“Nonpermissive Use” Exclusions and Factors Considered
Published .
The general concept
An auto policy may extend liability coverage beyond the named insured to another person who uses a covered vehicle with permission. A nonpermissive-use exclusion or limitation can remove that extension when the driver had no permission or used the vehicle outside the permission granted. This is a coverage question under the particular policy; it does not by itself decide who caused the crash, whether the vehicle owner is independently liable, or whether a separate coverage such as PIP applies.
How Maryland applies it
Maryland courts read the policy’s omnibus clause and examine the facts surrounding permission. Relevant evidence can include who owned or insured the vehicle; what the named insured allowed the first driver to do; whether that permission had limits; whether the owner allowed the first driver to let someone else drive; what the second driver was told; whether the first driver was present or asked the second driver to act for the first driver’s benefit; and what the vehicle was being used for when the crash occurred. In Payne v. Erie Insurance Exchange, the Supreme Court of Maryland held that an omnibus clause can cover a second driver who operates the car within the first driver’s permitted use and either accompanies the first driver or drives at that driver’s request for that driver’s benefit. But the Court found no coverage where the second driver deviated from the requested school pickup and the record did not support a reasonable inference that the deviation served the first driver’s purpose. Prior and customary use, communications about restrictions, possession of the keys, and the driver’s route or errand may help establish what permission was granted. The exact wording and the evidence matter; a conclusion that use was unauthorized for liability purposes should not be assumed to resolve PIP or other first-party benefits.
Related Maryland Cases and Authorities
Payne v. Erie Insurance Exchange, 442 Md. 384 (2015); Liberty Mutual Insurance Co. v. Maryland Automobile Insurance Fund, 154 Md. App. 604 (2004); Bond v. Pennsylvania National Mutual Casualty Insurance Co., 289 Md. 379 (1981); Md. Code, Insurance § 19-505.