A 20-year-old daughter, who owns a car registered in her name, goes home for Thanksgiving. Her 16-year-old brother drives her car to the grocery store and is involved in an accident.

Q: The Individual Named Insured endorsement on the parents’ business auto policy contains a liability exclusion for autos owned by family members. Is there coverage for the son anywhere?

A: It depends on where the 20-year-old daughter lives. Is she a resident of the household, or does she permanently reside elsewhere? The family member exclusion applies only to resident family members. Simply being a family member does not trigger the exclusion.

Therefore, there are various possibilities under the BAP with the Individual Named Insured endorsement (CA 99 17) attached:

• If the daughter lives at home, she qualifies as a family member, and there is no coverage under the BAP for her brother’s use of the car due to the exclusion. However, because insurance follows the car, the daughter’s personal auto policy covers her brother as a permitted user. That's why kids in this situation should not have low limits.
• If the daughter lives somewhere else, she does not qualify as a family member, so the exclusion does not apply. The parents’ BAP covers the son’s use of his sister’s car on an excess basis.

But what if the parents had a PAP rather than an endorsed BAP? In this scenario, the same exclusion you cite in the BAP also applies in the PAP, which excludes liability coverage for the ownership, maintenance or use of:

3. Any vehicle, other than "your covered auto", which is:

a. Owned by any "family member"; or

b. Furnished or available for the regular use of any "family member".

There is one exception to this exclusion: 

However, this Exclusion (B.3.) does not apply to you while you are maintaining or "occupying" any vehicle which is: 

a. Owned by a "family member"; or

b. Furnished or available for the regular use of a "family member".

So, if the parents had a PAP and their daughter lived with them, there would be no coverage under the parents’ PAP for the son’s use of the daughter’s vehicle. The only place the son would have coverage would be his sister’s PAP. But if the daughter lived elsewhere, just like with the endorsed BAP, the parents’ PAP would extend coverage to the son for use of his sister’s car—as excess over her policy.

Coverage under the BAP is generally not as broad as the coverage provided by the PAP, and it's not intended to be. But in this case, the same exclusion exists.

Chris Boggs is executive director of the Big “I” Virtual University (VU).

This question was originally submitted by an agent through the VU’s Ask an Expert Service. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.