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Under the ISO Personal Auto Policy (PP 00 01) Part A — Liability, an insured neighbor borrows the named insured's covered auto with permission and negligently injures a third party. The neighbor has his OWN auto policy. How does the PAP respond?
AThe neighbor is not an insured because only the named insured and resident family members can ever qualify as insureds for liability purposes under the PAP
BCoverage applies only if the neighbor is first added to the policy as an additional named insured by a written endorsement
CThe named insured's PAP is excess over the neighbor's own policy because permissive users receive no liability coverage at all
The neighbor is an insured as a permissive user of your covered auto, and the named insured's PAP responds, typically primary over the neighbor's policy
Why this is the answer
Under Part A, "insured" includes (1) the named insured/family member for ownership/maintenance/use of any auto/trailer, (2) any person using YOUR covered auto (subject to the exclusion for use without a reasonable belief of being entitled to it), (3) any person/organization vicariously liable for the use of your covered auto by an insured, and (4) any person/organization vicariously liable for the use of any auto/trailer by the named insured/family member, other than autos the third party owns/hires. Insurance on the auto being used is primary; the user's own policy (covering non-owned autos) is excess. See PP 00 01 Part A.
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