September 02, 2020 Articles

Where the Sharing Economy Meets Reality: Part II of III

Challenges and gaps in insurance coverage for hired, borrowed, and non-owned automobiles.

By Peter Georgiton, Christopher Meeks, Arden Levy, and Kristin Davis

The automobile represents a critical aspect of the modern economy. For many individuals and businesses, the automobile in its various shapes and forms provides necessary transport to job and work sites, as well as necessary capabilities to conduct a variety of personal and professional tasks. In addition, the automobile is an aspirational and hobby item for many people,[1] and automobiles owned for such purposes are often not used for a policyholder’s domestic or economic needs. In recent years,  services such as Turo[2] and Drive Share by Hagerty[3] have opened up the possibility for automobile owners to make their unused or aspirational/hobby automobiles available for rental, bringing a peer-to-peer option to rental cars similar to how Uber and Lyft brought a peer-to-peer option to taxis and car services. Indeed, the rise of ride-sharing services such as  Uber and Lyft has spawned a specialized peer-to-peer rental service called HyreCar, which specifically caters to Uber and Lyft drivers who need to rent a vehicle.[4] Likewise, in the commercial sphere, services such as COOP by Ryder[5] allow businesses to make their unused or infrequently used vehicles available for rental in a similar peer-to-peer setting.

Each of these services provides access to insurance for the rentals arranged through them.[6] However, to the extent a lessee or lessor participating in a peer-to-peer rental service possesses a commercial automobile policy, that policy may provide liability or property coverage (or both) for the rented automobile as well.[7] While peer-to-peer rental services are a relatively recent development, the rental, lease, sharing, and use of automobiles between peers has a considerably more significant and long-standing history with commercial automobile policies. This section explores the insurance coverage issues that may arise under commercial automobile policies on both sides of a relationship involving the rental, lease, sharing, or use of an automobile. As discussed in greater detail below, determining what constitutes a covered “auto” and, frequently, coverage in a commercial context is an often fact-specific and highly technical inquiry requiring mastery of the relevant policy language as well as comprehensive knowledge of the business relationships and equipment at issue.

The primary coverage question for a commercial automobile policy is whether the vehicle for which coverage is sought is a covered “auto.” For instance, the liability and property sections of a typical commercial automobile policy state as follows:

SECTION II—LIABILITY COVERAGE
A.    Coverage
We will pay all sums an “insured” must legally pay as a damages because of “bodily injury” or “property damage” to which this insurance applies, caused by an accident and resulting from the ownership, maintenance or use of a covered “auto”.
* * * *
1.      Who Is An Insured
The following are “insureds”:
a.      You for any covered “auto”.
b.      Anyone else while using with your permission a covered “auto” you own, hire or borrow except:
(1)   The owner or anyone else from whom you hire or borrow a covered “auto”. This exception does not apply if the covered “auto” is a “trailer” connected to a covered “auto” you own.
* * * *
SECTION III—PHYSICAL DAMAGE COVERAGE
A.    Coverage
1.      We will pay for “loss to a covered “auto” or its equipment under:
* * * *[8]

In most commercial automobile policies, what constitutes a covered “auto” is determined by the policy’s declarations page and a schedule of symbols and descriptions contained in the applicable coverage form. The following schedule of symbols and descriptions[9] is typical for a commercial automobile policy:

Symbol

Description Of Covered Auto Designation Symbols

1

Any “Auto”

2

Owned “Autos” Only

Only those “autos” you own (and for Liability Coverage any “trailers” you don’t own while attached to power units you own). This includes those “autos” you acquire ownership of after the policy begins.

3

Owned Private Passenger “Autos” Only

Only the private passenger “autos” you own. This includes those private passenger “autos” you acquire ownership of after the policy begins.

4

Owned “Autos” Other Than Private Passenger “Autos” Only

Only those “autos” you own that are not of the private passenger type (and for Liability Coverage any “trailers” you don’t own while attached to power units you own). This includes those “autos” not of the private passenger type you acquire ownership of after the policy begins.

5

Owned “Autos” Subject To No-Fault

Only those “autos” you own that are required to have No-Fault benefits in the state where they are licensed or principally garaged. This includes those “autos” you acquire ownership of after the policy begins provided they are required to have No-Fault benefits in the state where they are licensed or principally garaged.

6

Owned “Autos” Subject To A Compulsory Uninsured Motorists Law

Only those “autos” you own that because of the law in the state where they are licensed or principally garaged are required to have and cannot reject Uninsured Motorists Coverage. This includes those “autos” you acquire ownership of after the policy begins provided they are subject to the same state uninsured motorists requirement.

7

Specifically Described “Autos”

Only those “autos” described in Item Three of the Declarations for which a premium charge is shown (and for Liability Coverage any “trailers” you don’t own while attached to any power unit described in Item Three).

8

Hired “Autos” Only

Only those “autos” you lease, hire, rent or borrow. This does not include any “auto” you lease, hire, rent, or borrow from any of your “employees”, partners (if you are a partnership), members (if you are a limited liability company) or members of their households.

9

Non-owned “Autos” Only

Only those “autos” you do not own, lease, hire, rent or borrow that are used in connection with your business. This includes “autos” owned by your “employees”, partners (if you are a partnership), members (if you are a limited liability company), or members of their households but only while used in your business or your personal affairs.

Symbols can be chosen depending on the policyholder’s needs. The broadest coverage is provided by Symbol 1, “Any Auto.” If a policyholder does not purchase coverage under Symbol 1, “Any Auto,” the remaining eight symbols provide a variety of different coverages for a broad range of circumstances, and the choice of symbols will have a significant impact on the availability of coverage for lessors and lessees or in connection with contracted transportation services. For instance, a commercial lessee that did not purchase coverage under Symbol 8, “Hired Autos,” would generally not have coverage for any “auto” it rented from another person or entity. Likewise, a commercial lessor that did not purchase coverage under Symbols 1–7 would not have coverage for any “auto” it rented to another person or entity.

Thus, because the liability exclusions in a typical commercial automobile policy resemble those in a commercial general liability policy, the threshold and frequently most important question is whether the “auto” involved in an accident or loss is a covered “auto” under one of the symbols. For commercial lessees and those contracting for transportation services, the scope of coverage provided under Symbol 8, “Hired Autos,” and Symbol 9, “Nonowned Autos,” will be determinative of whether those policyholders are entitled to coverage under their own policies. For policyholders on the other side of those contracts, the primary question is whether the correct coverage for owned “autos” was purchased. Further, evaluating coverage from both perspectives raises questions concerning who is an “insured” and other insurance. In addition, even where there is commercial automobile insurance available for a vehicle owner or a lessee, there may still be a personal automobile policy that could provide some coverage. These issues are addressed below.

Symbol 8, “Hired Autos.” A “hired auto” is typically defined as an “auto” “you lease, hire, rent or borrow” or “as a vehicle ‘used under contract in behalf of, or loaned to’ the named insured.”[10] For the purpose of this language, courts generally draw a distinction between “autos” driven or operated by independent contractors to provide transportation services for an insured and “autos” under the direct control of an insured.[11] Thus, this language requires a separate contract transferring the use, control, or possession of an “auto” for a period of time, i.e., a rental or lease contract. [12] However, despite the distinction between rental/lease contracts and an independent contractor’s “auto,” some courts have held that an “auto” can qualify as a hired “auto” where there is evidence demonstrating the named insured’s “exercise of control” over the independent contractor’s “auto,” i.e., “choice of vehicle, where it is to travel, by what routes, and for what purposes.”[13]

For instance, in Southern General Insurance Co., the Georgia Court of Appeals held that an independent contractor’s tractor pulling a named insured’s trailer was not a “hired auto” under the named insured’s policy because there was no lease or “hiring” agreement for the tractor and the named insured had no right to control the tractor.[14] Moreover, the independent contractor’s compensation for his transportation services was separate from the named insured’s compensation related to his business.[15] Similarly, in American Casualty Co. of Reading, Pa., the Fourth Circuit held that an independent contractor’s truck was not a “hired auto” under the named insured’s policy because the truck was not “hired” by the named insured or being used by or on behalf of the named insured at the time of accident.[16] Instead, the truck was being used by an employee of the independent contractor.[17] In both decisions, the courts looked to the nature of the agreement between the independent contractor and the named insured and the manner in which the independent contractor’s automobile conducted the independent contractor’s business to determine that the automobiles were not “hired autos” under the respective policies.[18] In other words, the automobiles were not hired “autos” because there was no transfer of use or possession between the named insured and independent contractor either by express contractual terms or by the manner in which they conducted their relationship.[19]

By contrast, in Luizzi v. Pro Transport, Inc.,[20] the court held that a tractor owned by its driver was a “hired auto” under a motor carrier’s commercial automobile policy providing coverage under Symbols 7, 8, and 9. With regard to Symbol 8, the court found that the driver and motor carrier had entered into an exclusive lease agreement for the driver’s tractor and determined that the lease agreement was sufficient, by itself, to establish that the tractor was “lease[d], hire[d], rent[ed] or borrow[ed]” because the lease agreement gave the motor carrier the right to exercise control over the driver’s tractor, even if the motor carrier did not actually exercise that control.

Thus, the primary question in addressing whether an “auto” is a “hired auto” is the existence of a lease or rental agreement. Where such an agreement exists, such as in the case of a peer-to-peer rental, that “auto” will be a covered “auto” under the lessee’s commercial automobile policy. Such coverage may exist also exist for “autos” operated by a policyholder’s independent contractors. However, to the extent a court is willing to consider the existence of that coverage, the application of Symbol 8, “Hired Autos,” to an independent contractor’s “auto” will likely be a fact-intensive inquiry based on the level of control the policyholder has the right to exert over the independent contractor’s automobile.[21]

If an “auto” is a “hired auto,” the policyholder is an “insured” for that “auto.” However, for “hired autos,” the only other persons or entities that can typically be “insureds” are those using the “auto” with the policyholder’s permission, e.g., the policyholder’s employee or a sub-lessee. Further, for such permissive use, the typical commercial automobile policy specifically removes from coverage “the owner or anyone else from whom [the policyholder] hire[d] or borrow[ed] a covered ‘auto’” unless it “is a ‘trailer’ connected to” an automobile owned by the policyholder. Thus, the owner of a “hired auto” will generally not be an “insured” under the lessee’s commercial automobile policy except in very specific and limited circumstances.

Symbol 9, “Non-owned Autos.” A “non-owned auto” is typically defined as “those ‘autos’ you do not own, lease, hire, rent or borrow that are used in connection with your business.” The primary purpose of Symbol 9 is to provide coverage while a person affiliated with the named insured is operating a privately owned “auto” to conduct work related to the policyholder’s business.[22] Thus, in most circumstances, a contractor’s “auto” is not going to be a “non-owned auto” simply because the contractor was performing transportation services for the insured.[23] As recognized by several courts, holding otherwise could open up a potential Pandora’s box of liability without any logical end.[24] However, as with “hired autos,” not all courts interpret the policy language in this way and can extend coverage based on the insured’s control over the subject “auto.”[25]

For instance, in Nuvell National Auto Finance, LLC v. Monroe Guaranty Insurance Co., the Georgia Court of Appeals held that a tow truck owned by a repossession company and leased to an individual driver was a “non-owned auto” with regard to the commercial automobile liability policy issued to the repossession management company that acted as an intermediary for assigning repossession work.[26] Specifically, the court found that the tow truck was being used “in connection with [the repossession management company’s] business” because the evidence showed that the repossession management company was effectively in the business of repossessing vehicles in that it was the intermediary between the repossession firms and lenders.[27] Similarly, in Luizzi, discussed above, the court also found that the driver’s tractor was a “non-owned auto” under the motor carrier’s policy because the driver was a statutory employee of the motor carrier under the applicable motor carrier regulations and thus was driving the tractor in connection with the motor carrier’s business.[28]

The Nuvell court examined two factors “to determine whether a nonowned auto was used ‘in connection with [an insured’s] business[:]’” (1) “the extent to which the vehicle at issue was used in the course and scope of the insured’s business” and (2) “the extent to which an insured held or exerted a right of control over the vehicle and its driver.”[29] The Nuvell court borrowed the factors from the Eastern District of Tennessee’s decision in CMH Homes, Inc. v. United States Fidelity & Guaranty Co., which in turn distilled the factors from a variety of decisions from several states, none of which found that there was any coverage.[30] Further, CMH Homes identified the following eleven nonexclusive factual inquiries to assist in determining whether the factors apply:[31]

  1. whether [the insured] dictated from where and to where the loads were being hauled, that is, the right to designate the route to be taken to the ultimate destination;[32]
  2. whether [the insured] had its own employees drive [the contractor’s] vehicles;[33]
  3. whether [the insured] paid any rental fee for the vehicles themselves;[34]
  4. whether [the insured] dictated the particular time table for hauling products or rather [the insured] just required [the contractor] to pick up the loads during business hours;[35]
  5. whether all of the products hauled belonged to [the insured];[36]
  6. whether [the insured] required [the contractor] to have its own insurance;[37]
  7. whether [the contractor] had its own workmen’s compensation insurance;[38]
  8. whether [the contractor] always used its own trucks and trailers to make the hauls;[39]
  9. whether [the contractor] paid for all maintenance and repairs for the vehicles, paid its own insurance on vehicles, paid employees, and paid employment taxes;[40]
  10. whether [the insured] made any employment related deductions from the payments made to [the contractor];[41] and
  11. whether [the insured] was the primary source of hauling business for [the contractor] or whether [the contractor] did other hauling business without informing [the insured] or obtaining its consent.[42]

Thus, the Nuvell factors and the CMH Homes inquiries are tremendously fact specific. It will not be necessary to address these facts and inquiries in all circumstances, as many courts will likely limit application of Symbol 9 to employee automobiles based on the explicit purpose of the symbol. However, in jurisdictions that have not decided the issue or have embraced the broader interpretation of the symbol, it would behoove attorneys to carefully review the facts and circumstances surrounding an accident and “auto” as well as any contracts relating to the work to be performed and the automobiles involved.

As with Symbol 8, “Hired Autos,” if an “auto” is a covered “auto,” the policyholder is an “insured” for that “auto.” However, unlike “hired autos,” no one else can be an insured with regard to a “non-owned auto” under a typical commercial automobile policy’s liability section because coverage is only extended beyond the policyholder for “own[ed], hire[d] or borrow[ed] ‘autos’,” which does not include a “non-owned auto.” Thus, with the exception of the policyholder, no owner, operator, or other person or entity will be an “insured” for a “non-owned auto” under the policyholder’s commercial automobile policy.

“Owned Autos”—The owner’s commercial automobile policy. As discussed above, coverage will be afforded under a vehicle owner’s commercial automobile policy only if an appropriate symbol other than Symbol 8 or 9 is purchased. Thus, assuming the owner makes the appropriate purchase, the owner will have insurance coverage for itself. Further, any lessees or otherwise permissive users of the owner’s “autos” will also be “insureds,” as, under the typical commercial automobile policy, “insureds” includes “[a]nyone else while using with your permission a covered ‘auto’ you own, hire or borrow. . . .” Moreover, because the typical commercial automobile policy does not contain any exclusions for automobiles rented or leased to others by the “insured” (unlike many personal automobile policies), if the “auto” is a covered “auto” under the owner’s commercial automobile policy, both the owner and the user be entitled to coverage under the owner’s commercial automobile policy.

Other insurance. The other insurance condition in a typical commercial automobile policy provides as follows:

5.  Other Insurance
a. For any covered “auto” you own, this Coverage Form provides primary insurance. For any covered “auto” you don’t own, the insurance provided by this Coverage Form is excess over any other collectible insurance. However, while a covered “auto” which is a “trailer” is connected to another vehicle, the Liability Coverage this Coverage Form provides for the “trailer” is:=
(1)   Excess while it is connected to a motor vehicle you do not own.
(2)   Primary while it is connected to a covered “auto” you own.
b.      For Hired Auto Physical Damage Coverage, any covered “auto” you lease, hire, rent or borrow is deemed to be a covered “auto” you own. However, any “auto” that is leased, hired, rented or borrowed with a driver is not a covered “auto”.
c.       Regardless of the provisions of Paragraph a. above, this Coverage Form’s Liability Coverage is primary for any liability assumed under an “insured contract”.
d.      When this Coverage Form and any other Coverage Form or policy covers on the same basis, either excess or primary, we will pay only our share. Our share is the proportion that the Limit of Insurance of our Coverage Form bears to the total of the limits of all the Coverage Forms and policies covering on the same basis.[43]

Thus, an owner’s commercial automobile policy will provide primary coverage in most instances and a lessee’s commercial automobile policy will provide excess coverage in most instances. With regard to trailers, the same general rules apply; however, the priority of coverage is based on the “auto” pulling the trailer instead of the trailer itself. Further, for physical damage coverage, the lessee’s policy will be primary for any “hired auto,” as that type of relationship to an “auto” is considered to be the equivalent to ownership for the purposes of physical damage coverage. Finally, to the extent a lease/rental agreement or contract for transportation services qualifies as an “insured contract,” the commercial automobile policy of the party agreeing to assume liability will provide primary coverage.

Personal automobile policies—Gone but not forgotten? As noted above, many, but not all, personal automobile policies do not provide liability coverage while an insured vehicle is being rented or leased to another person or entity. Generally, this limitation on coverage can take the form of either an exclusion—e.g., coverage is barred while an insured vehicle is being rented or leased to another person or entity—or a limitation on the definition of “insured” such that peer-to-peer rental lessees are not insureds even if they have express permission to drive the insured vehicle. The later approach should be viewed as the stronger approach because, if the lessee is never an “insured,” the policy’s insuring agreement could never apply to a liability claim involving the lessee as a driver. This approach may also give the insurer a better chance of successfully arguing that it has no duty to defend.[44] In some states, the application of automobile liability exclusions can be limited to the state minimum limits of coverage, e.g., $25,000 per person/$50,000 per accident, if there is no other insurance coverage available to compensate an innocent accident victim.[45] However, because the rental services surveyed above all provide liability coverage, it will usually not be necessary to determine whether this “public policy exception” to automobile liability exclusions applies.[46]

Further, while the owner’s personal automobile policy may not provide coverage where there is a peer-to-peer rental, the lessee’s personal automobile policy will generally apply to a rented vehicle the lessee operates.[47] Nonetheless, despite state laws requiring the purchase of personal automobile insurance, one should never assume the purchase of such insurance and should, instead, confirm the existence and application of that coverage, which may provide an additional source of indemnity coverage if an accident is sufficiently severe.

In addition, most personal automobile polices provide some form of uninsured motorist coverage, which can provide first-party coverage to insured accident victims if the liability insurance is either unavailable or insufficient. The uninsured motorist coverage provided by many personal automobile policies is broader than the liability coverage provided when a leased or rented vehicle is involved. For instance, some of the personal automobile policies that exclude liability coverage while an insured vehicle is rented or leased to others do not include a similar exclusion for uninsured motorist coverage. Thus, if a lessee or occupant of a peer-to-peer rented vehicle is an accident victim, one should evaluate whether any uninsured motorist coverage purchased by the lessee, occupant, or vehicle owner applies and take appropriate steps under the applicable law to notify those insurers of the accident and include them in any legal proceedings that may result. This analysis is particularly important in the peer-to-peer rental context because the insurance purchased by some peer-to-peer rental services does not provide uninsured motorist coverage or provides only the state minimum limits of coverage.[48]

Accordingly, while a vehicle owner’s personal automobile policy is unlikely to provide liability coverage except perhaps in very limited and fact-specific circumstances, a lessee’s personal automobile policy may be a valuable source of coverage for the lessee. Further, unlike liability coverage, personal automobile policies may be a lessee’s best chance for obtaining uninsured motorist coverage. Therefore, while the personal automobile policy’s importance may be limited with peer-to-peer rentals, it should not be forgotten.

 

* This article is jointly authored through a collaborative process by attorneys representing or employed by policyholders and insurance carriers. The opinions expressed herein do not necessarily reflect the opinions of the authors, their firms, or their clients.

Peter Georgiton is a partner with Dinsmore & Shohl LLP in Columbus, Ohio, representing insurers. Peter can be reached at peter.georgiton@dinsmore.com and (614) 628-6963.

Christopher Meeks is a partner with Lewis, Brisbois, Bisgaard & Smith LLP in Atlanta, Georgia, representing insurers. Christopher can be reached at christopher.meeks@lewisbrisbois.com and (404) 348-8585.

Arden Levy is a partner with Arden Levy Law PLLC in Alexandria, Virginia, representing policyholders. Arden can be reached at alevy@ardenlevylaw.com and (703) 519-6800.

Kristin Davis is a partner with Thompson HD in Washington, D.C., representing policyholders. Kristin can be reached at kdavis@thompsonhd.com and (202) 367-6178.

[1] Zach Bowman, “The Commitment,” in Never Stop Driving: A Better Life Behind The Wheel 15, 17 (Larry Webster ed., 2019) (“It’s why Corollas still come in red and why there are Audis and Acuras and Cadillacs when any old VW, Honda, or Chevy would do.”).

[2] Turo (home page).

[3] Drive Share by Hagerty (home page).

[4] HyreCar (home page).

[5] COOP by Ryder (home page).

[6] Turo Insurance Agency; DriveShare Eligibility Requirements; COOP by Ryder (home page) (“Bring your own coverage or choose COOP’s physical damage and $1M liability policy.”); HyreCar Terms of Service (“As part of the Services, HyreCar provides limited insurance to Drivers and Owners through HyreCar’s insurance partner(s).”).

[7] While liability insurance of some amount is generally required in all states for automobiles operated on public roads, many personal automobile policies exclude coverage for automobiles leased or rented by the policyholder to others. Thus, in many instances, coverage under the owner’s personal automobile coverage will likely be barred or significantly limited while an automobile is rented through a peer-to-peer service. Given this limitation on coverage in most personal automobile policies, an individual interested in using a peer-to-peer rental service to rent personal automobiles (especially so called “microfleet” owners) should consider whether a peer-to-peer rental service provides insurance coverage and the extent of that coverage.

[8] ISO Business Auto Coverage Form, Form No. CA 00 01 10 01 (2000), pp. 2, 5.

[9] ISO Business Auto Coverage Form, Form No. CA 00 01 10 01, p. 1.

[10] ISO Business Auto Coverage Form, Form No. CA 00 01 10 01, p. 1; Holmes v. Brethren Mut. Ins. Co., 868 A.2d 155, 158 (D.C. 2005) (second definition (citing Fisher v. Tyler, 294 A.2d 1199 (Md. 1978)).

[11] Am. Cas. Co. of Reading, Pa. v. Denmark Foods, 224 F.2d 461, 463 (4th Cir. 1955) (“hired automobile clause had no bearing on the case” where vehicle “was being used by an employee of . . . an independent contract[or]”) (South Carolina law); Earth Tech, Inc. v. U.S. Fire Ins. Co., 407 F. Supp. 2d 763, 771–72 (E.D. Va. 2006) (“Clearly, at some point, the distinction between a hired auto and a company hired to perform transportation services must be drawn”); S. Gen. Ins. Co. v. Alford, 507 S.E.2d 179 (Ga. Ct. App. 1998) (tractor owned and driven by independent contractor was not a “hired automobile” because the named insured never leased nor controlled the tractor).

[12] Sprow v. Hartford Ins. Co., 594 F.2d 418, 422 (5th Cir. 1979) (“[F]or a vehicle to constitute a hired automobile, there must be a separate contract by which the vehicle is hired or leased to the named insured for his exclusive use or control.”); Broad v. Hitts, No. 5:08-CV-366, 2011 WL 4543874, at *14 (M.D. Ga. Sept. 30, 2011) (“‘Hire,’ . . . means ‘to engage the temporary use of for a fixed sum.’ ‘Borrow,’ . . . means ‘to receive with the implied or expressed intention of returning the same or an equivalent.’”); S. Gen. Ins. Co., 507 S.E.2d at 180–81 (citing Sprow, 594 F.2d at 422, Am. Cas. Co. of Reading, Pa., 224 F.2d 461, Canal Ins. Co. v. Liberty Mut. Ins. Co., 395 F. Supp. 962 (N.D. Ga. 1975), and Kelly v. Phoenix Assurance Co. of N.Y., 225 F. Supp. 562, 565 (D. Md. 1964)); Undercofler v. Whiteway Neon Ad, Inc., 152 S.E.2d 616, 618 (Ga. Ct. App. 1966) (a “lease” is a contract for the possession, use, and enjoyment of property for a specified period of time in exchange for the payment of rent).

[13] S. Gen. Ins. Co., 507 S.E.2d at 180–81 (citing Sprow, 594 F.2d at 422); Holmes, 868 A.2d at 159.

[14] S. Gen. Ins. Co., 507 S.E.2d 179.

[15] S. Gen. Ins. Co., 507 S.E.2d 179.

[16] Am. Cas. Co. of Reading, Pa., 224 F.2d 461.

[17] Am. Cas. Co. of Reading, Pa., 224 F.2d 461.

[18] Am. Cas. Co. of Reading, Pa., 224 F.2d 461; S. Gen. Ins. Co., 507 S.E.2d 179.

[19] Am. Cas. Co. of Reading, Pa., 224 F.2d 461; S. Gen. Ins. Co., 507 S.E.2d 179; accord Broad, 2011 U.S. Dist. LEXIS 112338, at *14 (tractor that may have been pulling a load for the insured was not a hired “auto” under the same policy language at issue here because the insured neither “paid any money to ‘hire’ the tractor” nor “‘received’ the tractor”); Huddleston v. Luther, 897 So. 2d 887, 889–90 (La. App. 3 Cir. 2005) (independent contractor’s truck was not a “hired auto” where named insured neither exercised control over truck nor operated or maintained the truck and the contact did not involve the lease of the truck).

[20] Luizzi v. Pro Transp., Inc., No. 02 CV 5388, 2013 U.S. Dist. LEXIS 107566, at *48–84 (E.D.N.Y. July 31, 2013).

[21] To the extent the right-of-control test applies to Symbol 8, “Hired Auto,” it would likely only apply for liability coverage. The Other Insurance Condition in a typical commercial automobile policy states that, for property coverage, an “‘auto’ that is leased, hired, rented or borrowed with a driver is not a covered ‘auto’.” ISO Business Auto Coverage Form, Form No. CA 00 01 10 01 (2000), pp. 8–9.

[22] See Union Std. Ins. Co. v. Hobbs Rental Corp., 566 F.3d 950, 954 (10th Cir. 2009) (“the use of personal vehicles by employees acting on the company’s behalf might be covered”); See CMH Homes v. U.S. Fid. & Guar. Co., No. 3:05-cv-552, 2007 U.S. Dist. LEXIS 12795, at *9 (E.D. Tenn. Feb. 21, 2007) (“The key language . . . is ‘used in connection with your business.’”).

[23] Hobbs Rental, 566 F.3d at 953 (declining to extend coverage under Symbol 9 to the vehicle of an independent contractor who did business with the named insured).

[24] See Hobbs Rental, 566 F.3d at 954–55 (“Construing [nonowned ‘auto’] in such a way would . . . impermissibly extend coverage to a vast universe of potential claimants.”); U.S. Fid. & Guar. Co. v. Sanders, No. 5:03-0702, 2006 U.S. Dist. LEXIS 23135, at *8–12 (S.D. W. Va. Mar. 23, 2006); Adams v. Thomason, 753 So. 2d 416, 421 (La. Ct. App. 2d Cir. 2000) (“To hold otherwise would . . . be tantamount to providing coverage . . . to any vehicle driven by any person to transport [products] to the [insured].”); see also Harris v. FedEx Nat’l LTL, Inc., 760 F.3d 780, 785–86 (8th Cir. 2014), aff’g 860 F. Supp. 2d 970, 979–81 (D. Neb. 2012) (applying similar logic to limit liability of FedEx under federal motor carrier regulations where it contracted with another federal motor carrier to pull a trailer).

[25] Luizzi, 2013 U.S. Dist. LEXIS 107566, at *85–98; Nuvell Nat’l Auto Fin., LLC v. Monroe Guar. Ins. Co., 736 S.E.2d 463 (Ga. Ct. App. 2012) (Michigan law).

[26] Nuvell, 736 S.E.2d at 467.

[27] Nuvell, 736 S.E.2d at 467.

[28] Luizzi, 2013 U.S. Dist. LEXIS 107566, at*85–98.

[29] Nuvell, 736 S.E.2d at 467.

[30] Allstate Ins. Co. v. J.A.D. Coal Co., Inc., No. 2:05-CV-29, 2006 U.S. Dist. LEXIS 57871 (W.D. Va. Aug. 16, 2006) (factors did not apply because there was no contract, employment, or other right for the insured to control the truck’s operations or the actions of the driver); Sanders, 2006 U.S. Dist. LEXIS 23135, at*8–12 (factors did not apply because truck was used in carrier’s business and the insured only told the carrier where to go and where to drop off loads); Adams, 753 So. 2d at 420–21 (no coverage as “nonowned auto” where driver was not employed by the insured, was delivering cargo owned by his employer, and was acting in the course and scope of that employment).

[31] CMH Homes, Inc., 2007 U.S. Dist. LEXIS 12795, at *10–11 (citing Liberty Mut. Fire Ins. Co. v. Canal Ins. Co., No. 1:96cv261-D-D, 1997 U.S. Dist. LEXIS 18305 (N.D. Miss. Nov. 13, 1997)).

[32] See Hobbs Rental, 566 F.3d at 953–54 (no “nonowned auto” where insured did not control truck or driver); Sanders, 2006 U.S. Dist. LEXIS 23135, at *10–12 (same where insured did not control driver); Liberty Mut. Fire Ins. Co., 1997 U.S. Dist. LEXIS 18305, at *4, *17–21 (same where insured did not designate routes or control truck and did not have right to have his employees drive the truck); Adams, 753 So. 2d at 420–21 (same where insured did not control driver).

[33] See Hobbs Rental, 566 F.3d at 953 (insured’s employees did not operate truck); Adams, 753 So. 2d at 421 (driver “was not an employee of [the insured]”).

[34] Liberty Mut. Fire Ins. Co., 1997 U.S. Dist. LEXIS 18305, at *18.

[35] Liberty Mut. Fire Ins. Co., 1997 U.S. Dist. LEXIS 18305, at *19–21 (“dictat[ing] the point of pick-up and destination” insufficient to make truck a nonowned “auto”).

[36] Hobbs Rental, 566 F.3d at 951 (contractor delivered equipment to insured); Liberty Mut. Fire Ins. Co., 1997 U.S. Dist. LEXIS 18305, at *5 (“the products hauled belonged to [the insured]”).

[37] Liberty Mut. Fire Ins. Co., 1997 U.S. Dist. LEXIS 18305, at *5 (“[insured] required [contractor] to have his own insurance”).

[38] Liberty Mut. Fire Ins. Co., 1997 U.S. Dist. LEXIS 18305, at *5 (contractor had its own workers’ comp insurance).

[39] Adams, 753 So. 2d at 420–21 (driver was operating employer’s truck pulling insured’s trailer).

[40] Liberty Mut. Fire Ins. Co., 1997 U.S. Dist. LEXIS 18305, at *5, *17 (insured never maintained truck).

[41] Liberty Mut. Fire Ins. Co., 1997 U.S. Dist. LEXIS 18305, at *5 (“[insured] did not make employment related deductions from payments to [contractor]”).

[42] Liberty Mut. Fire Ins. Co., 1997 U.S. Dist. LEXIS 18305, at *5–6 (“[contractor] did do other hauling work without informing [the insured] or obtaining their consent”)

[43] ISO Business Auto Coverage Form, Form No. CA 00 01 10 01 (2000), pp. 8–9.

[44] 1 New Appleman Insurance Law Practice Guide 11A.13 (2019) (“Most ‘four corners’ jurisdictions carve out an exception to the general rule that the duty to defend must be determined solely by the allegations of the complaint and the terms of the policy where determination of the insured status of the putative insured requires consideration of extrinsic evidence. . . .”).

[45] See, e.g., Federated Mut. Ins. Co. v. Dunton, 444 S.E.2d 123, 124–25 (Ga. Ct. App. 1994).

[46] See, e.g., State Farm Mut. Auto. Ins. Co. v. Drawdy, 456 S.E.2d 745, 745–47 (Ga. Ct. App. 1995) (“public policy exception” did not apply where other coverage, even uninsured motorist coverage, is available for accident victim); but see Woody v. Ga. Farm Bureau Mut. Ins. Co., 551 S.E.2d 836, 837–38 (Ga. Ct. App. 2001) (“public policy exception” applied where accident victim rejected uninsured motorist coverage and policy containing exclusion was only other potentially applicable coverage).

[47] A typical liability coverage part in a personal automobile policy defines an insured as the named insured “for the ownership, maintenance or use of any auto. . . .”

[48] See Detailed explanation of host protection plans in the US,” turo.com (“Turo has either waived this coverage entirely or subscribed to the lowest limit allowable by state law.”).


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