HO 00 03 –ISO HOMEOWNERS 3 - SPECIAL FORM
COVERAGE ANALYSIS

 

DEFINITIONS

7. "Motor vehicle"

A motor vehicle is a vehicle that is self-propelled, runs on land or on water, and includes any trailer that is towed or carried by such a vehicle. All of the following would qualify as motor vehicles:

cars	trucks	vans	recreational vehicles	certain golf carts
motorcycles	mopeds	all terrain cycles	all terrain vehicles	snowmobiles
sports utility vehicles	motorized carts	self-propelled mowers	lawn tractors	motorized bikes, scooters and similar vehicles

 

Any vehicle that is motorized and self-propelled is considered to be a motor vehicle. Both of these elements must be present.

Related Court Case: "ATV Injury Not Covered By Homeowners Policy"

Items such as sleds, non-motorized carts, bikes and similar property do not qualify as motor vehicles.

SECTION II - EXCLUSIONS

This section of the policy has undergone the biggest change in the HO 2000 edition of the Special Form Policy. In an attempt to more clearly identify the exposures which ARE NOT covered by the homeowner policy's liability coverage part, ISO has reformatted and added new wording and terms to the Section II exclusions. The first four exclusions are self-contained and feature vehicles or crafts. Because of trends in the personal, recreational vehicle market, ISO has expanded the exclusion section.

 

A. "Motor Vehicle Liability"

1. The Special Form coverage parts Coverage E - Personal Liability and Coverage F - Medical Payments to Others do not protect an insured against an "occurrence" related to "motor vehicle liability" when the loss involves:

a. a government agency issuing a law or regulation that mandates a "motor vehicle" to be registered due to it being used on public roads or property.

b. This first excluded situation is not limited to vehicles that are licensed and registered for use on public roads or highways, but to any situation where a vehicle is required to be registered.

 

Example: Adam Appo lives in Resortville which is located in a very hilly area that is a haven for recreational vehicles, especially snowmobiles. Because of problems with unsupervised snowmobile operators, Resortville passed an ordinance requiring snowmobile owners to register the vehicles and place a special, oversized license plate on their snowmobile to make them easier to identify. Although the snowmobile is used off public roads, this registration requirement would exclude the snowmobile from coverage for a loss occurring in any part of Resortville where snowmobile operation required registration.

 

c. Coverage is also excluded when the "motor vehicle" (as defined by the Special Form policy's definition section) is:

(1) used in an organized or prearranged race, speed contest or other competition, including or preparing for the race

Note: Since this exclusion refers to prearranged or organized events, it would appear that a spontaneous event, such as a drag race, might be covered. Of course such a race would have to involve vehicles that aren't excluded by other parts of the policy.

(2) rented to other persons;

(3) a vehicle whose owner charges a fee to carry persons or property;

(4) a vehicle that is used in a "business," with the exception of a motorized golf cart while it is being used on a golfing facility.

 

Example: Bev and Lou Indelabow don't golf, but they love spending time at their retirement community's golf course. Since they have so many friends who golf and who get thirsty or hungry on the course, they bought a golf cart that they load up with snacks and drinks and sell to the golfers. But before proposing this idea to the nearest senior citizen, read the additional vehicle exclusions.

 

2. If a vehicle fails to fall under exclusion A.1, a motor vehicle is still not covered EXCEPT when the vehicle is:

a. on an "insured location" in dead storage;

 

Example: Craig clicks off his TV when he hears a loud crash and a child's scream coming from his garage. He is upset to find that his daughter's best friend, Cissy, has seriously hurt herself while playing on his "fixer-uppermobile." Specifically, it's a '99 ACORD with no doors and its battery removed. Cissy tripped while getting out of the car and ended up cutting her arms and breaking a leg (compound fracture). As she cries, she promises she'll never play "Car Trek" again. This loss would qualify for coverage under Craig's homeowner policy since the car was not capable of operation.

 

b. ONLY used in connection with maintaining an "insured's" residence;

c. made for use by handicapped persons and:

(1) the loss occurs while it is being used by a handicapped person, or is

(2) parked on an "insured location";

(Note that even if a vehicle such as a motorized wheelchair is involved in a loss, the loss is not eligible for coverage UNLESS the wheelchair is being USED by a handicapped person.)

d. a recreational vehicle that is MADE as a recreational vehicle to be used off public roads AND

(1) is NOT owned by an insured, or

(2) IS owned by an insured, but the loss occurs on an insured location. Note that the insured location must qualify as such under the policy's definition;

 

Examples: an insured hits a hiker with his all-terrain vehicle while riding through a city park - not covered, owned vehicle an insured borrows his neighbor's lawn tractor and smashes it into a car parked in another neighbor's driveway - not covered, not a recreational vehicle an insured hits a neighbor's child who was crossing his yard at the same time the insured was driving a trailbike from his driveway to a trailer located in the street in front of his home - covered, owned RV and the accident is on an insured location.

 

e. a motorized golf cart which is owned by an insured and which is built for carrying 4 or fewer persons and is not capable of travelling faster than 25 mph on level ground. Further, the golf cart MUST be operated within the legal boundaries of the following:

(1) a golfing facility at which the golf cart is either kept or is being used by an insured to:

(a) play golf or some other activity sanctioned at the facility (interesting, what if the facility sanctioned golf cart races?)

(b) ride between the areas where golf carts or motor vehicles are parked or stored

(c) cross public streets in order to get to other areas of the golfing facility

(2) A private community which, with the consent of the community's property-owner association, allows golf carts to travel upon its roads. However, the person operating the cart must have a residence located within that private community.

Obviously the HO 2000 edition of the Special Form policy has built upon the philosophy of its predecessors to tightly control the exposure to any imaginable liability related to motor vehicles.

 

Example: Sara Loftylife and Xena, her daughter, await the start of Joustville's 41st Annual Cart Race. The ladies spent a lot of time over the last two months building the cart, practicing and preparing for the event. Sara came in third place in the 21st Annual Cart Race and they both hope that Xena can do even better. They quickly have other concerns as, halfway through the downhill course, one of their cart's front wheels falls off and Xena and the cart violently crash into several cart race spectators. The crash hurts a half dozen people ranging from broken bones to serious lacerations. Luckily, since the injuries are the result of a gravity-propelled vehicle, the liability for the injuries is covered by the homeowner policy.

 

Example: Let's look at a different scenario. Sara Loftylife and her daughter Xena are waiting for the start of Joustville's Third Annual Motorized Cart Challenge. Sara is thrilled as Xena is leading the race with only one more lap to go. Suddenly Xena loses control of the motorized cart and she slams into several spectators. Again the crash hurts a half dozen people ranging from broken bones to serious lacerations. Unfortunately for the Loftylifes, since the injuries are the result of a motorized vehicle, all liability for the injuries is excluded by the homeowner policy.

 

However, even with the latest wording, it is not always clear that a vehicle's involvement with a loss will result in it being ineligible for HO coverage.

Related Court Case: "Motor Vehicle Exclusion Did Not Apply To Injury By Forced Removal From Parked Vehicle"

 

 

ISO COMMERCIAL GENERAL LIABILITY COVERAGE FORMS ANALYSIS

 

2. Exclusions

 

The insurance coverage provided does not apply to any of the following, except as noted or indicated:

 

g. Aircraft, Auto or Watercraft

 

Insurance does not apply to bodily injury or property damage arising out of the ownership, maintenance, use, including operation, loading or unloading, or entrustment to others of any aircraft, auto or watercraft owned, operated by or rented or loaned to any insured. This exclusion applies even if a claim alleges negligence or other wrongdoing in supervising, hiring, employing, training or monitoring of others by any insured.

Example: A watercraft owned by the insured and rented to its employees for pleasure use is not properly maintained and an employee is injured when the watercraft sinks. Coverage does not apply to the injury.

This exclusion does not apply to:

• Watercraft ashore at locations owned by the named insured;
• Watercraft not owned by the named insured less than 26 feel long and not used to transport people or property for a fee;

Example: The named insured rents a pontoon boat for an afternoon sales presentation and uses a small hibachi grill to cook appetizers. The grill causes a fire and, when the guests move away from it, the weight shift causes the boat to tip and some of them fall into the water. Several are injured. Coverage applies but the owner of the boat would also be involved in any subsequent lawsuits.

• Parked autos on or on the ways next to locations owned or rented by the named insured. Such autos may not be owned by, rented or loaned to the named insured or any insured;

Example: The named insured arranges for valet parking during a dinner being held for its top customers at its location. One of the valets accidently puts a car being parked in reverse and pins a woman walking behind it against another vehicle. Coverage applies to the bodily injury sustained by the woman.

• Liability assumed under any insured contract applying to the ownership, maintenance or use of aircraft or watercraft

Example: The named insured charters an emergency flight to meet an important client and the charter company requires it to sign a hold-harmless agreement.

• Bodily injury or property damage arising out of operation of machinery or equipment attached to or part of a land vehicle that would qualify as mobile equipment except for it being subject to a compulsory, financial responsibility or other motor vehicle insurance law in the state in which it is licensed or principally garaged. This includes operation of certain machinery included in the definition of mobile equipment.

Example: An all terrain vehicle (ATV) is required to be licensed. A pulley welded to the back of it and used to pull a log suddenly swings the log, striking a person passing by. Coverage applies in this case because the operation of the pulley caused the accident, not the ATV.

Example: A specially modified pickup truck carrying well drilling equipment accidentally strikes the side of a building while maneuvering into position over a well, causing damage to the building. Coverage applies to the building damage.