No. The car owner's insurance is the primary liability coverage as she was driving with permission of the owner and is defined as an insured under that policy.
In certain circumstances. Usually, the requirement is that it is a casual borrowing the car. If the Aunt is letting the wife drive for an extended period or (worse) if they cohabitate, they usually won't cover this. I'd report it to both.
The "legal" reality is just the opposite. The aunt's policy would be the default primary policy and only in extreme circumstances could the claim be denied and the policy rescinded.
The Ohio personal auto policy liability section defines "Insured" as:
1. You or any "family member" for the ownership, maintenance, or use of any auto or "trailer."
"Family member" means a person related to you by blood, marriage, or adoption who is a resident of your household.
2. Any person using "your covered auto" with your permission provided that the actual operation or use is within the scope of such permission.
Above is quoted directly from the policy form which I present for your perusal.
https://www.omig.com/static/forms/pdf/A-10(2010-12).pdf
Note that number 2 does not limit permissive use to just a "casual borrowing" and since the driver, in this case, was certainly a "family member" (niece) it wouldn't matter if the niece was living with the aunt and used the car regularly.
Where a problem could arise is if the aunt conceals the situation from her insurance company and that concealment is
material to the underwriting of the risk.
Courts have routinely ruled that materiality must involve any of the following:
1 - The insurance company would have declined to write the insurance in the first place.
2 - The insurance company would have charged more for the insurance.
3 - The insurance company would have limited the coverage.
In the absence of any of the three elements the concealment would not be material and the claim would not be denied. Denial and rescission are serious matters and insurance companies don't make that decision without contemplating the serious legal consequences that are involved.
Nothing in the OP's situation suggests that any material concealment, or any other non-compliance with the aunt's policy, occurred.
