What I Hope Clients Didn‘t Buy Their Kids for Christmas or Hanukkah Presents
So … hoverboards … are all the rage … thank you Justin Bieber ...
Insurance Coverage Nightmare
I’m not talking about the fire hazard issue … but that has been a problem due to the lithium-ion batteries that power these hoverboards. Some have burst into flames while being ridden, others while plugged in and charging and still others while just sitting there. There have been 11 fires in 10 states.
Is paying more … for the expensive hoverboard the answer?
Interesting, the articles I read don’t guarantee the fire safety of ANY hoverboard. I guess I would want to make sure that it meets US safety standards. But … I wouldn’t buy one for anyone I loved … anyway.
Property Coverage and the ISO HO Policy
Good news … when it burns the house down, the HO policy will pay. I “assume” that the HO carrier will then subrogate against the manufacturer. The fire damage to the house and the contents will be covered.
If just the hoverboard catches fire or is stolen, then there is a problem.
The HO-2000/2011 defines “motor vehicle” as:
7. “Motor vehicle“ means:
a. A self-propelled land or amphibious vehicle; or
Coverage C Personal Property excludes “motor vehicles” under the HO-2000 and 2011.
4. Property Not Covered
We do not cover:
c. “Motor vehicles.“
(2) We do cover “motor vehicles“ not required to be registered for use on public roads or property which are:
(a) Used solely to service an “insured‘s“ residence; or
(b) Designed to assist the handicapped;
Self-propelled vehicles are ONLY covered if they are:
- not subject to registration
- used to service the premises
- or designed to assist the handicapped.
Recreational self-propelled vehicles are NOT covered! So, the hoverboard is not covered.
Coverage C Personal Property under the ISO HO-91 excludes “motorized land conveyances.”
Property Not Covered. We do not cover:
3. Motor vehicles or all other motorized land conveyances.
We do cover vehicles or conveyances not subject to motor vehicle registration which are:
a. Used to service an “insured’s” residence; or
b. Designed for assisting the handicapped;
Is a hoverboard a “motorized land conveyance”?
Dictionary.com defines “motorized” as:
- to furnish with a motor, as a vehicle.
- Equipped with a motor
“motor” is defined as:
1. a comparatively small and powerful engine, especially an internal-combustion engine in an automobile, motorboat, or the like.
2. any self-powered vehicle.
3. a person or thing that imparts motion, especially a contrivance, as a steam engine, that receives and modifies energy from some natural source in order to utilize it in driving machinery.
Is a lithium-ion battery powered hoverboard a motorized land conveyance? Kind of sounds like it is “motorized”. If it is, there is no coverage unless it is
- not subject to registration and
- used to service the premises or
- designed to assist the handicapped.
There is a similar restriction to the HO-2000/2011. Recreational vehicles are NOT covered!
The REAL Reason for the Article is the LACK OF LIABILITY Coverage…
Under the ISO HO-2000/2011, the hoverboard IS a “motor vehicle” and liability coverage for owned “motor vehicles” is QUITE limited!
The ISO HO-2000/2011 defines “motor vehicle liability” as:
1. “Aircraft Liability”, “Hovercraft Liability”, “Motor Vehicle Liability” and “Watercraft Liability”,
subject to the provisions in b. below, mean the following:
a. Liability for “bodily injury” or “property damage” arising out of the:
(1) Ownership of such vehicle or craft by an “insured”;
(2) Maintenance, occupancy, operation, use, loading or unloading of such vehicle or craft by any person;
(3) Entrustment of such vehicle or craft by an “insured” to any person;
(4) Failure to supervise or negligent supervision of any person involving such vehicle or craft by an “insured”; or
(5) Vicarious liability, whether or not imposed by law, for the actions of a child or minor involving such vehicle or craft.
Which means ALL BI/PD arising out of a self-propelled vehicle regardless of
- Who owns it
- Who uses it
- Insured’s negligent supervision of it
Is part of this definition. Section II Personal Liability and Medical Payments to Others then
addresses this broad definition by a wicked exclusion!
SECTION II – EXCLUSIONS
A. “Motor Vehicle Liability”
1. Coverages E and F do not apply to any “motor vehicle liability” if, at the time and place of an “occurrence”, the involved “motor vehicle”:
a. Is registered for use on public roads or property;
b. Is not registered for use on public roads or property, but such registration is required by a law, or regulation issued by a government agency, for it to be used at the place of the “occurrence”; or
Well, the hoverboard isn’t subject to registration so is there coverage? No … keep reading.
2. If Exclusion A.1. does not apply, there is still no coverage for “motor vehicle liability” unless the “motor vehicle” is:
d. Designed for recreational use off public roads and:
(1) Not owned by an “insured”; or
(2) Owned by an “insured” provided the “occurrence” takes place on an “insured location” as defined in Definitions B. 6. a., b., d., e. or h.; or
So … a “motor vehicle” will ONLY have Section II coverage if it is not subject to registration AND is designed for recreational use off public roads.
Ok, this could apply to a hoverboard …
However, if it is OWNED it is only covered on CERTAIN “insured locations.” Pretty much once theinsured takes the hoverboard OFF the “residence premises,” there will be NO liability or medical payments to others coverage.
“Horsing around” in the public road or sidewalks or playgrounds and bumping into someone who then falls and cracks their head on the pavement and is seriously injured will not be a covered situation. And, if there is no possibility of coverage, there is no defense either. When the parents who bought this hoverboard for their child get sued for negligent supervision they will not havecoverage or defense, either.
The ISO HO-2011 adds back Section II coverage for:
(2) Owned by an “insured” provided the “occurrence” takes place:
(b) Off an “insured location” and the “motor vehicle” is:
(i) Designed as a toy vehicle for use by children under seven years of age;
(ii) Powered by one or more batteries; and
(iii) Not built or modified after manufacture to exceed a speed of five miles per hour on level ground;
But this language will NOT help the use of hoverboards because they are NOT designed for
- Children under 7
- These conveyances are designed to go faster than 5 miles per hour
The ISO HO-91 Section II and “Motorized Land Conveyances”
Coverage E Personal Liability and Coverage F Medical Payments to Others excludes injury:
f. Arising out of:
(1) The ownership, maintenance, use, loading or unloading of motor vehicles or all other motorized land conveyances, including trailers, owned or operated by or rented or loaned to an “insured”;
(2) The entrustment by an “insured” of a motor vehicle or any other motorized land conveyance to any person; or
(3) Vicarious liability, whether or not statutorily imposed, for the actions of a child or minor using a conveyance excluded in paragraph (1) or (2) above.
This exclusion does not apply to:
(1) A trailer not towed by or carried on a motorized land conveyance.
(2) A motorized land conveyance designed for recreational use off public roads, not subject to motor vehicle registration and:
(a) Not owned by an “insured”; or
(b) Owned by an “insured” and on an “insured location”;
There is no Coverage E (BI or PD) or Coverage F Medical Payments to Others arising out of a motorized land conveyance owned or operated by an insured including the parent’s vicarious
liability for it, UNLESS it is designed for recreational use off public roads.
The good news is that if it is OWNED, an insured can use it on ANY “insured location.” Howeverpublic roads and public sidewalks, parks, parking lots, etc., will NOT be considered an “insured location.” And, again …
“Horsing around” in the public road or sidewalks or playgrounds and bumping into someone who then falls and cracks their head on the pavement and is seriously injured will not be a covered
situation. And, if there is no possibility of coverage, there is no defense either. When the parents who bought this hoverboard for their child get sued for negligent supervision, they will not have coverage or defense, either.
Article credit: Irene Morrill, CPCU, CIC, ARM, CRM, CRIS, LIA, CPIW; Vice President of Technical Affairs