Coverage for Collegiates

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College Students’ Auto Exposures and Coverages–Part 2

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

As a long-time resident of a town with a major university, two colleges, and several satellite campuses of other educational institutions, I am intimately familiar with what nearly 50,000 students bring to a community. The educational, cultural, and entertainment opportunities are breathtaking. Simply seeing all these young (and some not-so-young) students daily reminds one of the lives they are working to better. As a parent of college-age daughters, I appreciate the hard work and financial investment of all involved.

In the Fall 2015 issue of Resources magazine, the property and liability exposures of college students were examined. We will now focus our attention on the auto exposures of a college student. As insurance professionals, it is incumbent upon us to help our insureds understand and manage their risk. We can only do this when we understand both the exposures and coverage forms available to provide them with the protection they are relying upon, as well as the risk management options that will most effectively address that particular client’s needs.

Students take vehicles, which are owned by their parents, with them to college. They may also drive a vehicle owned by a roommate, or be a passenger in a friend’s car. Utilizing public transportation also creates exposure to loss, as does being a pedestrian. Will their parents’ Personal Auto Policy provide the coverage they need should they be involved in an auto accident as a driver, a passenger, or a pedestrian? To find out, let’s look to the ISO Personal Auto Policy (PP 00 01 01 05).

The first question in determining the coverage provided is whether or not the student is a “family member” as defined early in the policy, and again when used in every coverage part. We must be VERY aware that a “family member” must be BOTH related (by blood, marriage, or adoption and includes a ward or foster child) to the Named Insured and residing in the household of the Named Insured. A student who meets both the relationship and residence requirements is a “family member” and automatically receives the second-best coverage provided by his or her parents’ policy.


College Students Who are a “Family Member”

College students who meet the requirements to be a “family member” are afforded very broad coverage under their parents’ personal auto policy.


Part A – Liability

The parents’ policy provides liability coverage for their student because a “family member” is included in the definition of “insured” in Part A – Liability for the ownership, maintenance or use of any auto. Any auto includes a vehicle owned by the parents and a vehicle owned by others, subject, of course, to the policy conditions and exclusions. One of those exclusions can be quite nasty—it excludes coverage for the maintenance or use of a vehicle furnished or available for the regular use of a “family member” (Exclusion B.3.b). A roommate’s vehicle would likely be considered furnished or available for the student’s regular use. In this situation, the student would have no liability coverage provided by their parent’s policy and would be forced to rely solely on the roommate’s liability coverage. The question becomes: What liability limits does the roommate have? Might they carry only state minimum limits? Even if a roommate has what appears to be reasonable liability limits, some insurance companies have endorsed their policies to provide only state minimum coverages to non-listed household members or drivers, and other carriers attempt to exclude coverage entirely for the non-listed household member or driver.

Unfortunately, there is not an ISO endorsement that is helpful for the exposure associated with a student’s use of a roommate’s vehicle (or for any other vehicle deemed to be furnished or available for the student’s regular use). While it is often thought that the Extended Non-Owned Coverage – Vehicles Furnished Or Available For Regular Use (PP 03 06 01 05) endorsement could be used to provide coverage for this college student situation, this is not the case, as this endorsement does not remove the exclusion for the “family member” with a vehicle furnished or available for the “family member’s” regular use (Exclusion B.3.b).

There is also a common misunderstanding that coverage can be provided by this endorsement if the box for Named Individual and “Family Member” is marked. When this box is marked, the endorsement only provides coverage for the “family member’s” use of a vehicle furnished or available for the regular use of the individual named in the Schedule—not a vehicle furnished or available for the regular use of the “family member.”

SCHEDULE

Unless otherwise indicated below or in the Declarations, Extended Non-Owned Coverage is applicable only to the individual named in the Schedule or the Declarations.

Name of Individual: ___________________________________

If indicated below or in the Declarations, Extended NonOwned Coverage applies to:

□ Named Individual and “Family Members” (including Named Individual’s Spouse)

If an insurance company is willing to name the student as the Name of Individual in the Schedule of the Extended Non-Owned Coverage – Vehicles Furnished Or Available For Regular Use (PP 03 06 01 05) endorsement, coverage may be provided for the student’s use of a vehicle that is furnished or available for the student’s regular use. For carriers who subscribe to ISO, this may prove to be an underwriting challenge because ISO rules indicate that this endorsement is not available to someone who does not own an eligible vehicle. It is recommended that you check with your insurance companies to explore the ability to use a similar endorsement to achieve the ultimate goal of coverage for the student with a vehicle available for his or her regular use.


Part B – Medical Payments Coverage and Part C – Uninsured/Underinsured Motorists Coverage

The student who is a “family member” under their parents’ personal auto policy is also afforded coverage for Medical Payments and Uninsured/Underinsured Motorists, subject to the exclusions applicable to these coverage parts. The definition of “insured” in both coverage parts includes a “family member” that is either “occupying” (as defined in the policy) a motor vehicle designed for use mainly on public roads or is a pedestrian struck by a motor vehicle designed for use mainly on public roads.

We commonly think of the situation where the student is in a parents’ or friend’s vehicle, but often overlook the exposures created by the use of public transportation. A student is often encouraged to use this form of transportation for obvious reasons—many campuses are simply not constructed for every student to drive a car to campus each day. Whether we are discussing urban or rural college campuses, the push is clearly to promote a green environment, with college campuses routinely making it prohibitively expensive to have a car on campus. As such, particularly for the student who lives offcampus, both the college itself and often the apartment complexes that market to students, make public transportation available. Also gaining popularity among college students is the use of ride-sharing services, such as Uber or Lyft, when commuting to or from social activities.

Students utilizing these types of public transportation can find themselves injured from accidents that can and do happen. When doing so, Medical Payments and Uninsured/Underinsured Motorists Coverage is provided to the student who meets the definition of “family member.” These coverages are also provided to the student while a pedestrian or when riding a bicycle.

As we have clearly seen, students who fall within the definition of “family member” have extremely broad coverage provided by their parents’ personal auto policy. But what about the student who is not a “family member” by definition?


College Students Who are Not a “Family Member”

College students who do not meet the definition of a “family member” under their parents’ policy would have Part A – Liability, Part B – Medical Payments Coverage and Part C – Uninsured/Underinsured Motorists Coverage liability coverage ONLY while “occupying” the parents’ insured vehicles.

What coverages do they NOT have under their parents’ personal auto policy?

  • Liability coverage while in any other vehicle
  • Medical Payments while in any other vehicle or as a pedestrian
  • Uninsured/Underinsured Motorists Coverage in any other vehicle or as a pedestrian

No doubt, the loss of these coverages are very important considerations. These coverages are available to the student who does not own a vehicle through the use of the Named Non-Owner Coverage (PP 03 22) endorsement to a personal auto policy. The student (and his/her spouse) would be the named insured on the personal auto policy. Very importantly, an indication in the Schedule of this endorsement would be made to provide coverage for exposures associated with vehicles furnished or available for regular use. This coverage option should be routinely discussed with your clients.


The Role of the Insurance Professional

When clients share the news that their child is heading off to college, we have a responsibility to talk with them about the insurance coverage their child will, or will not, take with them. What coverage will their child continue to have under the parents’ Homeowners Policy (discussed in the Fall 2015 issue of Resources magazine) and Personal Auto Policy? How about the coverage from any Personal Excess Liability Policy? If the parents’ policies will not provide the needed protection, be sure that you are prepared to recommend policies that can provide these important coverages for the student.


Learn More, Earn More

P&C Insurance Essentials

Attend the CIC Personal Lines Institute to address the unique insurance coverage needs of families and family members. For more concise information on the Personal Auto Policy, consider attending a CISR Insuring Personal AutoExposures Course. The National Alliance Research Academy’s book, P&C Insurance Essentials is also an excellent reference for this area of insurance.


Samuel T. Bennett, CIC, AFIS, CRIS, CPIA, is an active retail producer in the Harrison Agency of Columbia, MO. He began his insurance career in 1987 and has been an independent insurance agent from the beginning. He has worked in the personal lines, commercial lines, agribusiness, and life and health marketplaces. As a result of working with many types of clients and coverage needs, Sam has grown to understand and appreciate the myriad ways in which an insurance professional must work with markets and clients in today’s insurance world.

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