Both parties of a divorced couple use the same insurer on two different policies. The couple resides in two separate households and shares joint custody of a 16-year-old son. How should an agency handle the teen's auto insurance?
An agency insures both parties of a divorced couple with the same insurer, but on two different policies. The couple resides in two separate households and shares joint custody of a 16-year-old son who is listed as a driver on the mother's policy.
Q: "The father recently purchased a vehicle for the use of his the son, so we added the son to the father’s policy and attempted to remove him from the mother’s policy. The insurer will not delete him as a driver from the mother’s policy since he also lives part-time with her. Is it correct that both parents should be charged for a youthful driver?"
A: “Your question begins with a rating issue, but the real issue is coverage. First, let’s address the rating issue. According to ISO's personal vehicle manual:
‘Rule 5 - Safe Driver Insurance Plan
B. Procedural Rules
2. Drives subject to SDIP Classification
The driving record of all drivers who customarily operate the autos being insured shall be used for the purpose of determining SDIP rating factors.
The following exceptions apply:
No surcharges are assigned for the convictions, accidents or years licensed of:
- A driver demonstrated to be a named insured or a principal operator of an auto insured under a separate policy.
- A driver specifically excluded under a named driver exclusion.’
Whether the insurer in question follows ISO rules to the letter is unknown. I'd provide this information to the underwriter and ask for the rating rule(s) they are relying on with regard to ‘customary operation’ of an insured auto under the mother's policy, along with any surcharges.
But based on the scenario you describe, rating is the least of your insureds' worries.
Under the ISO PAP, the mother’s policy will not cover the kid while driving the car his father bought. It will only cover him while driving his mom’s car, or possibly a non-owned auto not owned by him or furnished or available for his regular use. This means the son would only have coverage under his dad's PAP. The potential big problem for mom is this exclusion in her ISO policy:
‘B. We do not provide 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".
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".’
If mom is sued when junior kills somebody in the auto insured under his father’s PAP, mom’s own policy would not cover her because of this exclusion. She only has coverage for such claims by her own policy if she is maintaining or using the auto.
To further illustrate this issue, let’s say the kid is staying with mom and has an accident that kills two people in another vehicle. Mom is sued based on parental liability, vicarious liability or several other possible grounds. Read the exclusion above—unless mom is maintaining or occupying the son’s car, her own auto policy will not cover her for the lawsuit. She only has coverage under the policy on which the son’s car is added (assuming ISO policy language). So she’d better make sure her son’s (or in this case, ex's) policy has high limits like (hopefully) her own.
The Big ‘I’ national Technical Affairs Committee has asked ISO to revise this exclusion and the exception so that ‘you’ under the policy maintains coverage at least for the vicarious liability of ‘family members.’
For more information on these types of situations, check out ‘Joint Custody Insurance Issues’ and ‘Kids' Cars and Divorce’ or search the Big “I” Virtual University for ‘kids kars’ and ‘parental liability.’”
Bill Wilson is director of the Big “I” Virtual University.
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, email logon@iiaba.net to request login information.
