I often get pushback or complaints from my clients if a roommate or other household member shows up in the reports a company orders. My clients will almost always ask, ‘If they don’t drive my car, why do they have to be disclosed and I have to add them to my policy?’ The reason is pretty straightforward, actually. Personal Injury Protection (PIP) is a household-wide coverage. In Oregon, any member of the household can file a PIP claim on the auto insurance of any other member of the household, even if that other person was not involved in the accident.

So let’s pretend that Brett has a roommate. The roommate is injured in an accident (in/on/near a vehicle) as let’s say a passenger. If they exhaust the PIP on their own policy that covers the vehicle they were injured in (which can easily happen at only $15k in coverage), they can file additionally on Brett’s policy simply because they are a member of his household. I can assure you that when attorneys get involved, this can happen.

Insurance is about risk, and the insurance companies want to know what the true risk is. It’s just a small part of the policy, but the risk of having to pay out $15k for each member of the household is still there. Brett could exclude them from driving his car, but they are still included in the household rating for the medical coverage. Not advising the insurance company would be a material misrepresentation, and that is insurance fraud if they want to pursue it. No one really reads the application, but Brett answers this question and signs his name to it, stating that he has included all legally required drivers and household members.

No one likes to have a claim denied because of a failure to understand policy coverage and exclusions. Most people see insurers as big, bad insurance companies, but they warn people in writing ahead of time in the policy’s language.