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When is an Auto "Furnished or

Available"?

Bill Wilson

Abstract
Commonly referred to as the "company car exclusion," the
"furnished or available for your regular use" exclusion can
apply to a lot more than that. In addition, what constitutes
"regular"? For example, if you rent a car on vacation for a
week, is that "regular"? How about a month-long rental? How
about 90 days? At what point is the vehicle available for your
regular use? In this article, we'll examine this issue in the
light of several court decisions and offer a simple and
inexpensive solution to the exposure.

The ISO PAP excludes the ownership, maintenance or use of any vehicle,
other than "your covered auto," which is "furnished or available for your
regular use." By separate exclusion, it also removes coverage for vehicles
furnished or available for the regular use of a family member.
This exclusionary wording has been debated and litigated for years. The
controversy surrounds three words: (1) furnished, (2) available, and (3)
regular. Surprisingly, most courts have not found this wording or the
exclusion(s) to be ambiguous per se. However, decisions as to the
exclusion's applicability vary widely because most courts concede that it
depends on the unique circumstances of each case.
Generally speaking, each of these three terms means:
z

Furnished...most company cars are "furnished" to employees.

Likewise, most rental cars are furnished to the renter. Webster
defines "furnished" as "provided with what is needed" or "equipped
with."

Available...not all company cars are assigned to a specific

individual. A pool car might be available for an employee's use, so
that the exclusion does not necessarily depend on the use of a
unique, assigned or furnished vehicle (see Galvin v. Amica Mutual
Insurance Co., 1981 C.C.H. (Fire & Casulaty) 11,045). Webster
defines "available" as "present or ready for immediate use."

Regular...Most often at issue is what constitutes "regular." How long

must the vehicle be furnished or available and/or how often does the
person have to use the vehicle for such use to become "regular"?
Webster defines "regular" as "recurring, attending, or functioning at
fixed or uniform intervals."

Despite the assertion of many courts that the exclusion is not ambiguous,
decisions would indicate otherwise. In one case, the use of a car for 10
days was deemed to be "regular" and the exclusion was upheld. In another
case, use of a vehicle for 56 days was held not to be "regular" and, thus, a
resulting loss was covered. At least two courts have found that use of a
company car for personal reasons was not "regular use" since "regular use"
would involve business activities, a position that appears to be in the
minority.
Again, courts consider the circumstances of each case to be unique. For
example, in Hughes v. State Farm Insurance Company (Tennessee
Supreme Court, 1976), the use of an auto 6-8 times during an 8-9 month
period was not considered "regular" because the insured had to request

permission before each use and was, in fact, denied permission on several
occasions. In Waggoner v. Wilson (Colorado Court of Appeals, 1972),
coverage was found because the keys and permission had to be obtained
before each use and the court ruled that the use of the auto was not "to a
substantial degree under the control of the insured."
Many courts have upheld the exclusion where the insured exercises control
over the vehicle for an extended period, has keys and access to the vehicle,
and does not have to seek permission for each use. In fact, in a number of
cases, the frequency of use was not a significant factor since all that is
required by the exclusion is that the auto be "available" for regular use. So,
often, the applicability of the exclusion is more a function of custody, control
and accessibility than it is of actual use, particularly from the standpoint of
what constitutes "furnished or available."
On the issue of company cars, the exclusion most often will apply.
However, with regard to rental vehicles, the applicability of the exclusion is
less clear due to the issue of what constitutes "regular" use. Is a one-week
rental "regular"? How about three weeks...or 90 days? Recently, our Ask an
Expert service received the following question:
"We recently had a claim situation where an elderly insured rented
a vehicle for 30-day increments (planned duration: 90 days) in
Florida while on vacation. In the first 30-day period, he had an
accident where he pulled out of his mobile home park, his vision
was impaired due to a utility pole, and he struck a bicyclist. At the time, the
cyclist did not appear to be terribly hurt, but now he seems to be harmed to
the tune of about $100,000.
"Our problem is that the current carrier has denied coverage coverage due
to the 'furnished auto' exclusion on the policy. This was a rental...he did not
have an auto 'furnished' by an employer...he is retired. We would
appreciate an opinion on this matter from your experts. I was advised by
one of our class instructors to submit this for review."
We ran this scenario by our PAP faculty and got the following
results: 43% said "covered," 43% said "not covered," and 14%
said "only God and Johnny Cochran know for sure." As you can
see, if a group of "experts," can't agree, how can we expect
consistent court decisions...and, in most cases, when agreement can't be
reached, the facts of the case must go to a jury. As a result, at least one
insurer has attempted to quantify their exclusion by defining "regular use" to
be 21 consecutive days or 45 days in the past 365 days.
Here are several court cases dealing with rental cars and this exclusion:
Factory Mutual Liability Insurance Co. v. Continental Casualty Co., 267
Fed. (2nd) 818 (1959). A 3-week Florida rental was deemed not to be
regular use.
Waggoner v. Wilson, 507 PAC. (2nd) 482 (1972). The exclusion didn't
apply because the insured had to request the keys to drive a previously
owned auto on each occasion.
Hughes v. State Farm Insurance Co., 1976 C.C.H. (Automobile) 9020.
The exclusion didn't apply because the insured had to request the keys
each time, permission had been denied on occasion, and use was 6-8
times over 8-9 months.
American States Insurance Co. v. Tanner, et al., West Virginia Supreme
Court (2002). In this very recent case, which is similar in many ways to the
"Ask an Expert" question above, the court found that the exclusion did not
apply, considering four factors:

General availability of the vehicle...since this was a short-term

rental (she had been driving the rental car for 22 days at the time of
the accident), the court ruled that the vehicle was available for only a
finite period of time.

Frequency of use...it was unclear if the use constituted "regular"

use (via frequent, habitual or principal use), but this was apparently
not an issue due to the other factors considered by the court.

Restrictions, if any, placed on use...the court felt that substantial

restrictions in the rental agreement on who could use the vehicle and
where and how it could be used placed limitations on the renter's
free and unfettered use of the auto. The court decision cited several
other cases where rental agreement restrictions were material in
supporting the position that the exclusion did not apply.

Nature of the use...in this case, the rental was a temporary

substitute for an owned/insured auto that was being repaired. This is
not a factor in our analysis of liability claims in the PAP because the
exclusion does not apply to temporary substitutes since they are
included within the definition of "your covered auto."

To review this court case, including dozens of citations of decisions by

many other courts, CLICK HERE.
Clearly, the applicability of this exclusion is unclear. One could argue that
the exclusion should be applied broadly because the insurer has not
received any premium for this specific exposure. On the other hand, one
could argue that the exclusion should be applied restrictively because there
is no significant additional exposure if such a vehicle is being used in place
of an owned/insured vehicle (as there is, generally speaking, not a great
deal of difference in liability premiums for cars within the same broad class).
Finally, there is a simple way to avoid this problem...use the PP 03 06 Extended Nonowned Coverage for Named Individual endorsement which
eliminates this exclusion for liability coverage. While commonly used for
insureds who have company cars, it can also be used by someone who
may have occasion to use a neighbor's car on a regular basis or for a multiweek rental. Since this endorsement removes several exclusions, the cost
(typically $15-$25 semi-annually) is minimal.

Thanks for the timely article! I am primary driver for a 15 passenger van in a
vanpool...we lease a van from a transit agency and drive it to work (50
miles round trip) 5 days a week. The back-up drivers and I decided to add
Extended Non-Owned Auto Coverage to our own policies to provide excess
coverage over the transit agency's own coverage "just in case." I've been
trying to convince the transit agency to mention ENOA coverage during
their driver training, so I forwarded your piece to our vanpool coordinator
and the risk manager.
Vanpools are quite common in the Seattle area and other parts of the
country; perhaps you could add a specific mention of them next time you
update your article? Thanks!
Brady Smith, Products Development Analyst
Mutual of Enumclaw Insurance Co.
Enumclaw, WA
[From the Editor: Brady...just did. :-)]
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Revised: October 2011