Life was so much simpler when people didn’t sue each other over everything, lawyers didn’t scour insurance policies to find coverage for things never imagined and insurance companies weren’t constantly revising their policies to stay ahead of the game. But the fact is, that is the world we now live in and it is important for consumers to pay a little more attention to the insurance policies they once assumed covered “everything” (Even though they were never quite like that!).
Case in point is an activity that occurs thousands of times every summer weekend across our country. Someones son or daughter runs down the street with the riding lawn mower to pick up a few bucks mowing some lawns. Or a good neighbor takes his riding mower next door to take care of the neighbors lawn while they are on vacation. In those situations a few years ago, if the mower were to pick up a rock and throw it through the window of a passing car, the home owner’s insurance policy of the owner of the mower would have paid the bill. That has changed.
What if you loan your riding mower to the neighbor and forget to mention the sticky throttle? The neighbor gets off the mower and it runs over his foot, sending him to the emergency room. (Before you scoff, the Consumer Product Safety Commission reports that riding mower accidents kill 75 people a year and injure another 20,000) Are you liable? Maybe, and more importantly, would your home owner’s policy pay for your legal defense?
Up until the year 2000, the answer would normally have been “yes” to these scenarios above for most home owner policies. That’s because the standard policy language used to say that there was Property and Liability coverage for “Vehicles or conveyances not subject to motor vehicle registration which are used to service an ‘insured’s’ residence”. Under that definition, people with larger lots who used a 4-wheeler to plow the snow in the driveway, check the sprinklers and otherwise get around the place also had coverage if they happened to take the vehicle on their once a year hunting trip. If, on the hunting trip, they bounced someone off the back of the vehicle or even if the vehicle were stolen, the home owner’s policy would cover it as long as it met the definition above. So what changed?
In 2000, ISO (Insurance Services Office) changed the standard homeowners policy in several respects. Most insurance companies either use the ISO policy or at least adopt much of their language into their own policy forms. One of the changes they made in 2000 was to insert just one word into the definition in the previous paragraph which opened up a coverage gap for home owners all across the country. In the new policy, ISO said the policy excluded coverage for all motor vehicles, however “We do cover ‘motor vehicles’ not required to be registered for use on public roads or property which are used solely to service an ‘insured’s’ residence.” Did you see it? Notice the word solely. That changes everything dramatically.
Obviously if your son or daughter has your riding mower down the street making a little money, the mower is not used “solely” to service your residence. Same with the 4-wheeler. The moment you leave the residence you lose both Liability and Property coverages for those items. Under the scenarios outlined above: NO COVERAGE. In the case of a liability claim, you get your own lawyer and pay any damages out of pocket. And, should the vehicle get stolen or damaged while off the premises (other than maybe at the repair shop), there is no coverage for that loss either. But what is even worse is that the language of the policy, as it is written, could even exclude coverage when the vehicle is at your house.
Let’s say your son takes the riding mower down the street, mows Grandma’s yard, then comes back and parks the mower in your back yard. That night the mower is stolen, so you call your insurance agent. The adjuster comes out and, in explaining the theft, happen to mention that your son parked the mower in the yard after returning it from Grandma’s. Whoops! You see, you’ve just told the adjuster that your mower is definitely not used “solely” to service your residence, haven’t you? Re-read that definition above and you will see that once it doesn’t fit the definition, it can never fit the definition again. One insurance policy analyst suggested that the only solution would be to get rid of that riding mower and get a new one! And bear in mind that the same problem would exist if you were using the mower a week later to mow your own yard and threw a rock threw the neighbor’s car window. Still no coverage.
I did talk to an underwriter from one company (Safeco) who assured me that they would not interpret the policy that strictly and would cover the “on premise” losses described above. That’s nice to know, but you should be aware that such an “interpretation” would be at the discretion of the insurance company because the actual policy language is quite clear. This is one of those aggravating situations where there used to be coverage a few years ago but now there is not.
The final, and standard, caveat is that not all policies are alike. All the home owners policies I have examined so far contain this new wording but your policy may not. If this situation might apply to you or someone you know, then get the policy and read it. Better now than after the claim is denied.
