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Updated Last on Dec. 30, 2020.

Exclusion in Private Passenger Auto Policies 

Summary: Questions about the application of the public or livery conveyance exclusion on the personal auto policy have been raised, regardless of whether the policy is an older version or the current one. This article discusses the exclusion, court cases that have interpreted the exclusion, and concerns about the exclusion that insureds and insurers face.

Topics covered: Purpose of exclusion Common concerns

Purpose of Exclusion

Rates for private passenger automobile insurance do not anticipate the hazards inherent in operating an automobile for hire to the general public, such as a taxicab or a van; for this reason, private passenger automobile policies in the past customarily excluded coverage for any automobile “while it is being used as a public or livery conveyance”. This public or livery exclusion was, for awhile, reworded in the personal auto policy to state that coverage did not apply to “liability arising out of the ownership or operation of a vehicle while it is being used to carry persons or property for a fee”. Since that phrase resulted in some confusion and conflicting judicial interpretations over the question of coverage, the current personal auto policy (PAP) returned to the use of the phrase “public or livery conveyance”. This exclusion appears in all the coverage parts of the PAP; namely, the liability coverage part, the medical payments coverage part, the uninsured motorists coverage part, and the part dealing with coverage for damage to the named insured’s auto. For a discussion of the public or livery exclusion, see Personal Auto Policy – Part A .

The purpose of the exclusion is to deny coverage in those situations when the vehicle is used for hire or held out for hire to the general public; the exclusion applies when the insured makes the vehicle available for use by the general public or attempts to make a profit through the hiring out of his vehicle. This is in keeping with the legal definition of livery conveyance that states that such a conveyance is a vehicle hired out and used indiscriminately in conveying the public or objects without limitation or without being governed by special terms. The exclusion is intended to be applied in those situations where it is obvious that the insured is holding the vehicle out for hire to the general public; for example, using a vehicle in a limousine service or using it as a taxicab. (Note that the exclusion does not apply to share-the-expense car pools. So, it would not apply in the case of the insured routinely picking up co-workers on his way to work who then contribute to the insured’s travel expenses.)

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Hannah Smith

 

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