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Auto Liability Coverage

Fairfax Injury Lawyer Brien Roche Addresses Auto Liability Coverage

Brien Roche

One of the basic principles of auto liability coverage is that the coverage follows the vehicle.  What that means is that the coverage is literally glued to the vehicle.  Wherever the vehicle goes, that coverage follows.  There may be some things that void the coverage but the preference under Virginia law is that the vehicle remain covered so that the public is protected.

One exception to the rule that coverage follows the vehicle is with garage policies.  A garage policy is a policy issued to a repair shop or dealership.  That policy covers the vehicles that are driven by the employees while repairing or showing them.  That coverage does not “follow” the vehicle.  That coverage is excess. The primary policy is the car owner’s.

Another instance where the “follow” rule does not apply is in regards to rentals.  In regards to a rental where you do not buy the coverage that the rental company is trying to sell you, then your auto insurance coverage is primary for liability purposes.  

Another important concept is permissive use.  Virginia, like most states, has what is called an “Omnibus Statute”.  The Omnibus Statute is designed to provide the broadest form of liability coverage for users of automobiles.  The condition that must be met is that the user must be operating with permission of the owner.  In the alternative, that permission must be from someone who has permission from the owner to grant further permission.  With that appropriate permission, the liability coverage applies to that vehicle.  If there is no permission, then that means the vehicle is being used without consent.  That may result in a situation where there is no liability coverage.  The purpose of the Omnibus Statute is to broaden the coverage so that more people are protected.  

Declaration

In any policy it is important to look at the declaration.  That declaration is a statement (declaration) by the insured as to what they have asked for, what they have represented to the carrier and what the carrier has given them.  You need to look closely at it.  If it contains incorrect info that may be a basis for the carrier to deny coverage.  For instance if you misrepresent what your address is, that may be a basis for denying coverage.

Auto Liability Coverage-Split Limits

It’s important to understand that within most liability policies there can be either single limits or split limits.  Single limit means that there is only one coverage amount available.  If that coverage amount is $500,000, then that’s the total pool of money that is available to all of the different claimants.

If the limits are split, for instance $300,000/$500,000 then means that there is $300,000 available per claimant. However the total for all claimants is up to $500,000.  If you happen to have 10 claimants, they may each be able to recover $50,000.

Owned Auto

The concept of an owned auto is important.  An owned auto includes not only the vehicle identified on the policy but also a trailer, a replacement auto, a newly-acquired auto or what is called a “temporary substitute vehicle”.  As such if you buy a new car then you have 30 days to put that new car on the policy.  During that first 30-day period it is deemed to be an owned auto.

A temporary substitute vehicle has to meet the following criteria:

  • A trailer or auto;
  • It is not owned by the named insured;
  • It is being temporarily used with the permission of the owner as a substitute for the owned auto when it is no longer in use because of breakdown, repair, servicing, loss or destruction.

The purpose of this expanded definition is again to expand coverage.  An owned automobile is just that.  Under this definition, an owned automobile is broader than simply “the owned automobile”.  

Auto Liability Coverage-Non-Owned Automobile

An even more important concept is that of a non-owned automobile.  The basic criteria for a non-owned auto are:

  • It is not owned by the named insured or a relative of the named insured;
  • Its use at the time of the incident is casual and infrequent.  Casual and infrequent has been found to mean as much as 10 different uses during a two-month period.  State Farm Mutual Automobile Insurance Co. v. Smith, 206 Va. 280, 142 S.E.2d 562 (1965);
  • The vehicle must not be a temporary substitute vehicle.

This concept of non-owned automobile becomes especially important because it can be a basis for providing liability coverage.

For this non-owned coverage to be triggered, the following criteria must be met:

  • The driver must be the named insured or a relative who lives in the same household;
  • The non-owned auto as defined above is a private passenger auto or trailer;
  • The use is with permission of the owner;
  • The use is within the scope of that permission.

The purpose of this definition is again to expand coverage.  A non-owned automobile is just that.  Under this policy definition that definition is expanded. 

As such we see several different instances where either the insurance industry has sought to broaden coverage or state legislatures have sought to broaden coverage as seen in the Omnibus Statute.  

Other Insurance

Within every liability policy there is an “Other Insurance” clause.  That clause describes how much every other insurance company will have to pay if the loss is covered by more than one policy.  

This becomes especially important when you’re dealing with a temporary substitute or a non-owned auto.  Typically those forms of coverage are excess.  That coverage is going to be pro-rated among the different carriers.

Auto Liability Coverage-Rental Vehicles

If you’ve ever rented a vehicle you know that the rental company tries to sell you their own insurance.  That may not be a bad thing to have.  If you buy that coverage then that liability coverage is primary.  Otherwise your own auto liability coverage is primary.  As stated above, this is one instance where the coverage does not follow the auto.  

With rental cars, aside from the liability coverage of the driver being primary, the uninsured motorist coverage may also be primary.  

With rental cars you can also get into tricky situations of permissive use.  The lack of permission may void the coverage for the driver.  That lack of permission however does not void the coverage for the passengers in spite of what the rental contract says.  That is, the rental contract may say that coverage is voided.  Coverage is voided only as to the non-permissive user.  It is not voided as to the passenger.  

Call, or contact us for a free consult. Also for more info on this issue see the Wikipedia pages.

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Auto Liability Coverage

Fairfax Injury Lawyer Brien Roche Addresses Auto Liability Coverage

Brien Roche

One of the basic principles of auto liability coverage is that the coverage follows the vehicle.  What that means is that the coverage is literally glued to the vehicle.  Wherever the vehicle goes, that coverage follows.  There may be some things that void the coverage but the preference under Virginia law is that the vehicle remain covered so that the public is protected.

One exception to the rule that coverage follows the vehicle is with garage policies.  A garage policy is a policy issued to a repair shop or dealership.  That policy covers the vehicles that are driven by the employees while repairing or showing them.  That coverage does not “follow” the vehicle.  That coverage is excess. The primary policy is the car owner’s.

Another instance where the “follow” rule does not apply is in regards to rentals.  In regards to a rental where you do not buy the coverage that the rental company is trying to sell you, then your auto insurance coverage is primary for liability purposes.  

Another important concept is permissive use.  Virginia, like most states, has what is called an “Omnibus Statute”.  The Omnibus Statute is designed to provide the broadest form of liability coverage for users of automobiles.  The condition that must be met is that the user must be operating with permission of the owner.  In the alternative, that permission must be from someone who has permission from the owner to grant further permission.  With that appropriate permission, the liability coverage applies to that vehicle.  If there is no permission, then that means the vehicle is being used without consent.  That may result in a situation where there is no liability coverage.  The purpose of the Omnibus Statute is to broaden the coverage so that more people are protected.  

Declaration

In any policy it is important to look at the declaration.  That declaration is a statement (declaration) by the insured as to what they have asked for, what they have represented to the carrier and what the carrier has given them.  You need to look closely at it.  If it contains incorrect info that may be a basis for the carrier to deny coverage.  For instance if you misrepresent what your address is, that may be a basis for denying coverage.

Auto Liability Coverage-Split Limits

It’s important to understand that within most liability policies there can be either single limits or split limits.  Single limit means that there is only one coverage amount available.  If that coverage amount is $500,000, then that’s the total pool of money that is available to all of the different claimants.

If the limits are split, for instance $300,000/$500,000 then means that there is $300,000 available per claimant. However the total for all claimants is up to $500,000.  If you happen to have 10 claimants, they may each be able to recover $50,000.

Owned Auto

The concept of an owned auto is important.  An owned auto includes not only the vehicle identified on the policy but also a trailer, a replacement auto, a newly-acquired auto or what is called a “temporary substitute vehicle”.  As such if you buy a new car then you have 30 days to put that new car on the policy.  During that first 30-day period it is deemed to be an owned auto.

A temporary substitute vehicle has to meet the following criteria:

  • A trailer or auto;
  • It is not owned by the named insured;
  • It is being temporarily used with the permission of the owner as a substitute for the owned auto when it is no longer in use because of breakdown, repair, servicing, loss or destruction.

The purpose of this expanded definition is again to expand coverage.  An owned automobile is just that.  Under this definition, an owned automobile is broader than simply “the owned automobile”.  

Auto Liability Coverage-Non-Owned Automobile

An even more important concept is that of a non-owned automobile.  The basic criteria for a non-owned auto are:

  • It is not owned by the named insured or a relative of the named insured;
  • Its use at the time of the incident is casual and infrequent.  Casual and infrequent has been found to mean as much as 10 different uses during a two-month period.  State Farm Mutual Automobile Insurance Co. v. Smith, 206 Va. 280, 142 S.E.2d 562 (1965);
  • The vehicle must not be a temporary substitute vehicle.

This concept of non-owned automobile becomes especially important because it can be a basis for providing liability coverage.

For this non-owned coverage to be triggered, the following criteria must be met:

  • The driver must be the named insured or a relative who lives in the same household;
  • The non-owned auto as defined above is a private passenger auto or trailer;
  • The use is with permission of the owner;
  • The use is within the scope of that permission.

The purpose of this definition is again to expand coverage.  A non-owned automobile is just that.  Under this policy definition that definition is expanded. 

As such we see several different instances where either the insurance industry has sought to broaden coverage or state legislatures have sought to broaden coverage as seen in the Omnibus Statute.  

Other Insurance

Within every liability policy there is an “Other Insurance” clause.  That clause describes how much every other insurance company will have to pay if the loss is covered by more than one policy.  

This becomes especially important when you’re dealing with a temporary substitute or a non-owned auto.  Typically those forms of coverage are excess.  That coverage is going to be pro-rated among the different carriers.

Auto Liability Coverage-Rental Vehicles

If you’ve ever rented a vehicle you know that the rental company tries to sell you their own insurance.  That may not be a bad thing to have.  If you buy that coverage then that liability coverage is primary.  Otherwise your own auto liability coverage is primary.  As stated above, this is one instance where the coverage does not follow the auto.  

With rental cars, aside from the liability coverage of the driver being primary, the uninsured motorist coverage may also be primary.  

With rental cars you can also get into tricky situations of permissive use.  The lack of permission may void the coverage for the driver.  That lack of permission however does not void the coverage for the passengers in spite of what the rental contract says.  That is, the rental contract may say that coverage is voided.  Coverage is voided only as to the non-permissive user.  It is not voided as to the passenger.  

Call, or contact us for a free consult. Also for more info on this issue see the Wikipedia pages.

Contact Us For A Free Consultation

Contact Us For A Free Consultation