Q: An insured’s nanny uses her personal car to transport his children. Will the insured’s personal auto policy provide the nanny with any coverage while she is working? If not, what is the proper way to provide the insured with protection against this non-owned auto exposure?
Response 1: There's a slim chance of coverage. A PAP typically covers the named insured's "use" of autos. So, when the nanny is using her car on an errand for her employer, courts might hold that the employer is vicariously "using" her auto and should be afforded coverage. However, an insurer might also argue that any auto in the household is available for the insured's regular use, which excludes the nanny’s auto.
The nanny's PAP might provide coverage for this business use, but I've not seen any personal lines solutions in the regular market for this scenario. One option might be for the nanny to have high limits on her PAP to protect her employer.
Response 2: The ISO PAP covers anyone driving “your covered auto.” Therefore, the policy would not extend coverage to the nanny’s vehicle. I assume the nanny has a PAP. If it’s an ISO PAP, your insured would have some coverage on her policy.
If you’re concerned about your insured’s non-owned auto exposure, the named insured, resident spouse and family members should have coverage for the nanny’s use of her vehicle. There is also coverage for the ownership, maintenance or use of any auto but it doesn’t say that the auto must be used by those parties.
Response 3: Check the liability insuring agreement. If the coverage states that the policy provides coverage for the "use of any auto," then coverage does not require that the named insured is behind the wheel or that the auto is an owned auto.
Response 4: If using an ISO form, the parents are held vicariously liable.
Response 5: If using a standard ISO PP 00 01, the policy’s medical payments and uninsured/underinsured motorists coverages will cover the client’s child while occupying the nanny’s auto. Although, your client should strongly consider requiring the nanny to carry realistic liability and medical payment limits on her policy.
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