May 20, 2006 (Original publish date) • By Dennis Beaver
For the past several years my sister and I have been taking care of our mother, who suffers from Alzheimer’s. We alternate being with her during the day and at night. While she has two cars that are still in her own name and insured, her drivers license expired years ago. The cars are both in excellent shape with very low mileage, we drive them for errands from time to time … and that’s why I am writing.
California Casualty has insured mom’s car and home for over 20 years and in renewing the auto policy last week, their telephone sales agent says that we are covered as permissive users; that is, we are driving the cars with mom’s permission, and if involved in an accident, are protected. Since she has never had an accident and no tickets for many years, the insurance rates are very low. Honestly, if someone asked her if she gave us permission to use her cars, she would not even understand the question. It is economically attractive, but I wonder if we are facing any kind of a risk. Thanks. Tomas and Shirley from Arcata.
Permissive use requires permission
My Arcata readers are indeed facing a significant risk; Cal Casualty, when becoming aware of the underlying facts, could deny them protection, arguing that they are not permissive users.
The concept of Permissive Use as it affects auto insurance is important to understand. The typical way in which this legal issue comes up is when an accident happens with a borrowed car. Hopefully, if the vehicle is driven with permission of the owner, the driver will be covered. Hopefully, but not necessarily, as fewer and fewer insurance policies sold today have this type of broad protection.
In recent years there has been a definite trend in personal auto insurance towards limiting coverage for drivers who are not named in the policy. This is extremely common with “high risk” insurance carriers, as well as the so-called “cheap” auto insurance we often see advertised on television. Somewhere in the policy, or the application, you find language that says something like this: “This insurance only applies to drivers whose identity is known to the company and approved.”
This means, simply, that the insurance policy only protects listed drivers the insurance company knows about and agrees to cover. Often, the way they disclose this limitation is very sneaky.
While some applications and policy declaration pages are clear, it is always important to read through the policy itself to see how they define an insured. If there is no limitation, great. Don’t fall for an agent “Oh, you have Full Coverage,” line, as there is no such thing, not in the way at least most people understand that term.
Merely because the car is insured, this does not mean that anyone who drives it will be insured. It is a commonly held belief that insurance “Follows” the car — that is not necessarily the case. Be aware that there are restrictions in some policies which reduce the coverage’s to state required minimums (15/30) — even where you’ve paid for much higher amounts of coverage. This can happen, again, with high-risk companies.
So, what does “permission” mean? In the typical case, express permission would be a statement, such as “Sure, take my car.” But permission can also be implied from the circumstances, by tossing the car keys to another driver, or “I am taking your car to the store for a moment,” followed by no objection from the owner.
Obviously, in order to give permission to use the vehicle, a certain level of mental ability is required. That’s the problem facing my readers. Mom lacks the capacity to give permission. The fact that they have been both paying insurance and driving the vehicles for years-after her diagnosis of Alzheimer’s — has no impact upon what could become a critical legal issue.
Linked to the issue of Permissive Use is Agency. In its simplest form, if I am driving your car at your request, or performing some service for you, an agency relationship may exist. This is an extraordinarily important legal concept to understand and it exposes the vehicle owner to potential limitless liability, well above the insurance requirements of the State of California.
It is impossible to go into more detail here — just be careful when loaning a car combined with a request that the driver do something for you.
Accident? Who are you?
How might an insurance company respond if Tomas caused an accident driving Mom’s car? Would Cal Casualty deny the claim? What is the best thing for Tomas and his sister to do now? I ran these facts by an attorney who represents auto insurance companies, and his comments (with my promise of not revealing his identity) were as I expected:
“It is possible — no one can say for sure, but certainly possible — they would deny the claim for a number of reasons. Does their policy require the insured to be licensed? If so, and mom isn’t, that’s a problem, but you would think they would have verified the status of her license long ago. If she clearly cannot give permission now, did she give them permission to drive the cars in the past, and can that be proven? The bottom line is that it is best to get the cars out of her name and not run these risks?
Sound advice, which I passed along to my readers.
Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.