Welcome to the bustling of activity that is fall–back to school, football, cooler days and the inevitable countdown of shopping days until Christmas. But for just one more moment, let's hold on to that summer conceit musically expressed from Mungo Jerry to George Gershwin that life can be slower, simpler, and a little extra time spent wisely now will pay off in numerous ways later.

Consider the seemingly complicated insurance query recently winged my way by alert reader Pam. She writes:

We have an interesting situation. One of our insureds is a Boy Scout troop leader and there are multiple leaders in the group. They have several trailers and a lot of camping gear, including canoes (some canoes belong to the troops, some to the city, some to private individuals). The leaders use the trailers at random (they just pick one and go), and pull the canoes and camping gear. They are trying to decide who should be insuring what, and the correct way to make sure everything is covered. Can you help us sort this, or at least point us in the right direction?

If only folks arranged their affairs with insurance purposes in mind, our lives and jobs would be so much easier. But alas, they put personally owned vehicles on commercial auto policies (often without telling us), move their property into trusts while still insisting they own everything, change from sole-proprietorships to LLCs without a word, and sign contracts they've never read while assuming we are covering it all.

Don't these scouting folks realize if they would just title all the boats, trailers and camping gear to one entity, life–and insurance coverage–would be a slam dunk? But no, they have to spread ownership and usage willy-nilly across the landscape, then come crawling to poor Pam to solve everything! So what else is new?

But what may be convoluted and complicated due to the lackadaisical treatment of potentially significant loss exposures is still to be analyzed with a summertime approach: a simple, straightforward “step at a time” process.

First, divide the coverage issues. Due to limitations in space, and the apparent intent of Pam's question, I am going to focus only on the liability side of the coverage questions. (For those interested in the property coverages, check out Mike Edwards' excellent article on the IIABA Virtual University.)

The canoes are easy. For those personally owned, all ISO HO forms cover liability with no limitations. For those owned by commercial entities, just the opposite: the standard CGL has a blanket exclusion for watercraft except “while ashore on premises you own or rent.” Liability coverage for such canoes requires an endorsement.

Now to the trailers. Because the trailers are being pulled by scout leaders using their personal vehicles, let's first look at the personal lines forms.

Here are the applicable provisions from the ISO PAP (PP 0001 0105).

From the definitions section:

I. “Trailer” means a vehicle designed to be pulled by a:
1. Private passenger auto; or
2. Pickup or van.

J. “Your covered auto” means:
1. Any vehicle shown in the Declarations.
3. Any “trailer” you own.

From the Coverage A Insuring Agreement:

B. “Insured” as used in this Part means:
1. You or any “family member” for the ownership, maintenance or use of any auto or “trailer.”
2. Any person using “your covered auto.”
3. For “your covered auto,” any person or organization but only with respect to legal responsibility for acts or omissions of a person for whom coverage is afforded under this Part.
4. For any auto or “trailer,” other than “your covered auto,” any other person or organization but only with respect to legal responsibility for acts or omissions of you or any “family member” for whom coverage is afforded under this Part. This Provision (B.4.) applies only if the person or organization does not own or hire the auto or “trailer.”

Other insurance: If there is other applicable liability insurance we will pay only our share of the loss. Our share is the proportion that our limit of liability bears to the total of all applicable limits. However, any insurance we provide for a vehicle you do not own, including any vehicle while used as a temporary substitute for “your covered auto”, shall be excess over any other collectible insurance.

First, boat trailers of the type generally used for canoes meet the definition in the PAP. Also note that under the definition of “Your Covered Auto,” J.3 makes two things clear: first, owned trailers as defined are included; and (2) they do not have to be shown in the declarations for coverage to apply.

Reviewing the insuring agreement, paragraph B.1 clearly provides coverage for leaders while pulling these trailers, whether owned or not. B.2 provides coverage to other leaders while pulling the insured's owned trailer. B.3 and B.4 further provide coverage for the contingent liability of the other leaders, the Boy Scout troops or the city for any liability arising out of an individual insured's pulling of the trailer, unless the other entity owns the specific trailer involved.

And lastly for the PAP, the Other Insurance clause makes clear all of the provided coverage will be excess to any other applicable insurance when the trailer in question is not owned by the insured pulling it.

Before leaving the PAP, some may question whether Coverage A exclusion A.5 may apply in this scenario:
5. For that “insured's” liability arising out of the ownership or operation of a vehicle while it is being used as a public or livery conveyance. This Exclusion (A.5.) does not apply to a share-the-expense car pool.

I agree with the many who hold this exclusion is basically intended for situations where compensation is involved. Since I don't believe hauling canoes for Boy Scout outings meets this criterion, the exclusion will not apply.

What if the PAP should prove insufficient for personal liability, or in some rare cases the personal owner of the trailers does not have a PAP? Will the insured's homeowners policy respond?

The homeowners policy creates an interesting situation for trailer liability coverage. All of the homeowner liability exclusions in the current ISO forms (ending with edition date “1000″) focus on “motor vehicles” defined as follows:

7. “Motor vehicle” means:
a. A self-propelled land or amphibious vehicle; or
b. Any trailer or semitrailer which is being carried on, towed by or hitched for towing by a vehicle described in a. above.

Since 7.a does not apply to our canoe trailers, note the HO policy clearly excludes any coverage only while the trailer is attached to any vehicle, in effect forcing all the liability coverage for such situations back onto the auto policies. If a claim were to arise from a trailer while detached (parked or in storage), the HO policy would respond. To the extent the PAP also covers in that situation, the HO Other Insurance clause makes the HO excess to the auto coverage.

For any of the trailers owned by the business entities (the troop and city), the business auto policy steps in. In summary, the applicable provisions from the ISO BAC (CA 0001 0306) are much the same as the PAP: light trailers are automatically included for liability; others using the trailer with permission are insureds; and while attached to a vehicle owned by another, the BAC is excess to any liability coverage provided by a policy on the pulling vehicle.

Whew! There is a lot going on there, and I've only looked at the liability coverage question. But that returns me to my original point: No matter how complex a scenario may seem to be, this is where that turtle will beat the hare every time. Slow down, be deliberate, and take it one step at a time. Just like summer.

And for those of you in rabbit mode, I offer the sage advice of my sainted mother (slightly paraphrased to make it printable): If you haven't got time to do it right, when are you going to find time to do it over?

Special Reports /

Policy Issues- To avoid a fall, think summer

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