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Is Running an Errand for an Employer Excluded from PAP as Public or Livery?

A delivery driver had an accident while running an errand for his employer in his personal auto, but his carrier has denied the claim based on the public or livery exclusion.
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is running an errand for an employer excluded from pap as public or livery?

A commercial client's delivery driver ran an errand in his personal auto to pick up a few loaves of bread for the client's grocery delivery business. The delivery driver does not use his personal vehicle to deliver groceries and is provided with a company vehicle for these services. The driver was involved in a minor fender bender in the parking lot. His personal auto policy carrier has denied the claim, citing the public or livery exclusion

Q: Is an employee using their personal car to run an errand for their employer excluded from a PAP under the public or livery exclusion?

Response 1: Here's the exclusion the carrier is misusing to deny the claim:

Loss arising out of the use of an insured auto while used to carry persons or property for a charge, or the use of any auto an insured person is driving while available for hire by the public.

  1. while used to carry persons or property for a charge
  2. use of any auto an insured person is driving while available for hire by the public

While the employee may be on the payroll while running this errand and may receive a mileage expense reimbursement, he is not carrying property for a charge. And the employee is driving for the benefit of his employer, not the public.

The carrier is embarrassing itself and contributing to the distrust people have of the insurance industry with this ridiculous denial.

Response 2: My guess is that's a new claims representative working on a probation period. If the PAP customer was not delivering goods for a fee, not using the vehicle to carry someone for a fee, and the vehicle is not offered to the public for either use, the carrier should pay the claim. The agent of the driver should go up the line to a senior claims representative for review.

However, since this doesn't involve one of your insureds or policies, you have no justification for becoming involved. The employee should sort this out with his own agent. You should not be discussing coverages you had nothing to do with. 

If the employee was my friend, I'd suggest that he ask the insurance company for an appeal of this denial. He should explain to the insurance company that none of the restrictions cited in the letter apply to what he was doing and see if they will reconsider. If not, he'll have to seek legal advice. 

Response 3: Was the individual hired and paid a specific fee to go pick up the bread loaves and deliver them somewhere? Was the auto available for hire by the public? If so, then the denial might be justified. 

However, if the individual earns a salary or hourly wage and in the scope of employment was running an errand for his employer with no specific fee tied to the pickup of the bread, and the auto was not available for hire by the public, then the denial is not justified. The latter instance would be similar to a secretary who earns a salary or hourly wage whose work includes out of office errands for the employer, such as going to the bank or office supply store.

Search the Big “I" Virtual University for “public or livery conveyance" for articles on this citing case law.

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.

This article is intended for general informational purposes only, and any opinions expressed are solely those of the author(s). The article is provided “as is" with no warranties or representations of any kind, and any liability is disclaimed that is in any way connected to reliance on or use of the information contained therein. The article is not intended to constitute and should not be considered legal or other professional advice, nor shall it serve as a substitute for obtaining such advice. If specific expert advice is required or desired, the services of an appropriate, competent professional, such as an attorney or accountant, should be sought.

Friday, November 10, 2023
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