To comply with Texas Insurance Code (TIC) 1952.060, personal auto policies must provide coverage for a temporary vehicle.
It’s sometimes hard to get the policy language right, so to help insurance companies, we broke it down into these four requirements:
- Define a temporary vehicle in the policy.
- Make a temporary vehicle an insured vehicle.
- Add an exception for temporary vehicles to some liability exclusions.
- Provide primary liability coverage for temporary vehicles.
We provide example language in Times New Roman font to help explain these four requirements. Insurance companies don’t have to use this language.
Define a temporary vehicle in the policy
Personal auto insurance companies must define a temporary vehicle in the policy as it’s defined in Texas Insurance Code (TIC) 1952.060(a)(3).
Include the statutory definition
The policy must include this definition from TIC 1952.060(a)(3):
“Temporary vehicle includes a vehicle that is loaned or provided to an insured by an automobile repair facility for the insured’s use while the insured’s vehicle is at the facility for service, repair, maintenance, or damage or to obtain an estimate and is:
- in the lawful possession of the insured or resident relative of the insured;
- not owned by the insured, any resident relative of the insured, or any other person residing in the insured’s household; and
- operated by or in the possession of the insured or resident relative of the insured until the vehicle is returned to the repair facility.”
Add optional language to the definition
Insurance companies can specify what kinds of vehicles qualify as temporary vehicles if the specification complies with TIC 1952.060.
In addition to the statutory definition, insurance companies can use language like this:
“The temporary vehicle must be:
- a private passenger automobile;
- a pickup, utility vehicle, or van (gross vehicle weight rating of 14,000 pounds or less) not used primarily for delivering goods, materials, or supplies, other than samples; or
- a pickup, utility vehicle, or van (gross vehicle weight rating of 14,000 pounds or less) used for farming or ranching.”
Common objection: The policy defines “auto” too narrowly
TDI might object if the policy narrowly defines "auto” or “automobile” and uses that term in the temporary vehicle definition.
The definition of "auto” or “automobile” conflicts with the required coverage for temporary vehicles when the “auto” or “automobile” definition is narrower than the kinds of vehicles listed in TIC 1952.060(c).
To fix the conflict, either:
- Swap the term for another term (such as “motor vehicle”) in the definition of temporary vehicle.
- Revise the definition of “auto” or “automobile” to track TIC 1952.060(c).
Make a temporary vehicle an insured vehicle
TIC 1952.060(b) requires insurance companies to cover a temporary vehicle in the policy’s liability section.
The policy must cover the named insured, resident relatives, and licensed household members when using the temporary vehicle.
Here are three examples of how the policy can do that:
Example A: “Your covered auto means… a temporary vehicle.”
Example A adds a temporary vehicle to the list of covered autos. This grants coverage in all coverage parts of the policy for an insured using a temporary vehicle.
Example B: “Your covered auto means… a temporary vehicle for Part A - Liability Coverage only.”
Example B adds a temporary vehicle to the list of covered autos, but only in the liability coverage section.
Example C: “Your covered auto means… Any auto or trailer you don’t own while used as a temporary substitute for any other vehicle described in this definition that is out of normal use because of its:
- breakdown;
- repair;
- servicing;
- loss; or
- destruction.”
Example C adds a temporary substitute vehicle to the list of covered autos. This grants coverage in all coverage parts of the policy for an insured using a temporary substitute vehicle. In this example, a temporary substitute vehicle includes a temporary vehicle because a temporary substitute vehicle is a broader term.
Add an exception for temporary vehicles to exclusions
Insurance companies may need to add an exception for four liability exclusions that often conflict with TIC 1952.060.
These liability exclusions are the:
- Care, custody, or control exclusion
- Delivery exclusion
- Business use exclusion
- Assumed liability exclusion
Below, we explain what the exclusion looks like, what’s wrong with it, and how to fix it.
Care, custody, or control exclusion
If the policy has a liability exclusion like:
“For damage to property:
- Rented to;
- Used by; or
- In the care of;
that person.”
It conflicts with TIC 1952.060(d)
The care, custody, or control exclusion conflicts with TIC 1952.060(d) because it excludes coverage for damage to a temporary vehicle that is rented to, used by, or in the care of the insured. The law requires insurance companies to provide liability coverage for damage to a temporary vehicle.
Add an exception when needed
Some insurance companies already have an exception to the care, custody, or control exclusion like:
“This exclusion doesn’t apply to damage to any of the following type vehicles not owned by or furnished or available for the regular use of you or any family member:
(1) Private passenger autos;
(2) Trailers; or
(3) Pickups or vans.”
If the care, custody, or control exclusion has this exception, the insurance company doesn’t need to add an exception for temporary vehicles.
If the care, custody, or control exclusion doesn’t have this exception, you need to add an exception for a temporary vehicle.
For example, add:
This exclusion doesn’t apply to a temporary vehicle.
Delivery exclusion
If the policy has a liability exclusion like any of these:
- “Being used to carry property for a fee.”
- “Being used as a public or livery conveyance.”
- “Being used by a delivery network company driver who is logged in as a driver to a delivery network company’s digital network or is engaged in a prearranged delivery.”
It conflicts with TIC 1952.060(c).
The delivery exclusion conflicts with TIC 1952.060(c) because it excludes coverage when the insured is using a temporary vehicle to carry property or deliver goods for a fee.
TIC 1952.060(c) requires policies to cover a temporary vehicle that is:
- A private passenger automobile (without any business use restrictions).
- A pickup, utility vehicle, or van (gross vehicle weight rating of 14,000 pounds or less) not primarily used for delivering goods, materials, or supplies, other than samples.
- A pickup, utility vehicle, or van (gross vehicle weight rating of 14,000 pounds or less) used for farming or ranching.
Add an exception.
To fix the conflict, insurance companies should add an exception to the delivery exclusion like:
Example A: “This exclusion doesn’t apply to a temporary vehicle.”
Example B: “This exclusion doesn’t apply to a temporary vehicle that is:
- a private passenger auto;
- a pickup, utility vehicle, or van (gross vehicle weight rating of 14,000 pounds or less) not primarily used for delivering goods, materials, or supplies, other than samples; or
- a pickup, utility vehicle, or van (gross vehicle weight rating of 14,000 pounds or less) used for farming or ranching.”
Common objection: Exclusion applies when it’s not the primary use.
Companies sometimes file delivery exclusions with a temporary vehicle exception like:
“Being used to carry property for a fee; this does not apply to a temporary vehicle unless the primary use of the vehicle is to carry property for a fee.”
This exclusion still conflicts with TIC 1952.060(c) because the law requires policies to cover a temporary vehicle that is a private passenger automobile without adding business use restrictions. The law also requires coverage for a temporary vehicle used for farming or ranching.
Business use exclusion
If the policy has a liability exclusion like:
“Maintaining or using any vehicle while that person is employed or otherwise engaged in any business or occupation.”
It conflicts with TIC 1952.060(c).
The business use exclusion conflicts with TIC 1952.060(c) because it excludes coverage when the insured is using a temporary vehicle to deliver goods or for farming or ranching.
TIC 1952.060(c) requires coverage for a temporary vehicle that is:
- a private passenger automobile (without any business use restrictions);
- a pickup, utility vehicle, or van (gross vehicle weight rating of 14,000 pounds. or less) not primarily used for delivering goods, materials, or supplies, other than samples; or
- a pickup, utility vehicle, or van (gross vehicle weight rating of 14,000 pounds or less) used for farming or ranching.
Add an exception when needed.
Some insurance companies already have an exception to the business use exclusion like this:
“This exclusion does not apply to a private passenger auto, pickup or van that is your covered auto, or trailer used with either.”
If the business use exclusion has this exception, you don’t need to add an exception specifically for temporary vehicles.
If the business use exclusion does not have this exception, you must add an exception for a temporary vehicle like:
Example A: “This exclusion doesn’t apply to a temporary vehicle.”
Example B: “This exclusion doesn’t apply to a temporary vehicle that is:
- a private passenger auto;
- a pickup, utility vehicle, or van (gross vehicle rating of 14,000 pounds or less) that is not used primarily for delivering goods, materials, or supplies, other than samples; or
- a pickup, utility vehicle, or van (gross vehicle weight rating of 14,000 pounds or less) used for farming or ranching.”
Assumed liability exclusion
If the policy has an exclusion like:
“We do not provide coverage for damages or injuries resulting from liability assumed by contract.”
It conflicts with TIC 1952.060.
The assumed liability exclusion conflicts with TIC 1952.060 because it could exclude coverage for a temporary vehicle if the insured signs a contract with the repair facility assuming liability for the temporary vehicle.
Add an exception.
To fix the conflict, add an exception to the assumed liability exclusion like:
“This exclusion doesn’t apply to a temporary vehicle.”
Provide primary liability coverage for temporary vehicles
Most personal auto policies provide excess liability coverage for non-owned vehicles. However, TIC 1952.060 requires primary liability coverage for a temporary vehicle.
Add an exception to the Other Insurance section like:
“We will provide primary insurance for a temporary vehicle.”