Business Auto, Non-Owned Autos, and Alabama Uninsured Motorist Coverage
Ridgeline Heating & Air is an Alabama S corporation with one scheduled company van on a business auto policy using symbol 1 (any auto), liability limits of $1,000,000 combined single limit, hired-auto coverage, and no physical damage coverage. Technicians also drive their personal trucks to job sites; the company reimburses mileage and has techs pick up a $300 part at the supply house on the way to the first job. Tech Dana has a personal auto policy with 50/100/25 limits and no endorsements. On Tuesday, driving her own truck from the supply house to a customer with a company compressor on the seat, Dana runs a red light and injures a pedestrian whose claim is valued at $185,000. Dana's truck suffers $9,000 of damage. Separately, Dana asks about coverage if she is hit by an uninsured driver while riding in the company van.
1. How do Dana's PAP and the company's BAP share the $185,000 pedestrian claim, and is the $9,000 damage to Dana's truck covered?
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Liability, in order:
- Dana's PAP is primary. Her truck is a covered auto, and picking up a part on the way to a job is ordinary business use, not the public or livery conveyance exclusion (no passengers or property carried for a fee). Pays $50,000 per person.
- The company BAP with symbol 1 covers non-owned autos used in the business, but its other-insurance condition makes that coverage excess over any other collectible insurance for an auto the named insured does not own. It pays the remaining $135,000, within the $1,000,000 CSL.
Physical damage to Dana's truck: no recovery. Her PAP has no collision coverage, and the BAP covers damage to non-owned autos only if physical damage coverage is purchased and extended to those autos; this BAP has none. Her $9,000 is out of pocket.
Also note there is no "regular use" problem here - Dana is not furnished a vehicle for regular use, so her PAP is not excluded. If the company assigned her a van to take home every night, the analysis reverses: her PAP would exclude that van as furnished for regular use, and the BAP alone would respond.
2. Dana is injured by an uninsured driver while riding in the company van. Explain which UM coverage applies, in what order, and the limits - including the effect of Alabama's UM rules.
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Alabama framework: liability minimums are 25/50/25, and uninsured motorist coverage must be offered at limits equal to the policy's liability limits; it can be removed only by a written rejection signed by the named insured.
Order of application:
- The BAP's UM/UIM, if purchased, is primary because Dana is an insured occupying a covered auto (the van).
- Her PAP's UM is excess. It follows her as a named insured occupying a non-owned auto; the regular-use exclusion does not apply because the van is not furnished to her for regular use.
Measuring the claim: UM pays the gap between the at-fault driver's collectible coverage (zero here) and the UM limit, up to the insured's damages. If her damages are $120,000 and the BAP carries $1,000,000 UM, the BAP pays the loss in full. If the BAP carried UM equal only to statutory minimums, her PAP UM (limits equal to her 50/100 liability unless she rejected or reduced in writing) would sit above it.
Because she never rejected UM in writing, she is entitled to UM at her policy's liability limits, and the two policies do not simply add together - the excess provision governs.
3. The company later assigns a van permanently to Dana to drive home each night and on weekends. What changes for a crash in that van during a personal errand, under both policies?
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PAP: the liability and UM exclusions for a vehicle furnished or available for the regular use of the insured apply. A permanently assigned van is the textbook case. Dana's PAP owes nothing for the crash or for her own UM claim, even on a purely personal errand.
BAP: symbol 1 (any auto) covers the van as an owned auto even though it was never added to the schedule, and coverage follows the vehicle regardless of the purpose of the trip. The BAP is the only liability coverage, and its UM applies for her injuries.
Exposure to flag: the BAP's $1,000,000 CSL and its UM limits now stand alone with no personal excess or umbrella beneath; the company should not rely on employees' personal policies for assigned vehicles, should notify the insurer of newly acquired autos within the policy's reporting window, and should confirm the UM selection in writing.