Rental Car as Nonowned Vehicle

August 5, 2013

We have a claim in which the insured drove across state lines with a co-worker in the co-worker's personal car with the intent to conduct a sales meeting. While there, the insured rented a car and visited with family members and did some personal things. On the date of the accident, the insured was driving the rental car back from the business meeting which had concluded for the day. He was returning to his hotel and was planning on go to the beach. While driving to the hotel with the co-worker as a passenger, the insured caused an accident.

The policy has a definition of a nonowned vehicle which does not include a rental car while used in connection with a business purpose. The policy also excludes coverage under the liability section while maintaining or using any car while any person is employed or otherwise engages in any business or occupation with the exception of a car and trailer that the named insured owns, and further states coverage is not provided while maintaining or using any nonowned car in a business.

Since the insured claims the primary purpose for renting the car was for after work activities but was driving from the sales event, is there coverage?

Michigan Subscriber

Based on your description of the incident, the insured was using the car for business purposes. He can claim the rental car was for after work activities, but the facts are that he was driving the car back from a business meeting and was returning a co-worker from this meeting at the time of the accident. The definition of a nonowned car does not include a rental car while used in connection with a business purpose and that is encompassing enough to include this particular use by the insured. If the accident had occurred when the insured was driving to the beach, he would have a point, but the connection with the business meeting is strong enough in our opinion to exclude coverage.

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