Omnibus Clauses As Extending Auto Insurance Coverage To Third Persons
What Is An Omnibus Clause?
Automobile liability insurance policies usually contain a provision, commonly called the "omnibus clause," extending the coverage of the policy to any person using or responsible for the use of the insured vehicle, provided the actual use is with the permission of the named insured. Often, the named insured gives permission to a first permittee, who then gives permission to a third party known as the second permittee. The most common example is when a parent allows a child to use their car, and the child then lets a friend drive. The main issue in determining coverage when this occurs is whether the initial permission included either authority to the first permittee to allow the second permittee to so operate or use the vehicle, or the named insured's permission to the second permittee to do so.
Does An Omnibus Clause Extend Coverage To Second Permittees?
Most courts hold that the named insured's permission to another to use the insured automobile does not authorize the permittee to delegate his right to a third person so as to entitle that person to protection under the omnibus clause. However, the named insured's permission to a second permittee need not be express. Rather, it may be implied from the nature or scope of the initial permission, or from the conduct of the parties and the particular facts and circumstances.
In cases where the named insured expressly authorized the original permittee to delegate his right to use the insured vehicle to other persons, the courts have generally ruled that coverage will extend to a second permittee. On the other hand, in cases where the named insured expressly prohibited the original permittee from allowing anyone else to drive, and the second permittee was driving for his own benefit, most courts have taken the position that coverage will not extend to the second permittee.
In cases where permission was silent as to the original permittee's power to delegate his permission to operate the vehicle, courts are split. Some courts have ruled that a named insured's grant of unrestricted use of the automobile to another includes authority to permit other persons to use the car, and that under an initial permission of that character a second permittee's use of the car for his own purposes is within the protection of the omnibus clause. However, other courts have held that no power to delegate is necessarily implied under those circumstances, and a second permittee using the car for his own purposes has been denied coverage because the required permission of the named insured was lacking.
Should I Consult An Attorney Regarding The Omnibus Clause In My Auto Insurance Policy?
Automobile insurance policies can be complex and confusing, and dealing with your insurance company can be an extremely difficult task. If you feel that your insurance company is wrong in denying your claim, an attorney can help. An attorney can help explain the complex provisions of your policy and help you deal with your insurance company so that you get the coverage you are entitiled to.
Consult a Lawyer - Present Your Case Now!
Last Modified: 11-04-2011 11:29 AM PDT