The College Student, the Unlisted Civic, and the Pizza Deliveries
The Ortizes insure two vehicles on a Georgia personal auto policy: a 2021 Sienna and a 2018 Tacoma, with liability limits of 100/300/50, UM/UIM at the same limits, a $1,000 collision deductible, and no medical payments coverage. Their 20-year-old son Diego is a full-time student living in a dorm 180 miles away, financially dependent on his parents, and he comes home most weekends. In October he bought a 2013 Civic for $6,800, titled and registered in his own name, garaged at school, and never told the agent. He uses it three nights a week to deliver pizzas for a chain, paid per delivery, and never disclosed the delivery work. On a delivery run he runs a red light and hits a pedestrian who has $175,000 in medical bills and $20,000 in lost wages. Diego has $9,000 in medical bills. The Civic is a total loss at $7,500 actual cash value, with a $6,800 loan balance.
1. Is Diego an insured under his parents' policy for the pedestrian's claim, and how does the delivery work affect that answer?
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Step one - status. Under the PAP's Part A definition, an insured includes 'you or any family member for the ownership, maintenance or use of any auto.' Diego is a family member if he is a resident relative. A dorm 180 miles away does not destroy residency when he is financially dependent, returns most weekends, and treats the family home as his permanent address. On these facts he is a resident relative, so he is an insured for his use of any auto - including a car the policy does not list.
Step two - the use. Part A excludes liability arising out of owning, maintaining, or using a vehicle while it is being used to carry persons or property for a fee. Paid-per-delivery pizza runs are the textbook application: he is carrying property for a fee (delivery charges/compensation per run). The narrow share-the-expense carpool exception does not reach commercial delivery.
Result: the carrier has a strong basis to deny the pedestrian's $175,000 claim against the Ortizes' policy. Two caveats keep the answer honest: (1) some adjusters distinguish a delivery charge passed to the customer from compensation paid by the employer - read the actual endorsement; (2) even a successful denial does not erase the parents' exposure if they are sued for negligent entrustment, which is a separate theory that turns on what they knew about the delivery work.
Do not overlook the real target: if the chain treats Diego as an employee, its commercial auto policy is the primary source for the pedestrian's claim under respondeat-superior principles. Tender there immediately.
2. Can the Ortizes collect anything for the wrecked Civic under their collision coverage?
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No - and the reason is structural, not discretionary.
Part D pays for direct and accidental loss to 'your covered auto.' A vehicle qualifies as a covered auto if it is listed on the declarations or if it is a newly acquired auto - but the newly acquired auto provision applies only to an auto 'you' (the named insured) acquire. Diego is a family member, not the named insured. A vehicle owned by a family member and garaged elsewhere must be specifically listed on the policy to get physical damage coverage.
So:
- No collision payment on the $7,500 ACV.
- Even if the vehicle were covered, the $1,000 deductible would leave $6,500, and the lienholder's interest ($6,800) would consume the entire payment - the Ortizes would net $0 and still owe money on the loan.
- Adding the car now does not retroactively cover an October loss. Late-reported acquisitions have a short grace period, but only for vehicles the named insured acquires.
Advice to the family: the loan balance is a personal obligation; gap coverage would not apply because no physical damage coverage existed at all. If Diego needs coverage, he needs his own policy rated for the delivery use, or a commercial policy through the pizza chain - the parents' policy cannot be made to fit.
3. Assume for this task that the carrier does cover Diego's liability under the parents' policy. Explain how the $100/300/50 limits apply to the pedestrian's claim and whether anything is left for Diego's own $9,000 of medical bills.
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Liability limits are per-person/per-accident, not per-claimant-item.
- The pedestrian's damages total $195,000 ($175,000 medical + $20,000 wages). A single claimant, so the per-person limit of $100,000 governs; the $300,000 per-accident limit is irrelevant with one injured party. The pedestrian recovers $100,000 from the policy and looks to the tortfeasor and the pedestrian's own UM/UIM for the $95,000 balance.
- The $50,000 property damage limit is untouched - the Civic is Diego's own property and its damage is not payable to third parties.
Diego's $9,000 of medical bills get nothing. The policy has no medical payments coverage, and liability coverage does not pay the insured's own injuries. Diego would need to be listed on a policy carrying MedPay, or file under Georgia's required PIP - but PIP attaches to the vehicle, and the Civic carries no policy of its own. That is the practical cost of the unlisted vehicle.
The broader lesson for the exam: the same endorsement (fee-for-carriage) that kills coverage for the pedestrian also kills any defense obligation, which is why the carrier's reservation-of-rights letter matters more than the $100,000 figure.