Coverage for Second Driver

manhattan

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I’m wondering if an auto insurance expert will cast some light on a question which my agent and the insurance company itself has been unable to answer. I have a “non-owner” auto insurance policy with Travelers, so my question below is presented in that context. However, the question may be also relevant to standard auto insurance policies. I am “Bob” in the following scenario:

“Bob does not own his own car, but rents cars from a commercial agency such as Avis. Because Bob has a non-owner automobile insurance policy from Travelers, he does not accept any of the car rental agency’s insurance options. Suppose one of Bob’s friends (let’s call him James) signs the requisite paperwork at the Avis counter to be a second driver. James thinks he has adequate insurance, so he also turns down the car rental agency’s insurance options. While James is driving the car, an accident occurs. It turns out that for some reason James’s insurance does not cover the resulting vehicle damages or personal liability (perhaps because James did not really have a policy, or it expired, or he was just mistaken about his coverage).

“In this scenario in which James is not covered, would the car rental agency (and perhaps an injured passenger in the other car) hold Bob responsible for the damages to the car and for personal injuries, even though James was the driver at the time of the accident? And would Bob’s Travelers policy cover him for any financial penalties?”
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My Travelers agent responded this way:
“In the worst possible scenario if you are held responsible for the accident and your Travelers policies deny coverage then maybe both you and James will be responsible. In that case you can be sued for any property you own, monetary savings, future earnings, etc. There may also be fraud involved if James told them he had coverage when in fact he didn’t. Insurance fraud is a very serious crime.”
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I responded with surprise, telling my agent that a lot of policy-holders would be amazed to hear that they might not be covered in this scenario. So my agent asked the Travelers underwriter, who responded in this way:

“The final decision is with the Claims Dept. depending on the investigation and circumstances. If insured is renting a vehicle and lets his friend drive and he is not listed as a driver on the rental agreement, the rental co. may try to sue the driver and the insured who rented the vehicle.”
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My agent also passed my question along to Travelers’ legal department. Here is their response:

“Just wanted to follow up on the issues that have been brought by the insured, based on the e-mail trail it appears that the insured is posturing a lot of ‘what-if’ scenarios. He is not clear in indicating that there has been an actual event and he seems to be vetting out various scenarios and what the implications might with regard to coverage’s.

“We are not comfortable in providing broad based answers to the questions posed. As discussed, insurance coverage can be complex, as the interpretations could vary depending on the actual circumstances. Applicable laws fall into consideration and trying to answer hypothetical situations would not be in our best interest due to interpretation of specific situations.”
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What do you think of all the above? For starters, I find Traveler’s implication that an insured should not be asking hypothetical questions is a little unsettling. And the response does not provide a useful answer to my question. Does anyone have experience in this area, or insight into whether “Bob” in the above scenario is protected by his insurance?
Many thanks.
 
I'm from CA so not sure what state you are in. Not in claims either ,but the issue may lie with your policies permissive usage. some policies automatically extend coverage to other drivers as long as you give them permission for others are automatically excluded unless named on the policy.

secondly if you are the responsible party for the rental vehicle and James is simply an operator James Insurance may argue that no coverage is in force due to the nature of the contract.

So you might want to find out if you have permissive usage on your non owned auto policy. and what the rules are on rented or substitute vehicles regards to permissive operators.

if. your policy exclude other drivers you might not have a case at all, just my opinion don't take it as fact, do your own research to be sure
 
First thing that should be pointed out on a non-owner policy is that comprehensive and collision coverage is not covered/offered. So there is no coverage for damage done to the rented vehicle unless 'Bob' selects the rental companies damage waiver option. Borrowing a friends vehicle that carries full coverage is a different story.

Second, a non-owner policy covers liability and property damage for the listed individual. So 'James' is not covered under the policy but that does not mean if James injures another party in the rental car that 'Bob' would not be covered. If 'Bob' is named in a resulting lawsuit from the accident then Bob's non-owner policy would provide only Bob legal representation and pay out damages to the injured party if he is found negligent up to the policies limits. James would need to have his own policy to cover his liability.

It's really important to remember since 'Bob' signed the rental agreement that he is ultimately responsible for any damage to the rental regardless if someone else is driving unless they have full coverage that will transfer over or the damage waiver option is purchased. The rental car company can also make 'Bob' liable for loss of use.
 
@mattupthe hill
Many thanks. I am a resident of New York State. Regarding permissive usage, my question is about coverage for the primary driver who might get sued directly, not for the secondary driver.

@jgracey
Thank you also for your assistance. To address your responses:

First thing that should be pointed out on a non-owner policy is that comprehensive and collision coverage is not covered/offered. So there is no coverage for damage done to the rented vehicle unless 'Bob' selects the rental companies damage waiver option.

My policy has a “Rental Vehicle Coverage Endorsement” that DOES cover “accidental damage to, or loss of, any rental vehicle.”

Second, a non-owner policy covers liability and property damage for the listed individual. So 'James' is not covered under the policy but that does not mean if James injures another party in the rental car that 'Bob' would not be covered. If 'Bob' is named in a resulting lawsuit from the accident then Bob's non-owner policy would provide only Bob legal representation and pay out damages to the injured party if he is found negligent up to the policies limits.

Alas, this is the core of the issue. I would have thought you were right, but as you can see from my post, the insurance company is saying that ‘Bob’ is NOT covered. See the response from my agent:
In the worst possible scenario if you are held responsible for the accident and your Travelers policies deny coverage then maybe both you and James will be responsible. In that case you can be sued for any property you own. . . [etc.]
In brief, it seems to me that here is a gaping hole in coverage that many people are not aware of. I posted here in an attempt to see if anyone had any experiences to share in this area. If anyone else has some insight to add, I would appreciate it. And thanks again.
 
Regarding,

In the worst possible scenario if you are held responsible for the accident and your Travelers policies deny coverage

On any type of auto policy there will be situations the company will deny coverage. Those situations should be listed on the policy. Typically it's an intentional accident or when the vehicle is used in a criminal activity or certain business endeavors.
 
If renting is the only time you need non-owner protection, you may want to look into American Express' coverage they have available. They have what comes with their card but they also have a secondary 'premium' rental car coverage which is really good coverage. Every time you rent a car with their card, you pay $21 but that covers the entire rental, it's not a per day charge and you only incur it when you actually rent.

I don't know what it says about extra drivers though.
 
Many thanks for the responses, everyone. There seems to be a general misunderstanding of the reason for my initial post. I am not asking a question about my policy coverage: The insurance company has already answered that question. They have said that I am not covered if a second driver is responsible for an accident, was mistaken about his or her own coverage, and if I am sued directly. The reason I posted was to alert everyone that there seems to be a large hole in auto insurance coverage that people do not seem to be aware of. (I am assuming that all auto insurance carriers will have policies similar to Travelers.) And also, I was wondering if this described issue has come up in anyone's experience. Again, I appreciate your feedback.
 
Many people ask about the need to insure a second driver when they purchase a rental car. If you’re renting a car and your additional driver isn’t included on a personal auto policy (and you’re refusing the car rental insurance coverage), the decision to allow a second driver to operate the rental vehicle is potentially quite risky.
 
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