Auto Insurance Policy
Americans with their cars, but they sure don't love their auto insurance. Unfortunately, the joys of owning a car are often diminished by the realities of auto insurance. Or, to put it more graphically, auto insurance is to cars what buffalo chips are to bison.
As unpleasant as it may be to purchase auto insurance, it will be even more distasteful if you don't fully understand the who's, why's, what's, and how's of your coverage. And since ignorance is never bliss when it comes to insurance, it pays to know your policy, from the declarations page to the fine print.
Who Is Covered?
When you purchase auto insurance, you are insuring a specifically identified automobile. But you are also insuring people, who are known in "insurancespeak" as the insureds.
The Named Insured
If you buy insurance for your car, you are a named insured. So is your spouse if you are married, as well as any other family members who reside with you.
"Permissive Users"
If you allow your brother-in-law to borrow your car, he also becomes an insured, since insurance coverage usually follows the car wherever it goes, as long as it goes with your permission. This is important because liability also follows the vehicle wherever it goes - again, as long as it is driven with your permission or by someone who could reasonably believe you had given permission. (Many states limit the liability of the insured for damages caused to others by a permissive driver. For example, California limits such damages to $15,000. Of course, this limit does not protect the driver from further liability.)
Other Legally Responsible Parties
Another category of insured includes persons or organizations legally responsible for the acts of a covered person while using an automobile. Sometimes we use our cars for other than personal purposes. For example, if your boss asks you to drive to the airport to pick up an important customer, you are using your car for your employer's purposes. If you had an accident under such conditions, your employer could be sued as well as you, because you were conducting company business while driving the car. Should such an unfortunate incident take place, your employer would be considered an insured for purposes of auto insurance protection. (This would not apply if you were driving a company car rather than your own. In such circumstances, the company insurance policy would be primarily responsible.)