California Property & Casualty Broker-AgentCasualty InsuranceHard
A California resident has a Personal Auto Policy. They lend their car to a friend who is not listed as a driver on the policy. While driving the car, the friend causes an accident, resulting in significant bodily injury and property damage to a third party. Which of the following statements accurately describes how the policy's liability coverage will typically respond?
- AThe policy will provide primary liability coverage for the friend as a permissive user.
- BThe policy will deny coverage because the friend is not a named insured or listed driver.
- CThe policy will provide excess liability coverage only, after the friend's own policy pays first.
- DThe policy will only cover property damage, not bodily injury, if the driver is not a named insured.
Show answer & explanationAnswer & explanation
Correct answer: A. The policy will provide primary liability coverage for the friend as a permissive user.
Under most Personal Auto Policies, liability coverage follows the car, not just the named insured. A person driving the insured vehicle with the named insured's permission (a 'permissive user') is typically covered for liability. The car owner's policy usually acts as primary coverage for such an incident.
Why the other options are wrong
- B. This is incorrect; permissive use is a standard inclusion in most PAPs.
- C. The owner's policy is typically primary; the friend's own policy (if any) would be excess.
- D. This is incorrect; liability coverage for permissive users typically applies to both bodily injury and property damage.
Permissive Use (Personal Auto)
The coverage extension in a Personal Auto Policy that provides liability protection for individuals who drive the insured vehicle with the express or implied permission of the named insured.
- Coverage generally follows the vehicle.
- The owner's policy is usually primary for permissive users.
- Exclusions may apply (e.g., if the user has no reasonable belief of permission, or uses the car for ride-sharing).
Memory trick: Permissive Use: If you let 'em drive, your policy's their guide!