ON THE MOVE
New ISO homeowners forms update coverage for conveyances
It would be useful if ISO could define a logic for liability coverage that would apply equally
to air, land, and watercraft, but the realities of transit technology don’t allow for that.
By Joseph S. Harrington, CPCU
“You can tell the men from the boys by the size of their toys.” Maybe, but it’s not always easy to tell whether and how the ownership and/or use of certain “toys” is insured for bodily injury and property damage (BI/PD) liability.
As households acquire more types of vehicles—drones, model boats, off-road vehicles, you name it—personal lines agents and brokers must be prepared to explain the extent of liability coverage for such conveyances in a standard homeowners policy. If producers don’t do so, households may find themselves without coverage for some severe liability claims, with no option but to lodge an errors and omissions claim against their agent.
In the 2022 revision of its Homeowners program, the Insurance Services Office (ISO) introduces new and revised provisions addressing liability coverage for aircraft, watercraft, and motor vehicles owned and/or used by households.
As is often the case with such revisions, subtle changes in wording can have a significant impact on coverage. For example, by extending the definition of motor vehicle from being “self-propelled” to also being “capable of being self-propelled,” ISO has incorporated now-popular motorized scooters and motorized bicycles into policy provisions addressing motor vehicle liability.
Sometimes, a lot of words are needed to express a simple idea. In the 2022 forms, riding lawn mowers are now exempted from the liability exclusion for use of owned vehicles away from insured premises, if a riding mower is being used to mow a lawn at a location other than the insured premises. Translation: An insured has liability coverage when riding his or her mower to mow someone else’s lawn.
Ownership key to coverage
It would be useful if ISO could define a logic for liability coverage that would apply equally to air, land, and watercraft, but the realities of transit technology don’t allow for that. Nonetheless, the 2022 ISO Homeowners revision features some form changes that introduce more consistency in approach to these exposures, while leaving certain important distinctions.
The matrix below indicates there is some common logic to homeowners liability coverage for aircraft, land vehicles, and watercraft, with some necessary breaks in that logic. Yet, there’s one abiding criterion for determining homeowners coverage for the three categories of conveyances: whether they are owned by the insured or not.
ISO’s latest revision suggests that homeowners insurance will continue to cover liability arising from incidental use of non-owned conveyances. But if you own an aircraft, a land vehicle, or watercraft capable of carrying people or cargo, you have acquired a vehicle exposure and are expected to insure it accordingly.
ISO Homeowners Vehicle Liability Provisions (paraphrased)
| Land-based vehicles | Aircraft | Watercraft | |
| Non-motorized vehicles | BI/PD claims arising from pedal-only bicycles and foot-powered skateboards, scooters, etc., are covered whether the vehicles are owned or non-owned, or used on or away from insured premises. | Ownership and use of hot-air balloons, hang gliders, and parachutes effectively excluded from coverage as “contrivance[s] used or designed for flight.” | BI/PD claims arising from canoes, kayaks, rowboats, and other human-powered craft are covered, as they fall outside the exclusion for watercraft “designed to be propelled … by wind, engine power, electric motor.”
Sailboats up to 26 feet in length covered for BI/PD claims. |
| Hobby or model craft | No explicit provision for coverage; subject to policy terms for non-auto vehicles. | Coverage for BI/PD claims limited to hobby/model craft not designed to carry people or cargo; no restriction regarding owned or non-owned or location of use.* | |
| Low-speed vehicles | In the base form:
· BI/PD claims arising from low-speed, battery-powered vehicles for young children covered whether the vehicles owned or non-owned, on or off premises. Optional endorsement: · Adds coverage for off-premises use of owned vehicles that can attain up to 28 mph on level ground. |
No provision | No provision |
| Motor vehicle registration requirements | No coverage for vehicles registered for use on public roads or in public spaces. | “ | “ |
| Motor vehicles designed to service a residence or assist the handicapped | Specific coverage provided as exceptions to motor vehicle liability | “ | “ |
| Motor vehicles designed for recreational use off public roads (e.g., motorbikes, all-terrain vehicles, etc.)
NOTE: BI/PD coverage applies to use of golf carts (up to 25 mph) at golf facilities and in self-governed communities where golf carts are allowed for transit. |
In the base form:
· BI/PD coverage provided for on- or off-premises use of vehicles not owned by the insured. · BI/PD coverage provided for on-premises use of owned vehicles. · No coverage for use of owned vehicles away from insured premises. By optional endorsement: · Adds coverage for off-premises use of owned vehicles that can attain up to 28 mph on level ground. |
No coverage except for model/hobby craft | In the base form:
· Coverage for both owned and non-owned craft up to 25 horsepower. · Coverage for non-owned watercraft with greater than 25 hp (subject to size limits). · No coverage for owned watercraft with greater than 25 hp. |
*In each case, coverage is established by excluding aircraft and watercraft not designed to carry people or cargo from the definition of “aircraft liability” and “watercraft liability,” respectively.
The author
Joseph S. Harrington, CPCU, is an independent business writer specializing in property and casualty insurance coverages and operations. For 21 years, Joe was the communications director for the American Association of Insurance Services (AAIS), a P-C advisory organization. Prior to that, Joe worked in journalism and as a reporter and editor in financial services.
