Is this legal? Wouldn’t the insurance company have grounds to refuse payment in case of an accident? Are there any further legal issues?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Dec 5, 2011

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Insurance Question from Darbydale, OH

Asked on 12/05/2011

Is this legal? Wouldn’t the insurance company have grounds to refuse payment in case of an accident? Are there any further legal issues? SITUATION:1. A father buys a car for his son (age 29) who has a separate residence.2. The car is registered he father at father's address.3. The car insurance (liability only) is in the name of both the father and the son using the son's address.4. The sole driver listed on the policy is the son and the son has no other insurance.5. The son uses the car in his employment.

Answer given on December 06, 2011

The only issue with this scenario is that the son is using the auto for business.  You didn’t say what kind of business.  If the son is in any delivery business (even deliverying pizza), sales business and driving long distances, livery business or the like, the insurance company could deny a claim.  Claims or vehicles used in business are excluded from the private passenger auto policy.  The best thing to do is talk with your agent about the son using his vehicle in the course of his business. Let the agent or the insurance company advise you if there would be coverage.  If the son’s car is garaged at his residence, there should not be an issue with the auto insurance being at that residence as well.  It is best to talk to your agent or the insurance about all these concerns BEFORE there is an accident.      

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