The Standard Non-Owned Automobile Policy is commonly found as
part of many insureds' Commercial General Liability policy
(sometimes included as an Endorsement to the CGL policy); however,
interpretation of the policy has received little judicial review in
The typical wording of the non-owned auto policy provides
coverage for the insured for loss or damage arising from the use or
operation of any automobile not owned in whole or in part by or
licensed in the name of the Insured.
On its face, the wording appears straightforward. For example,
imagine the situation where an employee of Company X has a motor
vehicle accident in the employee's personally owned vehicle,
while acting on Company X business. Company X is sued for vicarious
liability and the non-owned auto policy is triggered for Company X
because the loss arose out of a vehicle not owned or licensed by
Company X. However, there is no coverage for the employee, as the
vehicle was owned by the employee. Therefore, for the employee, her
own auto insurance responds, not Company X's non-owned auto
However, coverage under this particular policy can become
convoluted where the vehicle at issue is a rental car, is borrowed
from a client or friend, or is borrowed from an employee's
It is this last scenario that was reviewed by the B.C. Court of
Appeal in Canadian Direct Insurance Incorporated v. Lombard
General Insurance Company of Canada, 2013 BCCA 523. In
that case, the Court looked at whether an employee of the Sto:Lo
Nation, which had a non-owned auto policy with Lombard, was an
Additional Insured under the policy. The case was complicated by
the fact that the employee was operating a vehicle that was leased
by his father from Ford.
The Court pointed to the wording of the Additional Insured
section contained within the non-owned policy wording, as
a. Additional Insureds
We agree to indemnify in the same manner and to the same extent
as if named herein as the Insured, every partner, officer or
employee of yours who, with the consent of the owner thereof,
1) in your business as stated on the Coverage Data
Page, any automobile not owned in whole or in part by or
licensed in the name of
a) you, or
b) such additional Insured Person, or
c) any person or persons residing in the same
dwelling premises [as] you or such additional Insured Person,
2) any automobile hired or leased in the name
of the Insured except any automobile owned in whole or in
part or licensed in the name of such additional Insured
In its analysis, the Court confirmed that if the vehicle was
"owned" or "licensed" by the employee's
father, there would be no coverage for the employee under the
policy. The Court held that the vehicle was not "owned"
by the employee's father, rather it was
"leased". It then turned to consider whether the
vehicle was "licensed" in the name of the employee's
father. The Court ultimately found that the vehicle was licensed in
the employee's father's name; therefore, there was no
coverage for the employee. In so finding, the Court stated:
[The policy] provides that a Sto:Lo Nation employee is not an
additional insured if the vehicle being driven is licensed in the
name of the Sto:Lo Nation, the employee, or a person with whom the
employee resides... It follows that, because Norman Dunn and his
son were residing together, and the vehicle was licensed in Norman
Dunn's name, Nathan Dunn was not an additional insured under
the Lombard Policy...
The Court of Appeal's decision confirms the intent of the
non-owned policy, which is to provide coverage in only select
situations. Where the vehicle at issue is owned or licensed by the
insured's employee, or is owned or licensed by a person
residing with the employee, there is no coverage under the
non-owned auto policy.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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