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:
d. Loss; or
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.