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.
“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.”
--
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.”
--
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.”
--
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.