents turn in a claim for their daughter’s injuries to their auto insurance company.
No problem, right? After all, their personal auto policy still has the daughter listed as a driver and the vehicle is still insured on the policy.
Wrong! There is a BIG problem, as neither Part B - Medical Payments nor Part C- Uninsured Motorists will provide coverage for their daughter’s injuries.
Former "Family Members" - Coverage and Lack of Coverage
"Family Members" - Coverage and Lack of Coverage
Children who no longer reside with their parent (or parents) are only an "insured" under the parent’s auto policy when driving or occupying the parent’s "your covered auto". These former "family members" now fall within the commonly used term of permissive user and are only covered under their parent’s policy for:
* Liability while driving the parent’s "your covered auto"
* Medical Payments while occupying the parent’s "your covered auto"
* Uninsured/Underinsured Motorists while occupying the parent’s "your covered auto"
Former "family members" no longer have the following coverages:
* Liability while in an auto other than the parent’s "your covered auto"
* Medical Payments while in any auto other than the parent’s "your covered auto"
* Medical Payments while a pedestrian
* Uninsured Motorists while in any auto other than the parent’s "your covered auto"
* Uninsured Motorists while a pedestrian
No doubt you will agree - these are important coverages to be without! Read on! © 2012 Insurance & Risk Management Knowledge Alliance
The Solution
One solution is to write a personal auto policy with the child as a Named Insured and attach the Named Non-Owner Coverage endorsement (ISO: PP 03 22). This endorsement is used in the ISO Personal Auto program to provide insurance coverage for the person who does not own a vehicle, but still wants insurance protection.
It can be used to provide Liability, Medical Payments and Uninsured/Underinsured Motorist coverage for the individual(s) named in the Schedule. These coverages must be individually selected with a Limit of Liability and a Premium shown on the schedule. (If the applicable box is marked as shown below, this endorsement also removes the Part A Liability and Part B Medical Payments exclusions for a vehicle furnished or available for regular use.)
Uncovering the Exposure
You may not learn about the former "family member" exposure until AFTER the loss (a potentially uncovered loss) has occurred. The goal is to identify the exposure BEFORE a loss occurs.
Make a habit of talking with your clients to see if they have this situation. Ask the question, "Mrs. Smith, does Megan still live at home?" If not, further questioning will help you to determine if coverage gaps exist.
Include questions in your renewal questionnaire such as, "Is any vehicle we insure for you being used by someone who does not live with you?" or "Have any of your children moved out of your house and taken one of your vehicles with them?"
A social media post can also be an effective tool in helping you to identify clients with this exposure. If a child moves out of your home, the coverage from your auto policy for your son or daughter is not the same as when he or she lived with you. Please contact us if you have this situation so we can discuss the coverage options available. We don’t want your child to be without insurance protection!
Remember to add this potential exposure and available solution to your coverage checklist.