New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

George E. Pataki
Governor

Gregory V. Serio
Superintendent

The Office of General Counsel issued the following opinion on October 29, 2004, representing the position of the New York State Insurance Department.

Re: Rental Vehicle Liability Coverage For Non-Named Insured

QUESTION PRESENTED:

Is a motor vehicle liability insurer required to provide rental vehicle coverage to a policyholder’s fiancÚ, when the fiancÚ, who does not have a motor vehicle liability policy of his own, lives with the policyholder and is listed as a driver on her motor vehicle liability policy but is not a named insured?

CONCLUSION:

No. Pursuant to N.Y. Ins. Law § 3440(b) (McKinney 2000) and N.Y. Comp. Codes R. & Regs. tit. 11, § 60-1.5 (2004), motor vehicle liability insurers are only required to provide rental vehicle coverage to named insureds and the insured’s relatives by blood, marriage, or adoption that reside with the named insured.

FACTS:

The inquirer told us that a man was involved in an accident with a vehicle he rented from a car rental company. He does not have a motor vehicle liability policy of his own and did not purchase the collision damage waiver from the car rental company, but his fiancÚ, with whom he lives, has a motor vehicle liability policy where he is listed as a driver but is not a named insured. He sought coverage for the damage to the rental vehicle under his fiancÚ’s policy. His fiancÚ’s insurer denied coverage because the person who rented the vehicle is not a named insured on the policy, but rather, is just a listed driver and is not a resident relative of the named insured. The inquirer asked whether the insurer is required to provide rental vehicle coverage in this situation.

ANALYSIS:

N.Y. Ins. Law § 3440(b) (McKinney 2000), which requires motor vehicle liability insurers to extend their coverage to vehicles rented by an insured, provides in pertinent part:

…every motor vehicle liability insurance policy which insures less than five private passenger motor vehicles registered in this state shall by endorsement provide coverage for the obligation of the insured for actual damage to, or loss of, vehicles (including loss of use) rented by an insured in the United States, its territories or possessions and Canada under a rental agreement with a term of thirty continuous days or less. (emphasis added).

N.Y. Comp. Codes R. & Regs. tit. 11, § 60-1.5 (2004) provides in pertinent parts:

…every motor vehicle liability insurance policy insuring at time of issuance or renewal less than five private passenger motor vehicles registered in this State shall provide…separate rental vehicle coverage for the insured’s obligation for actual damage to, or loss of, a rental vehicle, including loss of use, rented by the insured in the United States, its territories or possessions, and Canada under a rental agreement with a term of 30 continuous days or less. (emphasis added).

(e)(1) Insured means named insured or any relative.

(e)(2) Relative means a spouse, child or other person related to the named insured by blood, marriage or adoption…, who regularly resides in the insured’s household, including any such person who regularly resides in the household, but is living elsewhere.

N.Y. Ins. Law § 3440(b) (McKinney 2000) requires that rental vehicle coverage be provided to vehicles "rented by an insured." Here, the resident fiancÚ of a motor vehicle liability policyholder, who does not have a motor vehicle liability policy of his own, seeks to invoke the policy’s rental vehicle coverage to pay for damage to a vehicle he rented and with which he was involved in an accident. The insurer acted lawfully in denying rental vehicle coverage to the resident fiancÚ as he is neither named as an insured on the policy nor a relative of the named insured by blood, marriage, or adoption. See N.Y. Comp. Codes R. & Regs. tit. 11, § 60-1.5 (2004).

Please note that if an individual rents a rental car with a credit card, there may be collision damage insurance coverage provided to the cardholder under a group insurance policy. The fiancÚ should check the credit card agreement to determine whether such insurance is available to him.

For further information you may contact Supervising Attorney Lawrence M. Fuchsberg at the New York City Office.