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April 5, 2023

An online auto insurance coverage gap story for unmarried couples living together

Article by Sandy Manning, CISR • ROEHR Insurance, Personal Account Manager

The following real-life situation was recently encountered by a member of our staff and her husband, who was a career claim representative for one of our local insurance companies.

They were eating dinner at one of their favorite watering holes. Their waiter, John, was telling them that he had been involved in an auto accident a few days prior, he hydroplaned driving his live-in girlfriend Mary’s car. He was just banged up a bit, had a big black eye, but Mary’s 2018 Hyundai Sonata is a total loss. She and the vehicle were insured with an online insurance company, one that you frequently see advertised on TV, at the recommendation of her father’s insurance agent – which Mary described as “exclusively a pricing issue”.

The following week, they were back at the restaurant for dinner. They saw John and asked him how things were going with their insurance claim. Not at all well. Because John and Mary are not married but live together, and John is not listed as a driver on Mary’ Auto Policy, their insurance company denied all coverage. No Medical Payments, no Property Damage, no Collision, no Rental, no Towing, nothing. John has his own vehicle and his own Personal Auto Policy, insured with the same online insurance company, but he got caught in the “furnished and available for regular use” coverage restriction, so there’s no coverage available under his policy either – not for the vehicle, and not for his injuries.

To add insult to injury, Mary still owes $19,000 on her auto loan on this vehicle. She has owned the vehicle for less than a year. So they are now faced with paying off a $19,000 loan on a totaled vehicle, and coming up with money for a downpayment to purchase a replacement vehicle. John recently found out that he will be charged with driving without insurance, and could have his license suspended for 90 days, and they’re threatening to charge Mary with Wrongful Entrustment of a Motor Vehicle for permitting an uninsured driver to operate her vehicle. Mary’s comment was “I bought car insurance!  I thought we were doing everything right!”.  There’s no reason they should have thought otherwise.

And yet . . . . .

Co-habitation without the benefit of marriage, even a simple roommate situation, compromises the intent of a Personal Auto Policy and creates cavernous gaps in coverage, as we can plainly see in this real-life example. The only silver lining is that John hit a pole, not another vehicle that could have been damaged and with occupants who might have been injured. Otherwise this could have been a disaster that could have affected them financially for many years to come. And they are both very thankful for that. It is critical that you update us if your living situation changes, for any reason.

Online Direct Writers are doing a huge disservice to the insurance-buying public. It’s not that these restrictions don’t exist in all personal auto policy forms, they do, but there’s a reason cheap insurance is cheap, and there are reasons you need a professional agent. While we all know that the online insurance companies mean “NO!” when they say no, having a professional agent who can advocate on your behalf can sometimes help to mitigate a financial nightmare like this one.  

If you, or anyone you know, find yourself in this situation, contact your agent or anyone on our Personal Lines servicing staff and we will be glad to review your individual situation to make sure you are properly covered. We are valuable partners and we can provide you with counsel and coverage to make sure you – and your roommate - are properly protected. It happens – don’t let it happen to you.

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