“Joe" is in college. His roommate, “Mike," asks to borrow the keys to Joe's vehicle, which is titled in his parents' names. Mike gets in an accident and there is damage to both vehicles. Also, one of the passengers of the other vehicle needed medical assistance. 

Q: Joe is listed as a driver on his parents' personal auto policy. The garage location for Joe's vehicle has been properly noted to reflect Joe's college address. Mike is not listed on the policy, nor is he excluded. Does Joe's parents' PAP extend to cover Mike?

Response 1: Most PAPs extend liability, uninsured motorist/underinsured motorist and medical payment coverage to permissive users. As long as Mike has permission—or at least a reasonable belief of permission to use the auto—he has liability coverage for damage and injury to third parties. Joe's vehicle would need to have physical damage coverage to be covered for loss to it. A few insurers limit coverage for undisclosed drivers in the household, although an ISO does not. 

Response 2: Insurance follows the car. The PAP extends coverage to those using the auto with the permission of an insured. The PAP on the vehicle is primary and the driver's is excess in this case. 

Response 3: Insurance on the car is primary. Mike is a permissive user so the damages are covered on the car's policy.

If those limits are insufficient, Mike may have a problem because the policy on which he is an insured—perhaps his own parents' PAP—may view that car as regularly available to him and deny coverage.

Response 4: It seems to me that Mike was certainly operating the vehicle with a reasonable belief that he had permission. Therefore, there is coverage under the policy for the losses incurred.

Response 5: Given that the parents put the vehicle in Joe's custody, and Joe gave permission to Mike to use the vehicle, I would interpret Mike to be a permissive user and be protected by the PAP. Of course, a lawyer might think otherwise and attempt to deny coverage.

Response 6: As long as the vehicle qualifies as “your covered auto," which would be listed in the declarations, then anyone driving it is an insured. This is true with ISO, but some carriers provide “drop-down coverage" with state minimum limits, excess coverage, or no coverage if the driver has his own insurance. Also, some carriers require the permission of the named insured, which would be the parents.

This question was originally submitted by an agent through the Big “I" Virtual University's (VU) Ask an Expert service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.

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