Car Rentals, BAP Coverage and Theft

Rental Cars and Unauthorized Drivers
An insured called to advise that he was going on vacation and renting a car in his name. He has a 19-year-old who he understands cannot drive the rental car by requirement of the rental car company. However, he is planning on letting the 19-year-old drive the car anyway. His question is: Will his personal auto policy respond?

It is highly unlikely that his PAP would respond because of these exclusions:

Liability Exclusion:

Physical Damage Exclusion:

Clearly, the 19-year-old is not entitled to use the vehicle and it is presumed that he knows that. His only option would be to buy the rental company’s liability and LDW/CDW coverages, although almost certainly they would be voided if an unauthorized driver is using the vehicle.

The solution here is for them to abide by the contract being signed. It is doubtful that teaching a young person to willfully violate agreements is a good lesson to be passing along anyway.

For the full article, click here.

BAP Coverage for Employees’ Property
From our “Ask an Expert” archive: “A vehicle owned by a corporation is driven by a corporate officer who backs into his own personal vehicle in the parking lot. The insurer denies the claim stating that the corporate officer cannot be liable to himself. I do not find any exclusions in the CA 00 01 that state this. Doesn’t liability rest with the corporation, not the corporate officer?”

These claims involve the same issues: the concept of separation of insureds, legal liability issues and owned property exclusions. In the BAP, the definition of “insured” makes it clear that coverage is afforded distinctly to each insured. The “CCC”/ownership exclusion applies only to the negligent party’s property.

Therefore, if the suit is made against the employer, the policy would respond. The difficulty would most likely be in establishing liability on the part of the employer for the employee damaging his own property but, if that’s possible, then the policy should respond.

For the full article, click here.

Employee Theft of Customers’ Property
A member agent asks: “The resident of an apartment building reported a broken ice maker. Building maintenance entered the apartment when [the] resident was not at home and made the repair. The tenant subsequently discovered his Rolex watch was missing from the kitchen drawer. The tenant, an attorney, is certain the maintenance person stole the watch and has filed suit against the landlord for recovery. What insurance carried by [the] landlord, if any, would respond to this claim?”

Here is a similar question from another member: “A contractor did a job at a client’s home and one of his employees allegedly stole some jewelry from the home. Would this be covered under his CGL policy?”

For the full article, click here.