Named Insureds

    Posted by MAIA on May 10, 2019 12:01:00 AM

    QUESTION

    This question was answered based upon current rules, regulations & statutes in effect on April 11, 2019

    We have a MA Auto risk for a father who solely owns a vehicle and his daughter who solely owns her vehicle. They are the only household residents. I'm getting mixed feedback on whether we can do this on one policy. According to another post by MAIA ("Named Insured"), it sounds like some companies allow this - would it not interfere with a claims payment if one car was damaged? Any advice is appreciated.
    Thank you

    ANSWER

    Kathy Cormier:  We see two direct writers that currently want all HHMs with vehicles to be on the same policy, no matter who owns the vehicles.  We here at MAIA have an issue with this practice and have filed yet another complaint with the Division of Insurance on this matter “No Insurable Interest”.  I could insure YOUR car on MY policy and I have absolutely no insurable interest in your vehicle...these are the problems that this practice creates:

    •  You cannot accept a transfer of Insurer/2A for the daughter because you have a policy in the name of the father and not the daughter...the daughters policy eventually cancels for non-payment and that goes on her record with an EP.
    • If there is a loss, the claim payment goes to the holder of the policy...not the owner of the vehicle.
    • The  vehicle registration is in the daughters name, but the policy is in the name of the father.
    • What about a lienholder looking for proof of coverage and there is no policy in her name
    • If the daughter tries to change/alter coverage, they are being told that they cannot because they are not the named insured on the policy.

    We have approached the DOI on this multiple times and they are now re-looking at it and we hope to see that practice stopped.

    Here is a couple of examples:

    • Daughter insured moms car with a direct writer.  The policy was written in the daughters name and the vehicle and loan were in the mothers name.  Daughter did purchase full collision and comprehensive coverage for the vehicle.  There was a loss and the vehicle was totaled.  The company issued payment to the daughter, who then spend the money.  Mom has no car and is still paying a loan on a vehicle that she no longer has. 
    • Another case where a family member has their vehicle listed on a policy and want to make changes to the coverage.  Because they are not the named insured on the policy, the carrier would not discuss any changes with the owner of the vehicle.

    Most carriers do not allow this practice and we are hopeful that the DOI will also stop this.

    I hope this helps.  Please let me know if you have any other questions.

    Irene Morrill:  I also worry about when the “kid” leaves home.  Generally policy goes in parents name …kid’s car goes on policy … I “suppose” its not a bad idea from a premium standpoint.  And certainly the carrier eliminates ANY possibility of stacking coverage – but …

    Certainly the issues Kathy pointed out about claim payment of coverage change but also

    Kid is an adult and wonder of wonders finally moves out and takes his/her car …but car stays on parents policy.

    Kid might be a “relative” but is no longer a “household member” and loses the “drive other car” coverage afforded by being a household member by definition.  When kid is NOT in car he/she has NO insurance. 
    Also only “YOU” can provide consent of driving to someone else.  Kid lets friend drive …friend causes accident.  Kid OWNS vehicle but is not the YOU on the policy …who technically does NOT have the right to give permission

    For the premium “savings” …though in competitive auto …is there really …I believe it is a potential EO disaster for an agent. 

    You COULD provide “mulit-car” discount w/o putting vehicles on same policy …or at least put BOTH NAMES …or multiple names as named insured so that ALL vehicle owners get the RIGHT of coverage granted a “you”.

    Insurance Company:   Thank you both for the explanations. Sorry to spend so much time on this one but I got a little confused. The example you gave is: Dad solely owns a car, Kid solely owns a car, same household, one policy and only one is “named insured”. This definitely wouldn’t work for the reasons you provided.

    My question is what technical issues are there, if any, when we have both Dad and Kid as named insureds.

    They would both get the “YOU/drive other car” coverage. My only concern would be: Dad totals his car, we write a check to Dad AND Kid…. Being family we would hope that they’d handle the money correctly, but there could be times where there is a dispute in how to handle the claims payment, no? The more I talk it out, perhaps I should bring it up with my claims department, but I would love your insight too.

    Again sorry to bring up the question again but I just want to make sure I have it right.

    Thank you

    Kathy Cormier:  Not sure if you saw my other email:

    Typically if you have a husband and wife who both own a car separately, you will see these on the same policy in both names...husband and wife as the YOU.

    Otherwise, if the vehicles are in both names that policy should be in both names (non husband/wife situation)...that is not what is happening today with these two carriers. 

    Irene...what do you say?

    Irene Morrill:  In addition to other coverage issues, I totally agree with your “claim” issue … when the vehicles are NOT registered in dual names I think it causes problems to put dual names on the dec page

    Or

    When only 1 name on dec page ….and vehicles actually owned by someone other than who is listed on the dec page …

    I guess we find out what kind of a loving “family” attitude they really have!

    Insurance Company:  Thanks everyone for the help! This is much clearer now. I think we’ll try to avoid setting off any family disputes and make them get a 2nd policy…

    Have a good rest of your day

     

    This document is not a legal opinion and should not be relied upon as such. The intent of this document is to provide a general background regarding the topic or topics discussed, not to provide legal advice. Producers and agencies should consult an attorney regarding specific situations and specific questions with respect to the topic or topics covered in this document. Neither the Massachusetts Association of Insurance Agents, Number One Insurance Agency nor any of its employees shall be responsible for any errors or omissions regarding any statements made in this document, nor any errors or omissions regarding any statutes, regulations, court rules, and/or any other government documents cited in this document.

    Topics: 2018

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