Insurance questions arise when vehicles get towed
Coverage Q&A: Not all personal auto insurance policies include coverage for towing, and those that do can be confusing.
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Question: I have a coverage question related to a personal auto policy.
The insured was driving the personal vehicle listed on his policy. He was towing his friend’s vehicle with a car dolly attached to the insured’s personal vehicle. While slowing down, the car dolly broke and the unoccupied towed vehicle struck the insured’s personal vehicle, causing minor damage to both vehicles.
The personal auto policy has an exclusion under Part A – Liability Coverage, Insuring Agreement.
WE DO NOT PROVIDE LIABILITY COVERAGE FOR PROPERTY DAMAGE OR BODILY INJURY:
2. to any property, owned by, rented to, in charge of or transported by a covered person;
Does this exclusion apply to this situation for the friend’s vehicle?
— Utah Subscriber
Answer: You are correct in thinking that the damage would not be covered, since the insureds vehicle, and a vehicle the insured is towing, are the property that was damaged in the collision. The insured was transporting the auto, so there is no coverage for damage to the friend’s vehicle. The friend needs to go through his own carrier for coverage. The damage to the insured’s vehicle is covered under collision.
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Who covers third-party towing damage?
Question: Our personal auto policy (PAP) insured borrowed a friend’s car to drive, which broke down. He then used his own car to tow the friend’s car with a long tow rope. Our insured’s wife was behind the wheel of the friend’s car.
They were starting to tow the car, but at the first right turn they took the towed car’s steering wheel locked up, and the car continued straight and hit a parked car. Our insured’s wife had forgotten to turn the key on all the way, unlocking the steering wheel. Otherwise, she would have been able to steer and brake the car.
We think the friend’s own car insurance is liable since insurance follows the car. Further, because it was being steered and braked by an actual driver, we did not think it qualified as a trailer.
But the friend’s insurer says our insured is liable for the third-party damage because our vehicle provided the power, and gave the example of a car on the back of a tow truck hitting another car.
— Utah Subscriber
Answer: We believe the insured could be held liable because he was towing the car and did not take precautions. We believe that the wife could be held liable as well, since she did not unlock the steering wheel. Since both are presumably on the same policy, that is the one that should pay for the damage to the third party.
The friend and his policy should not come into play since he was not even at the scene. A court may hold he is liable because he owns the car, but we think that is a stretch.
As for the damage to the friend’s car, the insured’s liability coverage will not respond because of the care, custody and control exclusion, but the physical damage section of the PAP should pay for the damage as a non-owned vehicle. Of course, this coverage is excess.
Related: What you should know about auto accident liability exclusions
Towing and labor costs
Question: Our insured locked his keys in his car and had to have a locksmith open his door. Would the cost of the locksmith be covered under the towing and labor cost portion under the personal auto policy?
— Indiana Subscriber
Answer: Under the terms of the endorsement, the towing and labor costs are covered for attending to the disablement of the covered auto, and the labor costs are paid if the labor is performed at the place of disablement. If the car is disabled and it is fixed at that spot, the coverage is there. In this instance, the car was disabled and was fixed at that spot so the coverage exists.
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Applying a towing and labor costs endorsement
Question: Our insured has a personal auto policy with endorsement PP 03 03, towing and labor costs coverage, attached. The endorsement states that the insurer will pay for towing and labor costs necessitated by the disablement of the covered auto, provided the labor is performed at the place of disablement. In our opinion, this language includes a jump-start in the event the auto would not start. The insurer disagrees, stating that the labor referred to in the endorsement is the placing of the vehicle onto a tow truck. The insurer claims that a jump start is not part of the coverage provided and that any coverage has to be in connection with actual towing.
We dispute this reasoning and would appreciate your opinion.
— Illinois Subscriber
Answer: We agree with you that covered labor costs include jump-starts. The wording on the coverage form is in tune with this interpretation.
The insuring agreement on PP 03 03 says that the insurer will pay towing and labor costs. The use of the word “and” means that the insurer looks upon labor costs as a separate cost to be paid. The towing is one cost and the labor is another. If the labor costs were to be included in the towing, the phrase would have been something like “towing, including labor” or “towing and its costs”. Since the wording of the coverage is open to reasonable interpretations, the insured should get the benefit of the doubt.
Also, the coverage is for labor performed at the place of disablement. A jump start is labor performed at the place of disablement. What could be clearer? Besides, we would think that the insurer would be willing to pay for a jump start instead of a tow. Towing can run into a lot of money and a jump start can save that money — a good result for insured and insurer alike.
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