Author: Bill Wilson
Your 20-year-old daughter is away at college. She does not have a car on campus, but her roommate does and she drives the auto occasionally. Would your unendorsed personal auto policy respond if she has an accident driving the car? If not, is there anything you can do about it? You might be surprised...
Courts have generally held that students away at school are still considered to be "family members" under the PP 00 01 and, thus, are covered while operating autos at school. However, there is an important exclusion in the PAP that says [emphasis added]:
B. We do not provide Liability Coverage for the ownership, maintenance or use of:
3. Any vehicle, other than "your covered auto", which is:
a. Owned by any "family member"; or
b. Furnished or available for the regular use of any "family member".
However, this Exclusion (B.3.) does not apply to you while you are maintaining or "occupying" any vehicle which is:
a. Owned by a "family member"; or
b. Furnished or available for the regular use of a "family member".
As you can see, IF the vehicle is "furnished or available" for the "regular use" of a "family member," there is no coverage under the parents' policy while the student drives the car. Without debating the issues of "furnished or available" or "regular use," let's assume that the student does have regular, unrestricted access to her roommate's car. In that case, she is at the mercy of the insurance on the vehicle, if any, since her parents' policy will not provide any coverage. Is there anything her parents can do do extend coverage to her under their policy while driving her roommate's car? Well, speaking of the word "extend"...
ISO has an endorsement, the PP 03 06-Extended Non-Owned Coverage-Vehicles Furnished or Available For Regular Use that may provide coverage. If you'll open this endorsement, you'll see that it buys back several exclusions, including B.3. above. However, note the following wording from the endorsement [emphasis added]:
I. Extended Non-owned Coverage
The Extended Non-owned Coverage provided by this endorsement does not afford coverage under Part A and Part B of the Policy for any accident involving:
A. A vehicle owned by an individual named in the Schedule or in the Declarations;
B. A vehicle owned by a "family member" or
C. A temporary substitute vehicle for such owned vehicle described in A. or B. above.
So, even though this endorsement provides coverage to family members for vehicles furnished or available for their regular use, it does not provide coverage IF the vehicle is owned "by a member of the same household." Exclusion B.3. in the PAP applies to vehicles owned by family members but not scheduled on the parents' policy and also to vehicles furnished or available for the regular use of family members (e.g., a company car). What Item I. in the endorsement means is that the coverage provided by the endorsement only buys back the "furnished or available" part of Exclusion B.3. and coverage still does not apply to vehicles owned by a member of the same household. How does this apply to the college roommate situation?
On at least one occasion (and probably more), a claim involving a college student's roommate's car was denied under the PP 03 06. According to the insurer, the roommate was a "member of the same household." But, is this true? Do two college student sharing a dorm room constitute a "household?" In deciding the coverage issue, we must examine what is meant by a "household."
According to Black's Law Dictionary [emphasis added]:
Household, n. A family living together. Those who dwell under the same roof and compose a family. Term is generally synonymous with "family" for insurance purposes, and includes those who dwell together as a family under the same roof. Generally, the term as used in automobile policies is synonymous with "home" and "family."
The Black's Law discussion of "family" indicates that it is comprised of blood relatives or a close-knit social unit with a high degree or permanency, living under the control of one head of the household. I don't think two people who possibly had never met before, spending a few months together as roommates, but otherwise being independent of each other, constitutes a family or household...i.e., just because two people share a room doesn't make them a "household."
What if it's not her roommate that makes the auto regularly available, but her best friend across the hallway? Clearly, in this case, coverage applies since they aren't roommates...or does the entire dormitory constitute a "household?" What if we're talking about a sorority or fraternity where there is (at least theoretically) more of a "family" than a dormitory setting?
Clearly, there are no easy answers. So, the best thing to do is to discuss the situation with the company underwriter in advance. What do you think?
For examples of a more detailed analysis of auto and homeowners exposures, check out these two articles:
The Homeowners Policy and College Students
Kids in College...Time for an Insurance Review
Reviewed: January 2020