The Mustang in the Driveway, the Rideshare App, and the Hit-and-Run
The Reyes family carries an Oklahoma personal auto policy on a 2019 Silverado and a 2016 Camry, with liability limits of 25/50/25 and UM/UIM at 25/50. Son Austin, 17, lives at home and is a listed driver. On October 1 he buys a 2005 Mustang titled, registered, and paid for in his own name, and the family never tells the insurer. On October 20 he lets a friend drive; the friend runs a stop sign and injures another driver, whose claim settles at $40,000. In November, Austin starts driving for a rideshare app in the Camry and is logged in when he rear-ends a delivery van, causing $18,000 of damage to the van and $12,000 of damage to the Camry. On December 5, Mr. Reyes is struck by a hit-and-run driver and incurs $60,000 in medical bills and lost wages.
1. Is the Mustang a covered auto, and how much does the policy pay on the $40,000 claim? Identify the exposure.
Read the worked answer
The Mustang is covered - it is a newly acquired auto. The policy's definition of "your covered auto" sweeps in a vehicle acquired during the policy period by the named insured or a resident family member. A resident relative's own newly purchased car is granted the same treatment, so the family's failure to report the purchase does not by itself void liability coverage. What notice does affect is physical damage coverage: the form typically requires notice within 14 days (varies by edition) for collision/other-than-collision on a newly acquired auto, so the clock matters for damage to the car, not for liability.
Payment: the per-person liability limit is $25,000. The insurer pays $25,000 and the remaining $15,000 falls on the friend (the permissive driver) and, if the friend is uninsured and judgment-proof, potentially on Austin and the Reyes household - because a permissive driver is an insured under the policy, but the policy's limits are the ceiling of the insurer's obligation, not of the family's liability. Add Texas/Oklahoma-style personal asset exposure and the possibility that the friend's own policy responds as excess or primary depending on priority rules.
Action items: add the Mustang to the policy immediately, re-rate the household for a teenage-rated vehicle, and re-test the limits. A household with a 17-year-old driver carrying 25/50/25 is a walking E&O claim.
2. Evaluate coverage for the rideshare collision in the Camry.
Read the worked answer
The personal auto policy does not respond as primary coverage for this loss.
The PAP excludes liability and physical damage for a vehicle while it is used as a public or livery conveyance - carrying persons for compensation. Modern forms add an explicit rideshare exclusion that applies while the driver is logged into a transportation network app, with a narrow exception in some editions for the period before a ride request is accepted. Austin was logged in and driving, so the exclusion is squarely triggered.
Consequences to work through:
- Liability for the van ($18,000): the rideshare platform's commercial policy may respond. Most platforms provide contingent liability coverage that sits above the driver's own coverage and applies while the app is on, with higher limits once a trip is accepted. Whether the driver's own policy is required to pay first depends on the endorsement and the platform's terms - the classic gap is a driver who let his personal policy lapse and discovers the platform coverage is excess only.
- Damage to the Camry ($12,000): the platform's coverage ordinarily does not cover the driver's own vehicle. With the PAP exclusion in play, this is likely an uninsured collision loss unless he bought collision and the carrier agrees the exclusion does not reach it, or he purchased a rideshare endorsement.
- The fix: a rideshare endorsement on the PAP, or a commercial auto policy, plus a reminder that the endorsement usually applies only while the app is active and only to the listed vehicle.
Document the exclusion and the platform's coverage in writing - this is the conversation that prevents the claim.
3. How much does the UM coverage pay on Mr. Reyes's $60,000 hit-and-run claim, and what should the family understand about the limit?
Read the worked answer
The hit-and-run driver is an uninsured motorist. UM pays compensatory damages the insured is legally entitled to recover, up to the limit - it is not merely a medical payments substitute, so lost wages and general damages count.
Per-person UM limit: $25,000. The insurer pays $25,000. Mr. Reyes absorbs $35,000.
Points of judgment:
- There is no tortfeasor to collect from, so there is no offset or credit reducing the UM payment. Where the at-fault driver has a policy, the UM carrier is entitled to a credit for amounts recovered.
- UM is not a substitute for adequate limits. The family bought the statutory minimum and is now personally funding 58% of a serious injury. The recommendation is to raise liability and UM/UIM together - UM should be at least equal to liability, and umbrella coverage should sit above both.
- Stacking: Oklahoma has permitted stacking of UM/UIM limits across multiple vehicles on one policy absent valid anti-stacking language. With two vehicles and a 25/50 limit, there is a colorable argument for $50,000 rather than $25,000. Read the policy's limit-of-liability and anti-stacking provisions before promising or denying anything - and note that the answer changes the advice about limits at renewal.