Ask Tim

After the Love Is Gone, What Will Become of the Auto Insurance?

Question from an IIABNY member: I hope you can help me interpret the intent of a personal auto policy as it pertains to coverage for a separated couple, undoubtedly headed towards a divorce, one of whom no longer lives in the insured household or drives a vehicle insured on the policy.

We insure a family on a package auto/home/umbrella policy.  The husband and wife have separated and she has moved out, the husband remaining in the home with their daughter.  There is only one car insured on their policy, which he takes to work every day, the other vehicle having been removed following an accident prior to their separation.  As a non-resident owner of the home, her name will be taken off the entire package policy as a named insured, but added back as a non-resident owner on the homeowners section, using the appropriate endorsement. 

The husband's concern is that if she has access to any other car, wherever she is, and has an accident, could he (and his policy) be brought into a resulting claim or lawsuit?  Since she no longer resides in the home, I  tend to think not, if I interpret the definition of a family member correctly, but I am not so sure about that. 

I looked at all the definitions in the auto section that might be applicable and am having trouble reconciling the definitions of Covered Person(s), Family Member, Motor Vehicle and Non-owned automobile as they relate to this situation.  I thought you might be able to help me sort this out and would appreciate you thoughts.

IIABNY Response: I love questions like this because I get to build a trail through a policy, and I never know where I’m going to end up.

Could he be brought into a lawsuit involving his wife? That’s a legal question and outside my area of expertise, but I imagine anyone with a connection to her could be sued. The real question is whether his auto policy will cover him for it. To start off, the policy definitions state:

A. Throughout this policy, "you" and "your" refer to:

1. The "named insured" shown in the Declarations; and

2. The spouse if a resident of the same household.

If the spouse ceases to be a resident of the same household during the policy period or prior to the inception of this policy, the spouse will be considered "you" and "your" under this policy but only until the earlier of:

1. The end of 90 days following the spouse's change of residency;

2. The effective date of another policy listing the spouse as a named insured; or

3. The end of the policy period.

Let’s assume that a six-month policy took effect on April 1 and the spouse moved out on May 1. She would meet the definition of “you” until July 30 (90 days after she moved out.) If she moved out on September 1, she would meet the definition only until October 1 (the policy expiration date.) If she moved out on May 1 and bought a new policy on May 10, she meets the definition only until May 10.

The definitions also say:

F. "Family member" means a person related to you by blood, marriage or adoption who is a resident of your household. This includes a ward or foster child. (emphasis added)

By definition, then, an estranged spouse is not a family member. Another important definition is:

J. "Your covered auto" means:

1. Any vehicle shown in the Declarations.

2. A "newly acquired auto".

3. Any "trailer" you own.

4. Any auto or "trailer" you do not own while used as a temporary substitute for any other vehicle described in this definition which is out of normal use because of its:

a. Breakdown;

b. Repair;

c. Servicing;

d. Loss; or

e. Destruction.

This Provision (J.4.) does not apply to Coverage For Damage To Your Auto. Refer to the definition of “non-onwed auto” in Part D — Coverage For Damage To Your Auto.

Part A — Liability Coverage, paragraph B. states:

B. "Insured" as used in this Part means:

1. You or any "family member" for the ownership, maintenance or use of any auto or "trailer".

2. Any person using "your covered auto".

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.

4. For any auto or "trailer", other than "your covered auto", any other person or organization but only with respect to legal responsibility for acts or omissions of you or any "family member" for whom coverage is afforded under this Part. This Provision (B.4.) applies only if the person or organization does not own or hire the auto or "trailer".

Therefore, the husband is an insured for the ownership, maintenance or use of any auto, and so is the wife until she ceases to meet the definition of “you” (see above.) Any other person, including the wife after she no longer meets the definition of “you”, using an auto covered under the policy is also an insured. A covered auto is one that is shown in the declarations, newly acquired by “you,” a trailer owned by “you,” or a temporary substitute. So, once she no longer meets the definition of “you,” she’s insured only for the vehicle listed on the policy, one that the husband buys, a trailer, or the husband’s substitute vehicle. This is much narrower coverage than she had as a resident spouse. If she uses a covered auto with permission and causes an accident, the husband’s policy covers her. However, if she buys or borrows another car and has an accident, she has no coverage under the husband’s policy because it’s not a covered auto. He, on the other hand will have coverage if he’s dragged into the lawsuit in either case because he’s covered for the ownership and use of any auto, subject to the policy exclusions.

For more information on this topic, IIABNY and IIABA members can read Dealing With Divorce on the Big I Virtual University Web site. You will need a user ID and password to access the article.

Should My Client Be An Additional Insured On Someone Else's Policy?

Question from an IIABNY member: I received an interesting question from an insured.  The insured is a not-for-profit organization composed of smaller organizations.  Our insured requires its members to list it as an additional insured on their policies.  A certificate from each member is on file with our insured.

Oft times outside groups seek to use a member's facilities, and the members require that the user list the member as an additional insured on the user's policy.  Our insured asked me whether it should also be listed on the user's certificate of insurance.  My thought would be that that would be addressed by having our insured listed on the member's policy as an additional insured. 

Since we are dealing with certificates - the biggest E&O exposure of all time - I thought I would run this by you for your feedback.

IIABNY response: For ease of discussion, I’m going to assume that all three parties (user, member and your insured) have modern versions of the ISO CGL policy. A key condition of that policy states:

4. Other Insurance.

If other valid and collectible insurance is available to the insured for a loss we cover under Coverages A or B of this Coverage Part, our obligations are limited as follows:…

b. Excess Insurance

(1) This insurance is excess over: …

(b) Any other primary insurance available to you covering liability for damages arising out of the premises or operations, or the products and completed operations, for which you have been added as an additional insured by attachment of an endorsement.

Therefore, our layers of coverage will look something like this:

Since the user is adding the member and your insured as additional insureds by endorsement, the member’s policy automatically becomes excess over the user’s policy. The same applies with your insured’s policy, since your insured is an additional insured by endorsement on the member's policy. Naming your insured as an additional insured on the user’s policy essentially makes your insured's coverage one step further removed from a given claim. The only potential downside I can see is that this requirement, all other things being equal, might make the member’s facilities less attractive to potential users. I don’t know how significant the difference will be, however. If the facilities are perfect for a particular group and the group’s insurer is willing to go along with the requirement, the requirement likely will not be much of an impediment.

That's my interpretation. Does anyone have a different view? Leave a comment!

N.Y. No Fault Coverage for Car Passenger

Question from an IIABNY member: Our insured’s son drove a car that had been purchased before adding it onto the policy. According to the New York No-Fault endorsement, there is coverage from the day of purchase. However, the company has denied coverage because the named insured did not purchase the vehicle; her son purchased it.

Can the passenger injured in the crash get coverage for his injuries from his parents' policy? He is a minor age 18 or 19 and in college. Should the parents submit to their carrier under PIP?

IIABNY response: The NY PIP endorsement states in part:

Subject to the exclusions and conditions set forth below, an eligible injured person is:

(a) the named insured and any relative who sustains personal injury arising out of the use or operation of any motor vehicle;…

This coverage does not apply to personal injury sustained by:...

(b) any relative while occupying, or while a pedestrian through being struck by, any motor vehicle owned by the relative with respect to which the coverage required by the New York Comprehensive Motor Vehicle Insurance Reparations Act is not in effect;

(c) the named insured or relative while occupying, or while a pedestrian through being struck by, a motor vehicle in New York State, other than the insured motor vehicle, with respect to which the coverage required by the New York Comprehensive Motor Vehicle Insurance Reparations Act is in effect; however, this exclusion does not apply to personal injury sustained in New York State by the named insured or relative while occupying a bus or school bus, as defined in sections 104 and 142 of the New York Vehicle and Traffic Law, unless that person is the operator, an owner, or an employee of the owner or operator, of such bus or school bus;

(e) any person while occupying a motorcycle;

(f) any person who intentionally causes his or her own personal injury

(g) any person as a result of operating a motor vehicle while in an intoxicated condition or while his ability to operate such vehicle is impaired by the use of a drug (within the meaning of section 1192 of the New York Vehicle and Traffic Law);  or

(h) any person while:

(1) committing an act which would constitute a felony, or seeking to avoid lawful apprehension or arrest by a law enforcement officer;

(2) operating a motor vehicle in a race or speed test;

(3) operating or occupying a motor vehicle known to that person to be stolen;  or

(4) repairing, servicing or otherwise maintaining a motor vehicle if such conduct is within the course of a business of repairing, servicing or otherwise maintaining a motor vehicle and the injury occurs on the business premises;

(i) the named insured or relative while not occupying a motor vehicle or a motorcycle when struck by a motorcycle in New York State with respect to which the coverage required by the New York Comprehensive Motor Vehicle Insurance Reparations Act is in effect;

So, under the parents’ PIP coverage, any “relative” (i.e., a child or other person related to the named insured by blood who regularly resides in the insured’s household, including any such person who regularly resides in the household, but is temporarily living elsewhere) is covered for injuries arising out of the use or operation of any motor vehicle. Under this provision, the 18 year-old college student has coverage for his injuries. He would not have coverage if:

• He was injured by a vehicle he owned and that did not carry PIP coverage

• He was injured while occupying someone else’s vehicle that did have PIP coverage (unless it was a bus or school bus)

• He was injured while riding a motorcycle

• He intentionally injured himself

• He was injured while driving under the influence of alcohol or illegal drugs

• He was injured while committing a felony, trying to outrun the police, racing, driving a vehicle he knew was stolen, or repairing a vehicle on the premises of a repair shop where he worked

• He was injured when struck by a motorcycle that had PIP coverage.

In your situation, he was injured while occupying his friend’s car, and your insured's company has determined that this car did not carry PIP coverage. Therefore, the second bullet point should not apply, none of the other bullet points appear to apply, and he should be able to recover under his parents’ PIP coverage.

Episode #13: Insurance Myths

I enjoy reading and writing fiction, especially science fiction, fantasy and horror stories. Made up worlds and monsters can be a lot of fun and a welcome diversion from reality, especially after I read the news these days. I'm a sucker for the Harry Potter books and movies. However, there are a lot of "stories" out there about insurance coverage that are not so harmless. In fact, if your clients believe some of these tales, they could be exposing themselves to some large losses. Enter episode #13 of Ask Tim, where I look at some of these myths. Based on a recent article in USAA Magazine, this episode looks at flood coverage, auto coverage for personal belongings, dwelling wear and tear, and others, finishing up with an assist from Prince.

This episode is brought to you by IIABNY and the RLI Personal Umbrella program.

Download Ask Tim Episode #13

Independent Insurance Agents & Brokers of New York Honor Leaders

(DeWitt, New York, May 15, 2009) — A pioneer for women in insurance, an ambitious local insurance producer’s trade association, a dedicated association executive and a solutions-focused volunteer leader were among the recipients of honors given by the Independent Insurance Agents & Brokers of New York last night. New York’s oldest producer organization gave the awards at its 2009 Leadership Dinner, held following its 127th Annual Business Meeting at the Garden City Hotel in Garden City, New York.

Acting for the final time in his capacity as IIABNY chair of the board, Neal L. Sullivan, CPA, presented the Chair’s Distinguished Service Awards, the association’s highest honor, to three individuals:

• Eileen A. Frank, CPCU, ARe, NASD, president of J.P. West, Inc., Manhattan. Frank, who represents the New York City metro area and suburbs on the IIABNY board of directors, is a past director of former IIABNY affiliate IAMAC and past director at large for IAAC, IIABNY’s member services division. She is the current chair of the Board Development and Accountability Committee and a current member of the association’s political action committee. Active in UNICEF and the United Negroes College Fund, she was the first woman to chair the Conference of Special Risk Underwriters and the first woman to head the National Insurance Industry Alliance. Because of her knowledge and experience with complex alternative risk programs and pricing structures, the Independent Insurance Agents & Brokers of America frequently asks her to be a spokesperson on national television programs. She has appeared as a spokesperson for Trusted Choice in national television ads. Very engaged in the New York political scene, she was primarily responsible for securing Gov. David A. Paterson as the keynote speaker for the 2009 Legislative Day (also known as L Day).

• David M. Gelia, executive vice president of United Insurance Agency, Inc. in Amherst, New York. Gelia served as director and officer of the Independent Insurance Agents Association of Western New York before serving as its president from 2005-06. He became an IIABNY director in 2007, joined the IIABNY executive committee in 2008, and is the association’s chair-elect for 2009-10. He currently serves as chair of the Direct Response Task Force and as a member of the Public Policy Management committee. He played an integral role in tackling the business challenges the association has faced in recent years. His advice and counsel on the Finance and Audit Committees helped the association make some difficult but necessary decisions to position it for the years ahead.

• Lisa K. Lounsbury, AAI, CAE, senior vice-president of IIABNY and president of IAAC. Lounsbury has guided the continuing evolution and development of IAAC and helped build an unprecedented high level of member service. Responsible for the human resources functions for IIABNY and IAAC, she has provided guidance and stewardship for the staff to make IIABNY a warm, family-friendly employment atmosphere. She has worked tirelessly to improve the association’s errors and omissions insurance program and built new business lines, including premium finance, employee benefits and a variety of other programs. A firm believer in continuing education, she has earned the Accredited Advisor in Insurance designation and, more recently, the Certified Association Executive designation. Sullivan made special note of the assistance she gave to him during his years on the board of directors and executive committee.

The association also bestowed the following awards:

• Douglas Katz of Jacob J. Katz Co. in Bardonia received the American Association of Managing General Agents Award. As chair of the association’s Technology Leadership and Advocacy Committee, Katz initiated and managed outreach to New York state agency management systems users groups, coordinating education and advocacy on behalf of independent agents. This resulted in better working relationships with these groups. To protect agencies from intrusive and contradictory insurer technology contracts, he worked to deploy supplemental contracts. He also initiated monthly calls with the Technology Committee to keep business on track and to identify new issues that need attention.

• The Independent Insurance Agents of Westchester County received the inaugural award for Local Association of the Year. IIABNY gave this award to recognize outstanding effort and accomplishments by a local association in the areas of enhancing the image of independent agents, planning and executing an outstanding local association meeting, legislative advocacy, increasing attendance at L Day, and establishing effective public relations. The Westchester association had the largest local association delegation at L-Day, increased the number of press releases issued, produced quarterly printed newsletters and monthly e-mail newsletters, held a meeting with a sell-out crowd at their annual “Education Day,” and established a Volunteer Firefighters Fund to grant scholarships to two children of volunteer firefighters in Westchester County.

Nassau County Insurance Agent Elected Chair of Independent Insurance Agents & Brokers of New York

(DeWitt, New York, May 15, 2009) — Insurance agent Lane S. Rubin led the list of officers elected yesterday by members of the Independent Insurance Agents & Brokers of New York, Inc. New York’s oldest insurance producer trade association installed Rubin as chair of the board at its 127th Annual Business Meeting, held at the Garden City Hotel in Garden City. Members also elected and installed new regional and district directors for the 2009-2010 term.

Rubin, managing member of Excel Coverage Group, LLC in Westbury, is a former IIABNY Regional Director. He chaired IIABNY’s Insurance Training Center Task Force, which oversaw the development of the ‘Essentials’ for Customer Service Representatives curriculum, a first-of-its-kind training solution for independent insurance agencies and brokerages. An active participant in the association's government affairs work, he has attended industry legislative conferences in Albany and Washington, D.C. He has been active on a number of insurance company advisory boards and is a past president of the Nassau County Independent Insurance Agents Association.

In his acceptance speech, Rubin laid out priorities for the next year. Reflecting on his work on the training center task force, he said, “One of the biggest challenges confronting our industry today is recruiting new talent.” To improve communications between IIABNY and its members, he pledged better use of technology and face-to-face contact. He called on IIABNY to educate members on how to use Web 2.0 technology in their businesses, and he acknowledged the struggling economy. “When times are difficult, it is even more important that we work together to help us all get through this period and to protect and make our industry even stronger.”

Other officers elected and re-elected to IIABNY’s executive committee for one-year terms included:

• David M. Gelia, executive vice president of United Insurance Agency, Inc. in Amherst, New York, elected chair-elect;

• Christopher A. Brassard, CIC, executive vice-president and director of Ten Eyck Group in Albany, New York, elected secretary-treasurer.

IIABNY members also elected and re-elected the following regional directors to two-year terms:

• Sean L. Hickey, ARM, senior vice-president of Rose & Kiernan, Inc. in East Greenbush, New York to represent the state’s Capitol District and areas north;

• William J. Oliver, CIC, chief executive officer of The Partners in Vestal, New York to represent the central and western parts of the state;

• R. Todd Rockefeller, vice-president of DeRosa, Rockefeller, Sohigian & Werdal, Inc., Harrison, New York to represent the New York City metro area and suburbs; and

• John J. Schwab, AAM, president of Niagara National, Inc. in Buffalo, to represent the central and western areas.

Richard Longueira, AAI, vice-president of Petrocelli Group, Inc. in Flushing, New York won a two-year term as a member representative on the Nominating Committee, which evaluates candidates for leadership positions and makes recommendations to the membership.

Earlier in the day, the IIABNY board of directors elected Rick Morgan of Rick Morgan Consulting, Broomfield, Colorado, to a one-year term as a director-at-large. The board also re-elected Wesley Bissett, president and founder of the Bellemore Group, LLC in Washington, D.C and Baltimore, to a second one-year term as director-at-large.