Richardson, Richardson, & Campbell
Omnibus Clauses in Auto Insurance
An omnibus clause in an automobile liability insurance policy extends coverage under the policy to those using an insured automobile with a named insured's express or implied permission. The clause is also known as an additional insureds clause. State statutes generally require automobile liability insurance companies to provide omnibus clauses in their insurance policies.
Statutes are expressions of public policy. Any liability insurance policy provisions that conflict with omnibus-insured statutes are void. The purpose of mandatory automobile liability insurance is to protect the public by ensuring that damages will be paid. Insurance companies cannot be allowed to limit persons covered as insureds by automobile liability insurance policies.
Where a mother had given her son permission to drive an insured automobile, the insurance company could not deny liability coverage for an accident caused by the son while delivering food with the automobile despite a food delivery exclusion in the policy. The insurance company's desire to avoid the risk inherent in food deliveries conflicted with a state statute requiring the policy's omnibus clause, which made the son an insured under the policy. The food delivery exclusion clause was void.
There are statutory exceptions for certain types of vehicles for which insurance coverage need not include an omnibus clause. For example, it is not necessary in some states to provide omnibus coverage for leased vehicles within the context of a garage liability policy.