Topics Covered:
Public or livery exclusion
Premium
Injury to named insured
Injury to passengers
Liability of employer

Public or Livery Exclusion

The exclusion of public or livery conveyances traditionally included in automobile policies has been a principal source of anxiety to insureds forming car pools.

Although court decisions have consistently held that car pools do not constitute public or livery use of an automobile, misunderstanding of the public or livery exclusion persists within and without the insurance industry. For example, one suggestion sometimes heard is that car pool participants should share the actual driving rather than share driving costs; otherwise the car pool may amount to public or livery use. This, simply, is not the case. The courts are in agreement that charging a car pool passenger for his or her reasonable share of expenses does not constitute public or livery use.

Also, the exclusion on the current personal auto policy states that it does not apply to a share-the-expense car pool. Whether the insured takes his or her turn at driving, say one day a week with four other drivers, or drives five days a week and collects a reasonable share of expenses from each passenger, the exclusion does not apply. It is only when the insured indiscriminately makes the car available to the general public or attempts to make a profit that he or she runs the risk of operating a public or livery conveyance.

This is in keeping with the legal definition of livery conveyance. That definition states that such a conveyance is a vehicle that is hired out and is used indiscriminately in conveying the public or objects without limitation or without being governed by special terms. In other words, a public or livery conveyance is open to the general public to deliver whatever or whomever pays the price; such a vehicle is also usually regulated by public laws governing the safety and sometimes the price. A car pool vehicle, on the other hand, is not open to the general public and is not subject to the same stringent regulations that apply to a bus or long haul truck for example.