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EmailJoey Webb of State Farm writes to the Nevada Insurance Law blogs asking:
“When a person purchases a new vehicle, how long are they covered for on their current policy before physically adding the new vehicle to their policy?”
Thanks for the great question Joey. Clearly, Mills & Associates is not in the business of offering advice to non-clients based on specific facts. So we have to say that the most accurate answer is “That depends on the facts and the policy.” When dealing with a specific set of facts, you have to turn to the policy first. I don’t have a copy of the standard State Farm auto policy, but universally, auto policies include language that deals with “Newly Acquired Vehicles”.
After giving you that obvious legal disclaimer, let’s give you a hypothetical answer based upon a hypothetical set of facts. For purposes of this discussion, let’s create a hypothetical policy that obligates the policyholder to notify the carrier within 30 days of the purchase of a new or additional car. Imagine also that the current policy declaration sheet provides for bodily injury liability coverage of $25,000 per person / $50,000 per occurrence, property damage liability of $25.000 with med pay of $10,000, as well as collision and comprehensive. The final fact in our hypothetical is that the policyholder comes to you 45 days after buying the new car. He presents evidence of purchase as well as a report that he just caused an accident in which he was injured, his new car was damaged, a third party was hurt and the opposing vehicle was also damaged.
Based on these facts, let’s talk about coverage, keeping in mind that policy interpretation will always turn on the specific facts and the specific policy language. If the company raises a coverage dispute based upon the late notice, let’s see what happens in each of the coverage areas. (Keep in mind that nothing is ever guaranteed where coverage litigation is involved.)
Collision Coverage: Whether coverage exists to fix the policyholder’s new car is going to turn on a phrase in the collision section of the policy and the definitions “covered auto” and “newly acquired vehicle.” A car that is owned but not listed and that the insured uses all the time, might well be excluded from this coverage. See HERE.
Med Pay: Generally med pay is individual to the policyholder. Coverage for med pay will often extend to the insured not just while he is in his own auto, but to anywhere that he might be hurt by an auto. So where med pay coverage is involved, late notice of the addition of the car to the policy makes no difference. The policyholder could collect med pay for his injuries.
Bodily Injury / Property Damage Liability: This one gets a little tricky. From a technical standpoint, the policy may well say that there is no liability coverage. However, the Nevada Financial Responsibility Act, NRS 485.190 et seq. will likely kick in and obligate the company to pick up liability coverage. For details, see the Nevada Coverage Law blog HERE.
Another tricky aspect is that, the carrier may be able to invoke a Step Down if policy allows for it. The Step Down would reduce liability coverage from the declared $25,000/$50,000 to state’s minimum limits of $15,000/$30,000. For more on Step-Downs see HERE.
So you see, if our hypothetical insured was up to date on the premiums on his ongoing policy, it would be incorrect for our hypothetical company to tell him that he has no coverage based exclusively on the fact that he didn’t report his new auto purchase to the carrier within the 30 days allowed by the policy.
Hope that helps Joey. Thanks for submitting the question.
