I have an opportunity to possibly write an auto insurance renewal for a situation that I have not seen before and would like an expert opinion.
A vehicle is registered to a commercial business entity, a church, which provides the vehicle to the senior pastor and his wife for their personal usage. Currently, the pastor has the vehicle insured on his own personal policy and the church is not listed as an additional insured on the personal auto policy.
The pastor and his wife use this vehicle mostly for their personal use, but regularly they do drive to handle the business affairs of the church.
My initial thoughts are that this risk is incorrectly insured at this time. I think that the risk should be insured on a commercial auto policy with the registered owner of the vehicle, the church, as the named insured and the senior pastor and his wife listed as additional insureds.
You are correct. You might also write a named non-owner policy on the couple. That would ensure that their limits were correct and would cover them for their potential use of other vehicles.
I agree—it's probably being done wrong, and in a way that could leave somebody without coverage and you with an E & O lawsuit.
The Pastor needs a personal Non Owned (or owners) Auto Liability policy, this is can be written with the same carrier as the pastor's renters policy so he gets a multi policy credit, usually the credit pays for most of the auto policy. The downfall of the Non-Owned Auto Liability policy is many do not provide coverage for comp and collision coverage on rented auto. The downfall of the DOC is doesn't provide automatic coverage for the pastor's kids. If the pastor has a car he owns that his wife drives and has a personal auto policy that he will keep he doesn't need DOC or Non Owned Auto Liability policy.
The vehicle owner should insure the car.
If the pastor owns no other autos, write a named non-owner policy rather than endorsing the BAP with a Drive Other Cars endorsement.
The church does need a BAP on this vehicle since they own it.
Although this is written incorrectly, the car does currently qualify as a covered auto in the PAP because the definition of “your covered auto" includes any vehicle listed on the policy; and the church would be an insured by virtue of the extension of insured status as follows:
B. "Insured" as used in this Part means:
3. For "your covered auto", any person or organization but only with respect to legal responsibility for acts or omissions of a person for whom coverage is afforded under this Part.
But the limits are way too low for the church to depend on at the time of a loss.
You are correct, this belongs under a Business Auto Policy for the church. I don't think the PAP serves the risk as well as a BAP. If the minister does not have any other of his own autos insured, be sure to add the Drive Other Car endorsement to the BAP to give him non-owned auto coverage. Also, address other household members (teen drivers) as well.
My thoughts are the vehicle should be insured under the name of the church / legal entity. I would add Drive Other Car Coverage and list any children, regardless of age if they are residents. Finally, I would offer a Named Non-Owner policy presuming the pastor /spouse does not own a personal vehicle in his or his spouses name.
I agree that the best approach is a commercial auto policy in the name of the church. Then the pastor and his family are covered as permissive users. I would also get either a Drive Other Car endorsement to the Commercial Auto policy or a Named Non-Owner personal policy for the pastor and his family if they drive an auto not owned by the church.