An agency has a client who is an attorney. The firm owns the client's auto, which is written on a business auto policy with a commercial umbrella sitting over it. If the driver has an at-fault accident in the car and both the firm and driver are named in the lawsuit, the BAP and commercial umbrella would respond as the coverage follows the listed vehicle, but where does defense and coverage come from for the driver who is personally named in the suit? 

Q: Would personal auto and personal umbrella policies ever respond if a named driver was named in a suit while driving a company-owned auto?

Response: The primary coverage should come from the BAP and commercial umbrella, as long as the attorney fits the definition of the “insured" and no other exclusions apply. If the attorney also has a PAP, there is undoubtedly an exclusion for an accident arising out of a vehicle furnished for their regular use. 

However, it is advisable to add the Extended Non-Owned endorsement to that PAP. The ISO form is PP 03 06 Extended Non-Owned Coverage – Vehicles Furnished or Available for Regular Use. It protects the operator in a variety of situations where the commercial auto policy may not respond, such as:

• If the commercial auto premium was not paid, and the policy lapsed without their knowledge.
• If the commercial policy had a fellow-employee exclusion.
• If it was determined that the operator used the vehicle outside the scope of permission. For instance, if the employee took it on vacation, their spouse took the vehicle to visit family out of state, a child drove it to school, or an accident occurred while driving home from a bar at 2 a.m., among other reasons.

In an accident that involves multiple fatalities and threatens to blow through limits, the firm's owner or board of directors may decide that the vehicle was not being used within the scope of permission.

Note that you must name the operators on the form. Don't be surprised if, being an attorney, they say none of that would apply to them. If they claim that, then have them sign an attestation that they don't want it. 

If they don't own another auto and don't have a PAP, you can accomplish this by providing them a PAP and this protection with the ISO endorsement PP 03 22 Named Non-Owner Coverage.

This is a frequently overlooked coverage gap. All your insureds who are provided company cars should have this endorsement on their PAP. The one possible exception might be due to the fact they are the business owner, they pay the premiums, they assure that the limits are adequate, they assure that the fellow-employee exclusion is removed, and they control the accepted scope of operation.

This question was originally submitted by an agent through the Big “I" Virtual University's (VU) Ask an Expert service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.

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