SECTION II - EXCLUSIONS
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 motor vehicle which is actually registered to be
used on public roads or property.
b. Vehicles that are not registered for public road
use but that are required by the governmental authority to be registered. The
registration requirement is determined by the location where the place where
the occurrence happens.
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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.
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c. Coverage is also excluded when the “motor vehicle”
(as defined by the Special Form policy’s definition section) meets any of the
following conditions:
(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.
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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.
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2. If a vehicle fails to fall under exclusion A.1, a motor vehicle is still not
covered EXCEPT when the vehicle meets one or more of the following conditions:
a. Is on an “insured location” and in dead storage
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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.
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b. ONLY used in connection with maintaining an
“insured’s” residence
c. Made for use by handicapped persons and the loss
occurs when either of the following is true:
(1) The vehicle is being used by a handicapped person
(2) The vehicle is 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 or is parked.)
d. A recreational vehicle that is MADE as a
recreational vehicle to be used off public roads AND one or more of the
following apply:
(1) The vehicle is NOT owned by an insured
Note: Item d.(2) was expanded under the 05 11
Edition of the HO Special Form Policy. Item (2) (b) is the added item.
(2)(a) The vehicle 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.
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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 trail bike 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.
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(2)(b) The vehicle is owned by an insured, but the
loss occurs away from an insured location. However, this off-location protection
is quite narrow. It applies only when the loss involves a vehicle that is
designed to be used by young children (6 years and younger) as a toy, is
battery-powered and is incapable of moving faster than 5 mph on level ground.
In other words, the policy responds to, essentially, losses resulting from
motorized, pre-school toys.
Note: The 5 mph restriction applies whether the
motorized toy’s speed capability was provided by the manufacturer or is due to
later modification.
Of course, though
the coverage is narrow; it is still valuable that the Special Form policy could
respond to hazards caused by certain motorized property.
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Example: The Kaos family gave their middle child a
Motorized Safari Jeep for her 4th birthday. The toy was designed
with a top speed of 4 mph. While operating the jeep on the neighbor’s long,
new asphalt driveway, the jeep strikes and knocks down the 72 year old man
who lives there.
- Scenario 1:
The accident happened while the 4 year old was driving – Incident is
covered.
- Scenario 2:
The accident happened while the 4 year old was driving the jeep which
was modified to move at 7 mph; the speed at the time of the accident –
Incident is NOT covered.
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e. A motorized golf cart which is owned by an insured
and which is built for carrying four or fewer persons and is not capable of
traveling 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 do any of the following:
(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.
The Special Form
policy is designed to tightly control the exposure to any imaginable liability
related to motor vehicles.
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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.
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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.
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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"
