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Will a PUP Cover a Business Owner’s Liability When BAP Limits Are Exhausted?

In an incident when operating a business-owned and insured vehicle, there was personal liability once the business auto policy paid the full limit.
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will a pup cover a business owner’s liability when bap limits are exhausted?

Q: Would a personal umbrella insurance policy provide an extra layer of coverage for a business owner driving a vehicle registered to the business and insured on a business auto policy if the BAP limits were exhausted? There was an incident when operating a business-owned and insured vehicle and there was personal liability once the business auto policy paid the full limit.

Response 1: Depending on the PUP policy, there may be coverage for the driver driving “any auto." For a non-owned auto, coverage would be excess. If the auto is a private passenger auto, several personal auto policies and PUPs usually do not exclude auto coverage. You need to review the policy forms to see if excess coverage is available under either or both the PAP and PUP.

Response 2: It depends on the umbrella. There is no standard personal umbrella policy used widely in the marketplace.

If the individual is sued personally, they should have extended non-owned coverage that would include the company car. In that case, the PUP could cover that.

Response 3: The business exclusion in a PUP usually doesn't apply to the auto exposure, but there is no way to know for sure without reviewing the policy. If it's a follow form excess policy and the underlying PAP is non-ISO, there could be a business use exclusion. Or, even if the PAP is ISO and this is a vehicle furnished or available for regular use, extended non-owned coverage would have to be endorsed on the PAP and then it would be up to the PUP whether the coverage extends.

Response 4: On an ISO form, the PAP covers the insured for the use of any auto. There is no exclusion for the business use of a private passenger auto, it only excludes the business use of something like a box truck. An umbrella may provide similar coverage.

Response 5: Many PUPs would provide coverage for driving a car owned by a business, even if it's used in business. Business use of trucks is typically excluded, as is livery. Sometimes the exclusion for furnished autos will apply if it's a company car, but coverage for furnished autos may also be covered.

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.