You, Your & Family Members in the Personal Auto Policy

By Samuel T. Bennett, CIC, AFIS, CPRM, CRIS, CPIA

The Lee family is very excited. Their son, Joe, just graduated from high school and will go to college in the fall. Joe will reside in a dorm during his first year and Mr. Lee plans to send him to school in their 2014 Toyota Corolla. In many ways, Joe is following in the footsteps of his 22-yearold brother, Tim, who will begin graduate school at the same university in a few weeks. Tim has possession of a 2016 Honda Civic and has lived in an apartment since his sophomore year. These vehicles are titled solely to Mr. & Mrs. Lee and are listed in the Declarations of their personal auto policy (PAP). Mr. & Mrs. Lee are the Named Insureds on that policy and Tim and Joe are listed as drivers. You have been asked to explain liability coverage in his PAP to Mr. Lee.

In the PAP, definitions are found throughout the form. It is important to understand that DEFINITIONS ARE NOT COVERAGE. Definitions are simply used as part of the process of finding (or eliminating) coverage.

Determining who meets the definition of “insured” in each of the PAP’s coverage parts can be a challenge. We will concentrate on those afforded “insured” status as to liability coverage in this article.

“You” and “your” refer to the Named Insured shown in the Declarations as well as that person’s resident spouse. A non-resident spouse who is not named in the Declarations maintains “you”/“your” status for a limited period of time. Naming both spouses in the Declarations will make them “insureds” at all times, regardless of their residency. Many situations can cause residency concerns – divorce, a job that requires a spouse to live away for extended periods, military service, health challenges that result in a spouse spending time in a care facility. All of these situations can jeopardize residency. The terms “reside” and “resident” are not defined in the policy, so interpretation is left to the courts. This is important because the PAP affords liability coverage more consistently to “you” and “your” than to anyone else.

A “family member” is a person related to you by blood, marriage or adoption who is a resident of your household, including a ward or foster child. The challenge with this definition seems to be the “who is a resident of your household“ portion. In our example, is the 18‐year‐old college freshman (Joe) who is living in a dorm considered a resident of the Named Insured’s household? How about Tim, the 22-year-old graduate student? How about the many situations that can exist that may fall in between these examples? It is not unusual for your client to have situations in which their children are driving vehicles they own and sometimes they operate vehicles owned by others. As to liability coverage in the PAP, those who meet the definition of “family member” are afforded “insured” status as broadly as “you” and ”your.”

In the Liability Coverage Part’s Insuring Agreement, a promise is made by the carrier (we) to any “insured”. This promise has several elements. The carrier will pay for the legal responsibility of any “insured” for BI or PD because of an auto accident and is subject to other policy provisions (e.g., the coverage part’s exclusions and conditions). Defense is promised, IN ADDITION TO POLICY LIMITS, and is conditional: We have no duty to defend any suit or settle any claim for “bodily injury” or “property damage” not covered under this Policy. The promise is made ONLY to an “insured”. Any person not an “insured” is then not afforded this promise and will find no coverage nor defense.

As you and “family members” are “insureds” for legal liability associated with an auto accident involving ANY auto, the promise of liability coverage is broader for those meeting these definitions than for anyone else. As the word “auto” is not defined, it is impossible to determine which vehicles are autos. Is the 2014 Toyota Corolla an auto? What about a 2021 Ford F250? Or a 2019 Sterling dump truck? As there is no definition of auto – we cannot say that any of these vehicles are NOT autos. Ultimately, “you” and “family members” are afforded “insured” status for ANY auto, including the dump truck.

The Named Insured’s child, parent or sibling who does not reside with the Named Insured is not a “family member” and is not afforded “insured” status here – even if they are listed as drivers.

The nonresident child, parent or sibling - or any other person using “your covered auto” – would be afforded “insured” status under the second part of the definition of “insured.” These people are afforded “insured” status only while using “your covered auto.” For these folks, a friend’s or roommate’s car or any other vehicle would likely not be a

“your covered auto” for the Named Insured. These persons would likely be an “insured” as to the policy on the vehicle itself – but only its coverages and limits would be available to them.

As to the Lee family: It is likely that Joe would continue to be considered a resident of the Lee household for a period of time and, therefore, would remain a “family member.” Past evidence presented in support of residence status has included such information as: voter rolls, tax filings, mail delivery, age and/or level of financial dependency. It is unlikely that Tim could prove that he resides with Mr. or Mrs. Lee and would, therefore, would not be considered a “family member.” Even though he is listed as a driver on the PAP, Tim is only an “insured” while using Mr. & Mrs. Lee’s “your covered auto.” Tim would be afforded no liability coverage in the Lee’s PAP while using any other auto. Joe, on the other hand, as a “family member” could maintain liability coverage, even when using other vehicles.

It is imperative that the insurance professional understand the many nuances of the PAP, in order to provide proper advice.

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