Property and Casualty Insurance Practice Exam

Which of the following is an example of a nonowned auto?

1. A car owned by a family member

2. A rental car

3. A motorcycle owned by the insured

4. An auto shop loaner vehicle

The correct answer is: A rental car

The designation of a nonowned auto within the context of insurance typically applies to vehicles that are not owned by the insured but are still in their possession or use. A rental car serves as a prime example of this. When an insured rents a vehicle, they are granted temporary use of that vehicle without holding ownership. This understanding is crucial in many policies, as it often dictates coverage implications and liability responsibilities. For instance, if someone is in an accident while driving a rental vehicle, the insurance policy may provide coverage for that incident under nonowned auto provisions, which protects against personal liability while using a vehicle that isn't theirs. In contrast, a vehicle owned by a family member is typically categorized as owned by someone in the household, therefore it does not fit the classification of nonowned. A motorcycle owned by the insured is explicitly owned and thus does not qualify. Similarly, a loaner vehicle from an auto shop would generally not be classified as nonowned if it's assigned to the insured for their use, as it represents a specific arrangement of temporary possession linked to service rather than personal ownership or rental status.