Rental Vehicle Not Used by Insured

Our insured rented a vehicle from a rental company, and turned it over to another person. He had no intention of using the vehicle when he rented it. The vehicle is now missing, and the rental company wants us to pay for the vehicle.

The insured has a personal auto policy. Although the insured misrepresented who would be in possession of the vehicle to the rental company, it does not seem to us that the provision concerning “fraud” is applicable in this instance.

Do we have to pay for the vehicle? What is your opinion?

Missouri Subscriber

Under part A, liability coverage, exclusion A.3. states “we do not provide liability coverage for any insured for property damage to property rented to that person.” Therefore, there is no coverage for the missing vehicle under this portion of the policy.

Next, turning to part D, coverage for damage to your auto, the rented auto qualifies as a “non-owned” auto provided it is a “private passenger auto, pickup, van or trailer not owned by or furnished or available for the regular use of the named insured or any 'family member' while it is in the custody of or being operated by the insured or any 'family member.'”

Since neither the named insured nor any family member had custody of or was operating the vehicle, there is no coverage for this loss.

This premium content is locked for FC&S Coverage Interpretation Subscribers

Enjoy unlimited access to the trusted solution for successful interpretation and analyses of complex insurance policies.

  • Quality content from industry experts with over 60 years insurance experience, combined
  • Customizable alerts of changes in relevant policies and trends
  • Search and navigate Q&As to find answers to your specific questions
  • Filter by article, discussion, analysis and more to find the exact information you’re looking for
  • Continually updated to bring you the latest reports, trending topics, and coverage analysis