Summary: The liability and medical payments coverages contained in the American Association of Insurance Services (AAIS) homeowners program fit the insurance needs of most insureds. (Coverage may be modified by endorsement to amend coverage where necessary—see AAIS Homeowners Common Endorsements. Although in many ways the coverages and exclusions are similar to those found in the Insurance Services Office (ISO) Common Endorsements—AAIS Program program, there are significant differences.
The AAIS forms have been revised, and have been given a new numbering system. The prior forms were, for example, form 3, edition 2.0. But now, the forms are HO 0001 01 06, HO 0002 01 06, HO 0003 01 06, HO 0004 01 06, HO 0005 01 06, HO 0006 01 06, and HO 0008 01 06.
Following is a discussion of the homeowners liability and medical payments coverages.
Topics covered:
Introduction Definitions applicable to liability coverage Principal coverages—liability and medical payments to others Incidental liability coverages Exclusions applying to liability and medical payments coverages Exclusions applying only to liability coverages Exclusions applying only to medical payments
Introduction
As noted, the coverages and exclusions of the AAIS and ISO programs are similar. There is a difference in the contract format, however. In the ISO form, the insuring agreement provides broad coverage which is narrowed through the use of exclusionary language. In the AAIS form, coverage is provided through the insuring agreement and through the use of incidental liability coverages, which incorporate coverage provisions and which, in the ISO form, include section II additional coverages. Certain other liability coverages are clearly enumerated, whereas in the ISO form they are provided through exceptions to a particular exclusion. The AAIS form concludes the liability section with exclusions applying either to liability coverage, medical payments coverage, or both.
Definitions Applicable to Liability Coverage
The definitions below are those applicable to liability coverages, and are numbered according to the numbers in the form itself. For the definitions applying to property coverage, see AAIS Homeowners Program. For the sake of convenience, many of the definitions that apply to liability as well as to property coverages are repeated here.
1.The words “you” and “your” mean the person or persons named as the insured on the “declarations”. This includes “your” spouse if a resident of “your” household.
2.The words “we”, “us”, and “our” mean the company providing this insurance.
4.Under the Liability Coverages provided by this policy, “aircraft” means an apparatus or a device designed or used for flight, but this does not include:
a.a model aircraft that is not designed or used to carry people or cargo;
b.a “hovercraft”' or
c.a model hovercraft that is not designed or used to carry people or cargo.
5.”Bodily injury” means bodily harm to a person and includes sickness, disease, or death. This also includes required care and loss of services.
However, “bodily injury” does not mean bodily harm, sickness, disease or death that arises out of: mental or emotional injury, suffering, or distress that does not result from actual physical injury to a person.
6.”Business” means:
a.a trade, a profession, or an occupation, including farming, all whether full time, part time, or occasional. This includes the rental of property to others, but does not include:
1)the occasional rental for residential purposes of the part of the “described location” normally occupied solely by “your” household.
2)the rental or holding for rental of a portion of that part of the described location” normally occupied by “your” household to no more than two roomers of boarders for use as a residence; or
b.any other activity undertaken for money or other compensation, but this does not include:
1)providing care services to a relative of an “insured”;
2)providing services for the care of persons who are not relatives of an “insured” and for which the only compensation is the mutual exchange of services;
3)a volunteer activity for which:
a)an “insured” receives no compensation; or
b)an “insured's” only compensation is the reimbursement of expenses incurred to carry out the activity; or
4)an activity not described in 1) through 3) above for which no “insured's” total compensation for the 12 month period just before the first day of this policy period was more than $2,500.
8. “Described location” means the one-to four-family house, the townhouse, or the row house where “you” reside and which is shown on the “declarations” as the “described location”. It includes related private structures and grounds at that location.
However, if the “described location” is a townhouse or a row house, it includes only related private structures and grounds at that location that are used or occupied solely by “your” household for residential purposes.
9.”Domestic employee” means a person employed by an “insured”, or a person leased to an “insured” under a contract or an agreement with a labor leasing firm, to perform duties that relate to the use or care of the “described location”. This includes a person who performs duties of a similar nature elsewhere for an “insured”, provided such duties are not in connection with an “insured's” “business”.
However, “domestic employee” does not include a person who is furnished to an “insured”:
a.as a temporary substitute for a permanent “domestic employee” who is on leave; or
b.to meet seasonal or short-term workloads.
10.”Employee” means a person employed by an “insured”, or a person leased to an “insured” under a contract or an agreement with a labor leasing firm, to perform duties other than those performed by a “domestic employee”.
Analysis
The definition of “bodily injury” has been altered considerably from the earlier form. The earlier form stated several things that bodily injury was not, such as bodily harm arising out of physical abuse. In the current form, “bodily injury” is briefly defined, while the exclusions (discussed later in this article) bar coverage for, among other things, bodily injury arising out of physical abuse. Note that while in some jurisdictions “bodily injury” does not always include emotional distress, it is clear in this definition that “bodily injury” encompasses emotional distress only so long as the emotional injury arises from “bodily injury.”
The definition of “business” was also discussed in the article on AAIS Property Coverages (see Property Coverages—AAIS Homeowners. The current form makes an exception for providing care services to a relative of an insured, even though the insured might well receive compensation. And, though usually one thinks of caring for young children, it is increasingly common to care for elderly parents. In this instance, one sibling might provide the care, with other siblings paying the insured. The policy makes it clear this is not to be construed as a business.
Although volunteer activities have always been thought of as not being a business activity, the current form clearly states this to be the case. And, while the earlier form stated that a “business” did not include part-time or seasonal activities of minors, the current form does not make any exceptions in the definition. However, there is coverage under the incidental liability coverage for business (see later in this article). The earlier form also contained an exception for activities that were related to a business but were not viewed as business in nature. This exception has been removed from the current form.
The term “described location” was used in the previous form (in the definition for insured premises), but it was not defined until the current form. Thus, when the policy refers to the “insured premises” as including the described location, it is readily apparent as to meaning.
The earlier form defined “domestic employee,” but the current form adds that the employee is one either hired directly by the insured, or can be one that is leased to the insured under contract or agreement. Duties must relate to the use or care of the “described location,” or can be similar duties performed elsewhere for an insured. Temporary substitutes or seasonal or short-term employees are not domestic employees. The current form also adds a definition for an “employee”: one who is employed directly by or leased to an insured to perform duties other than those performed by a domestic employee. There is no equivalent term in the ISO form.
12.Under the Liability Coverages provided by this policy, “hovercraft” means a self-propelled motorized ground effect machine or air cushion vehicle designed or used to travel over land or water. This includes, but is not limited to, a flarecraft.
However, “hovercraft” does not include:
a.a model hovercraft that is not designed or used to carry people or cargo;
b.an “aircraft”;
c.a model aircraft that is not designed or used to carry people or cargo;
d.a “motorized vehicle”;
e.a “watercraft”' or
f.a model watercraft that is not designed or used to carry people or cargo.
13.”Insured” means:
a.”you”;
b.”your” relatives if residents of “your” household;
c.”your” relatives under the age of 25 years who:
1)are financially dependent upon “you”;
2)are students enrolled in school full time, as defined by the school; and
3)were residents of “your” household just before moving out to attend school;
d.persons, other than “your” relatives, under the age of 21 years who:
1)reside in “your” household; and
2)are in “your” care or in the care of “your” resident relatives;
e.persons, other than “your” relatives, under the age of 21 years who:
1)are in “your” care or in the care of “your” resident relatives;
2)are students enrolled in school full time, as defined by the school; and
3)were residents of “your” household just before moving out to attend school; or
f.solely with respect to the Liability Coverages provided by this policy:
1)persons in the course of acting as “your” real estate manager for the “described location”, but only with respect to acts falling within the scope of such duties;
2)persons while engaged in the employ of an “insured” as defined in a., b., c., d., or e. above, but only with respect to a “motorized vehicle” to which this insurance applies;
4)persons using a “motorized vehicle” to which this insurance applies on an “insured premises” with “your” consent, but only with respect to such use;
4)persons or organizations accountable by law for “watercraft” or animals:
a)owned by an “insured” as defined in a., b., c., d., or e. above; and
b)to which this insurance applies;
but only with respect to such “watercraft” or animals.
However, this does not include persons or organizations using or having charge or control of such “watercraft” or animals in the course of “business” or without the owner's consent; or
5)persons or organizations accountable by law for a motorized golf cart:
a)owned by an “insured” as defined in a., b., c., d., or e. above; and
b)to which this insurance applies;
but only with respect to such golf cart.
However, this does not include persons or organizations using or having charge or control of such golf cart without the owner's consent.
The phrase an “insured”, wherever it appears in this policy, means “one or more “insureds”.
14.”Insured premises” means:
a.the “described location”;
b.that part of any other premises used by “you” as a residence and shown on the “declarations” as an “insured premises”;
c.that part of any other premises used by “you” as a residence and that is acquired by “you” during the policy period for such use;
d.premises used by “you” in connection with a premises described in a., b., or c. above;
e.cemetery lots and burial vaults of an “insured”;
f.that part of a premises not owned by an “insured” and that is temporarily used by an “insured” as a residence;
g.that part of a premises occasionally rented to an “insured” for other than “business” purposes; and
h.vacant land owned by or rented to an “insured”. This includes land where a one- to four-family house, a townhouse, or a new house is being built for use as an “insured's” residence. This does not include farm land.
15.”Limit” means the amount of insurance.
16.”Motorized vehicle” means:
a.a self-propelled land or amphibious vehicle, regardless of method of surface contact, but this does not include a:
1)”hovercraft”;
2)model hovercraft that is not designed or used to carry people or cargo;
3)”watercraft”; or
4)model watercraft that is not designed or used to carry people or cargo; or
b.a trailer or semitrailer that:
1)is attached to or being carried on or towed by; or
2)becomes detached while being carried on or towed by;
a vehicle described in a. above.
17.”Occurrence” means an accident, including repeated exposures to similar conditions, that results in “bodily injury” or “property damage” during the policy period.
19.”Property damage” means:
a.physical injury to or destruction of tangible property; or
b.the loss of use of tangible property whether or not it is physically damaged.
20.”Terms” means all provisions, limitations, exclusions, conditions, “declarations”, and definitions used in this policy.
22.Under the Liability Coverages provided by this policy, “watercraft” means an apparatus or a device primarily designed to be propelled on or in water by engine, motor, or wind, but this does not include:
a.a model watercraft that is not designed or used to carry people or cargo;
b.a “hovercraft”;
c.a model hovercraft that is not designed or used to carry people or cargo;
d.a “motorized vehicle”;
e.an “aircraft”' or
f.a model aircraft that is not designed or used to carry people or cargo.
Analysis
The current AAIS forms, as well as the ISO 2000 forms, have added “hovercraft” (including flarecraft) to the definitions, and therefore to the liability section. The definition for a “motorized vehicle” states that it does not include a hovercraft, since this is now separately defined. The same is true for “watercraft”; although watercraft as a defined term only relates to the liability section of the form. The list of “property not covered” includes certain motorized vehicles (as defined), aircraft, and hovercraft. But in this list, the words aircraft and hovercraft are not in quotations; they are defined within the list itself. It is in the liability section where the words aircraft, hovercraft, and watercraft do appear in quotation marks. Discussion of the exclusions applicable to these items will be found later in this article.
As discussed in the article Property Coverages—AAIS Homeowners. the definition for “insured” has been considerably expanded to include students under the age of 25 who are away at school, if they are financially dependent upon the named insured and were residents of the named insured's household just before leaving to attend school. Included as well are persons other than the named insured's relatives who are under 21, away at school, and were residents of the named insured's household and in the care of an insured.
Form 3 Ed. 2.0 stated that the definition of “insured” included the named insured's legal representative if the named insured died during the policy term. This provision has been moved to the Policy Conditions: specifically, conditions applicable to all coverages 5., and will be discussed in the article on policy conditions Conditions and Provisions—AAIS Homeowners.
Persons acting as a real estate manager for the described location are insureds, but only with respect to acts falling within the scope of such duties. Persons employed by an insured as defined (in a., b., c., d., or e.) are insureds with respect to a motorized vehicle that the policy will cover. Note that the employee need not be a domestic employee—just an employee—of an insured. So, if an insured requested that one of his employees drive him on a golf cart around a golf course, and the employee accidentally drove into a golfer's bag of expensive clubs, destroying them, the employee would have “insured” status for the accident.
Persons using a covered motorized vehicle on the insured premises with the named insured's consent also have “insured” status with respect to liability arising out of the use of the vehicle. Persons or organizations accountable by law for watercraft (as defined), animals, or golf carts owned by an insured and covered by the policy also have “insured” status, but only with respect to the watercraft, animal, or golf cart and only if the person or organization had the owner's consent. So, if a golf course groundskeeper decided to appropriate a cart to go joy riding around the course and caused considerable damage, there would be no coverage.
“Insured premises” is a broad term, which encompasses the described location. “Insured premises” is used with respect to liability coverages, while “described location” is used with respect to property coverages. Insured premises include any other premises, such as a seasonal home, used by the named insured as a residence; the premises must be shown on the declarations. A premises acquired by the named insured during the policy period and used as residence is an insured premises. A premises used by the named insured in connection with the described location, a newly acquired premises, or a premises shown on the declarations is also considered an insured premises. Used “in connection with” can take a broad interpretation, as was the case with Erie Insurance Exchange v. Szamatowicz, 597 S.E.2d 136 (N.C. App. 748). The named insured hosted his birthday party at a warehouse he owned, located some twenty miles from his home. The reason was that his residence was simply too small for the number of invited guests. A fire broke out, with some resulting injuries. When the insured was sued, the insurer denied coverage based on the business pursuits exclusion. But the court ruled that the warehouse was used in connection with the insured residence premises, and so it was an insured location for coverage purposes. This part of the definition is thus similar to the “part of a premises occasionally rented to an 'insured' for other than 'business' purposes”—which is often quoted to give coverage for an insured's rental of, say, a hall for a wedding reception.
Cemetery lots and burial vaults of an insured, a part of a nonowned premises used as a temporary residence, and vacant land are considered insured premises. The question often arises as to what constitutes vacant land. According to Webster's New World College Dictionary (Third Edition), “vacant” means “having nothing in it, as a space; devoid of contents; empty; void.” The courts have generally held this to mean no man-made structure exists on the land. If an insured owns a parcel of land containing a structure, the land should be scheduled on the declarations so liability coverage will apply.
The current form states that a “motorized vehicle” is not a hovercraft or watercraft; however, “hovercraft,” as does “watercraft,” have their own definitions. The prior form contained separate definitions for “motorized vehicle” and “motor vehicle,” and “motor vehicle” meant, among other things, a “motorized vehicle.” Fortunately, the 2006 forms have eliminated this confusion. A “motorized vehicle” means a self-propelled land or amphibious vehicle regardless of method of surface contact. Lawn care tractors, golf carts, or private passenger automobiles come to mind. Not included are hovercraft, watercraft, or trailers or semi-trailers that are either attached to, being carried on, or come loose from a motorized vehicle. The intent here is to shift any loss involving a trailer to an auto or other motor vehicle policy, which quite properly is the place to seek coverage. This does not mean there is no coverage for, say, a camper trailer that has been detached in a camp ground from a pickup. Then, the definition for “part of a premises not owned by an 'insured' and that is temporarily used by an 'insured' as a residence” can apply.
The definition of “occurrence” is common to most liability coverage forms. The accident need not take place during the policy period, but the resulting bodily injury or property damage must take place during the policy period.
Watercraft are those objects that use an engine, a motor, or wind to be propelled on or in the water. By this definition an iceboat, which uses wind but travels on ice rather than water, is not a watercraft.
Principal Coverages—Liability and Medical Payments to Others
1.Coverage L—Personal Liability—”We” pay, up to the “limit” that applies, all sums for which an “insured” is legally liable because of “bodily injury” or “property damage” caused by an “occurrence” to which this coverage applies.
“We” will defend a suit seeking damages if the suit resulted from “bodily injury” or “property damage” caused by an “occurrence” to which this coverage applies. Such defense will be provided at “our” expense by counsel that “we” choose.
“We” may make investigations and settle claims or suits that “we” decide are appropriate. “We” do not have to provide a defense after “we” have paid an amount equal to “our” “limit” as a result of a judgment or written settlement.
2.Coverage M—Medical Payments To Others—”We” pay the necessary medical expenses if they are incurred or medically determined within three years from the date of an accident causing “bodily injury” covered by this policy. Medical expenses means the reasonable charges for medical, surgical, X-ray, dental, ambulance, hospital, professional nursing, and funeral services; prosthetic devices; hearing aids; prescription drugs; and eyeglasses, including contact lenses. This coverage does not apply to “you” or to any person who is a regular resident of “your” household, other than a “domestic employee”. With respect to others, this coverage applies only to:
a.a person on an “insured premises” with the permission of an “insured”; or
b.a person away from an “insured premises” if the “bodily injury”:
1)arises out of a condition on an “insured premises” or the access ways immediately adjoining an “insured premises”;
2)is caused by an activity of an “insured”;
3)is caused by a “domestic employee” in the course of his or her employment by an “insured”; or
4)is caused by an animal owned by or in the care of an “insured”.
Analysis
The insuring agreement of the AAIS liability coverage section omits the ISO provision of a defense “even if the suit is groundless, false, or fraudulent.” This leaves open the possibility that, under the AAIS form, the insurer could decide a suit was groundless and therefore not provide a defense. The wording “to which this coverage applies” clarifies that the loss cannot be one that would be excluded—for example, an occurrence arising out of the use of an excluded motor vehicle—in order for the insurer to defend or pay sums for which an insured is legally liable.
There is coverage for medical payments to others, either incurred or medically determined, within three years from the date of an accident resulting in covered bodily injury. In the ISO form, coverage applies if the injury occurs on an “insured location” or the ways immediately adjoining; in the AAIS form, coverage applies if the injury occurs on an “insured premises” or the ways immediately adjoining. Note that medical payments coverage for a “domestic employee” injured away from the “insured premises” in the course of his or her employment is provided in the insuring agreement. The ISO form provides the coverage through an exclusion, G.1.a. and b., which state that medical payments do not apply to bodily injury to a “residence employee” if the injury occurs off the insured location and has not arisen out of or in the course of the residence employee's employment by an insured.
This policy provides the following Incidental Liability Coverages. They are subject to all of the “terms” of Coverage L and Coverage M. Except for Claims And Defense Cost, Damage To Property Of Others, First Aid Expense, and Loss Assessment, they do not increase the “limits” stated for the Principal Liability Coverages.
1.Business
a.”We” pay for “bodily injury” or “property damage” that arises out of:
1)the rental or holding for rental of an “insured premises”:
a)on an occasional basis for use only as a residence;
b)in part for use only as a residence (No family unit may include more than two roomers or boarders.); or
c)in part for use as a school, studio, office, or private garage; or
2)the “business” activities of an “insured” under the age of 21 years, but only if such “insured” is involved in a part-time or occasional, self-employed “business” that does not employ others and the “bodily injury” or “property damage” arises out of activities related to that “business”.
b.This Incidental Liability Coverage for Business is subject to all of the:
1)Exclusions That Apply To Coverage L And Coverage M, other than exclusion g.;
2)Additional Exclusions That Apply Only To Coverage L; and
3)Additional Exclusions That Apply Only To Coverage M.
2.Claims and Defense Cost—”We” pay for:
a.the costs incurred by “us” and the costs taxed to an “insured” in a suit “we” defend;
b.the premiums on required bonds in a suit “we” defend, but only for bond amounts up to the “limit” that applies. “We” are not required to apply for or furnish bonds;
c.the necessary costs incurred by an “insured” at “our” request for assisting “us” in the investigation or defense of a claim or suit. This includes up to $250 per day, per “insured”, for the actual loss of earnings, but not loss of other income, for time spent away from work at “our” request;
d.the interest on the entire judgment that accrues after the entry of a judgment, but ending when “we” tender, pay, or deposit in court that part of the judgment that does not exceed the “limit” that applies; and up to “our” “limit”;
e.prejudgment interest awarded against an “insured” on that part of the judgment “we” pay. If “we” offer to pay the “limit” that applies, “we” will not pay any prejudgment interest based on that period of time after the offer.
Analysis
The AAIS form, in its treatment of liability coverages, differs from the ISO form in that, unlike the ISO form, the AAIS form sets out what it will cover, rather than, as in the ISO form, stating what it will cover in exceptions to the exclusions. The AAIS use of “incidental” is perhaps a bit misleading, since the coverage grants are certainly not of a secondary or less important nature.
The rental of an insured premises, on an occasional basis and for use as a residence, is not considered to be a business. Therefore, if a homeowner wishes to rent his or her seasonal dwelling, or a beachfront condo, for a week or two, the policy will not treat this as a business exposure. According to Webster's New World College Dictionary (Third Edition), the meaning of “occasional” that should most likely be applied is “of irregular occurrence; happening now and then.” So, if the premises are regularly rented, such usage would probably constitute a business and proper coverage should be arranged. There is also coverage if the insured premises is rented in part for use only as a residence (as half of a duplex) or in part for use as a school, studio, office, or private garage. The key here is “in part”; that is, the dwelling is to be used primarily as a residence for the named insured, not totally rented to others for offices, for example.
As noted earlier in this discussion, the business activities of minors are given coverage here, rather than in the definitions.
The exclusions applying to liability and medical payments coverage apply, except for exclusion g., which excludes coverage for bodily injury or property damage arising out of or in any way related to a business conducted from an insured premises or undertaken by an insured, regardless of location, whether or not the business is owned or operated by an insured or employs an insured. So, in the event an insured rented his or her dwelling on an occasional basis, rented space to another for a dance studio on the premises, or his or her minor child acted as a baby-sitter, there would be coverage for bodily injury or property damage.
The coverage for claims and defense costs has been revised. Rather that stating the insurer would pay premiums on appeal bonds or the release of attachments, or premiums on bail bonds required because of a traffic law violation arising out of the use of a covered vehicle, the policy now states that the insurer will pay “premiums on required bonds.” Payment for loss of earnings has been increased to $250 from $50 per day. This provision has been amended to state that this loss of earnings does not include loss of other income. For example, an insured could not claim that his time away from watching the stock market and buying or selling was a loss of income—unless, of course, he or she was a stock broker. And, interest is now to be paid on the entire judgment, rather than stating it will be paid after entry of a judgment; subject to the limit of insurance.
3.Contracts
a.”We” pay for “bodily injury” or “property damage”:
1)for which an “insured” is liable under a written contract that directly relates to the ownership, maintenance, or use of an “insured premises”; or
2)for which “you” are liable under a written contract, made before the loss, in which “you” have assumed the liability of others.
The loss causing the “bodily injury” or “property damage” must have occurred during the policy period.
b.This Incidental Liability Coverage for Contracts is subject to all of the:
1)Exclusions That Apply To Coverage L And Coverage M;
2)Additional Exclusions That Apply Only To Coverage L, other than exclusion c; and
3)Additional Exclusions That Apply Only To Coverage M.
4.Damage to Property of Others—Regardless of an “insured's” legal liability, “we” pay, at replacement cost, for “property damage” to property of others caused by an “insured”. The “limit” that applies to this coverage is $1,000 per “occurrence”.
The exclusions that apply to Coverages L and M do not apply to this coverage. However, “we” do not pay for “property damage”:
a.covered under the Property Coverages section of this policy.
However, “we” will pay for “property damage” in excess of the amount recoverable under the Property Coverages, to the extent that such “property damage” is covered under the “terms” of this Incidental Liability Coverage.
b.to property owned by an “insured”, or owned by, rented to, or leased to another resident of “your” household or a tenant of an “insured”;
c.caused intentionally by an “insured” who has attained the age of 13 years;
d.arising out of an act or omission in any way related to a:
1)”business” undertaken by an “insured”; or
2)premises owned, rented, or controlled by an “insured”, other than an “insured premises”; or
e.arising out of the ownership, operation, maintenance, use, occupancy, loaning, entrusting, supervision, leasing, loading, or unloading of “aircraft”, “hovercraft”, “motorized vehicles”, or “watercraft”.
However, this exclusion does not apply to “property damage” arising out of a “motorized vehicle”:
1)that is not owned by an “insured” and is designed:
a)for recreational use off of public roads; or
b)to assist the handicapped; or
2)that is not owned by an “insured” and is used to service:
a)an “insured premises”; or
b)a premises of another, not in the course of “business”;
if, at the time of the “occurrence”, such “motorized vehicle” is not required by law or governmental regulation to be registered for use on public roads or property.
5. First Aid Expense—”We” pay the expenses incurred by an “insured” for first aid to persons, other than “insureds”, for “bodily injury” covered by this policy.
6.Loss Assessment
a.”We” pay for “your” share of an assessment levied by a homeowners, condominium or similar residential association if the assessment is levied as a result of:
1)”bodily injury” or “property damage” to which Coverage L and Coverage M apply; or
2)damages or legal fees the association legally must pay for the acts of a director, officer, or trustee that result from the exercise of his or her duties solely on behalf of the association. This applies only to the acts of a director, officer, or trustee who is elected by the members of the association and who serves without receiving a fee, salary, or other compensation, other than reimbursement of expenses incurred.
b.However, “we” do not pay for assessments levied against “you” or a homeowners, condominium or similar residential association by any governmental body or authority.
c.Coverage applies only when the assessment is levied during the policy period and is levies against “you” as owner or tenant of the “described location”.
d.The most “we” pay is $1,500 per occurrence. Regardless of the number of assessments, this “limit” is the most “we” pay for loss arising out of:
1)any one accident, including repeated exposures to similar conditions; or
2)an act of a director or trustee. An act involving more than one director or trustee is considered a single act.
e.The Policy Period condition under Conditions Applicable To Liability Coverages Only does not apply to this Incidental Liability Coverage.
Analysis
In the earlier form, coverage for contractual liability only applied where the liability of others was assumed under a written contract directly relating to the ownership, maintenance, or use of an insured premises, or if the liability of others was assumed by a written contract made prior to the loss. In the 2006 form, the coverage now applies to bodily injury or property damage if an insured is liable under a contract directly relating to the ownership, maintenance, or use of an insured premises, or under a contract in which the named insured has assumed liability in a written contract made prior to the loss. Thus, the first part of the coverage provision could apply to a contract in which an insured—not necessarily the named insured—hired a lawn care service for the insured premises; the second part of this coverage provision applies to hold-harmless situations, such as the rental of a hall for a reception. But here, it is the named insured who must have assumed liability. Other contractual liability is excluded.
The coverage for damage to property of others, often thought of as “good will” or “good neighbor” coverage, is usually intended to pay for a loss where the insured's liability is negligible; but, in the interests of preserving peace the insurance responds. However, the wording in the earlier form, damaged by an “insured”, suggested a direct physical cause-and-effect relationship; in other words, an insured must have directly damaged property of others. The wording in the current form has been changed to that found in the ISO form: “caused by an 'insured'.” This wording allows action or inaction to begin the chain of events leading to the damage.
If the policy is not read carefully, this provision of coverage can be misleading. The insuring agreement for coverage C states the insurer covers “personal property owned or used by an 'insured.'” If the “damage to property of others” provision is read in isolation, however, it appears that $1000 (increased from $500) is the most that will be paid for personal property of others that the insured has, for an example, borrowed. That is not the case, which the current wording makes clear by stating that the insurer will not pay for “property damage” covered under the property coverages section of the policy.
The coverage will not respond to: property owned by an insured, or owned by, rented to, or leased to another resident of the named insured's household or a tenant of an insured; to damage intentionally caused by an insured age thirteen or over; to damage arising out of an act related to a business; or to an act or omission related to a premises owned, rented, or controlled by an insured that is not an insured premises.
Property damage to “motorized vehicles” is covered so long as they are not owned by an insured, not subject to motor vehicle registration, and used to assist the handicapped, service the insured premises or a premises of another (but not in the course of business) or for recreational purposes. So, for example, a borrowed riding lawnmower could be covered under coverage C or the incidental liability coverage; a borrowed snowmobile is covered only under the incidental liability coverage. The wording of this coverage, unlike that in the 2000 ISO form, clarifies that an insured could rent a backhoe to do some yard work on the described location and property damage he or she might cause to property of others in the course of the work would be covered.
The coverage for first aid expenses incurred by an insured has not been changed from the earlier form.
The coverage for loss assessment has been changed from the earlier form, but chiefly with regard to stressing that an officer, director, or trustee of the condominium or homeowners association can receive reimbursement for expenses incurred and coverage will not be jeopardized.
5.Motorized Vehicles
a.Subject to the limitations set forth in b. and c. below, “we” pay for “bodily injury” or “property damage” that arises out of a “motorized vehicle” that:
1)is in dead storage on an “insured premises”;
2)is used only to service:
a)an “insured premises”, but only if the “occurrence” takes place on an “insured premises” as defined in 14.a., 14.b., 14.c., 14.f., 14.g., or 14.h. under Definitions; or
b)an “insured premises” or a premises of another, but only if such “motorized vehicle” is designed only for use off of public roads;
3)is designed to assist the handicapped;
4)is designed for recreational use off of public roads and is:
a)not owned by an “insured”; or
b)owned by an “insured:, but only if the “occurrence” takes place on an “insured premises” as defined in 14.a., 14.b., 14.c., 14.f., 14.g., or 14.h. under Definitions;
5)is operated only from electrical current supplied by a battery and is:
a)not built or modified after manufacture to exceed a speed of 15 miles per hour on level ground; and
b)not a motorized bicycle, moped, or golf cart; or
6)is a motorized golf cart that:
a)is owned by an “insured”;
b)is designed to carry no more than four persons;
c)is not built or modified after manufacture to exceed a speed of 25 miles per hour on level ground; and
d)at the time of the “occurrence”, is within the legal boundaries of:
(1)a golfing establishment and is:
(a)parked or stored there; or
(b)being used by an “insured” to:
(i)play the game of golf or for other recreational or leisure activity allowed by the establishment;
(ii)travel to or from an area where “motorized vehicles” or golf carts are parked or stored; or
(iii)cross public roads at designated points to access other parts of the golfing establishment; or
(2)a private residential community, including its public roads upon which a motorized golf cart can legally travel:
(a)that is subject to the authority of an association of property owners; and
(b)in which an “insured premises” is located.
b.The coverage described in a. above applies only to a “motorized vehicle” that, at the time of the “occurrence”, is not:
1)registered for use on public roads or property;
2)required by law or governmental regulation to be registered for use at the location of the “occurrence”;
3)being used in, or in the practice or the preparation for, a prearranged or organized racing, speed, pulling or pushing, demolition, or stunt activity or contest;
4)being rented to others;
5)being used to carry people or cargo for a fee; or
6)being used for any “business” purpose, except a motorized golf cart while on a golfing establishment.
c.This Incidental Liability Coverage for Motorized vehicles is subject to all of the:
1)Exclusions That Apply To Coverage L And Coverage M, other than:
a)exclusions c. and e.; and
b)solely with respect to the use of a motorized golf cart while on a golfing establishment, exclusion g.;
2)Additional Exclusions That Apply Only To Coverage L; and
3)Additional Exclusions That apply Only To Coverage M.
Analysis
As noted earlier in this discussion, the AAIS format is to describe what liability coverage is provided in the incidental liability coverages, while the ISO treatment is to exclude coverage and then give back coverage through exceptions. The above provisions exemplify this. The AAIS language describes the instances in which coverage applies to a motorized vehicle; the ISO form excludes liability arising from a motor vehicle and then states when the exclusion will not apply.
There is liability coverage for certain “motorized vehicles” on the insured premises: those in dead storage (usually viewed as being incapable of being operated); used to service the insured premises or the premises of another, but only if the vehicle is designed for use off public roads. The ISO form refers to a servicing vehicle as used solely to service the insured premises, which is quite restrictive. There is coverage for a vehicle designed to assist the handicapped. This differs from the ISO form, which states that at the time of an “occurrence” the motor vehicle must be in use to assist the handicapped for coverage to apply. Thus, under the ISO form, if a toddler negligently got on such a vehicle and ran it into a neighbor's house, causing property damage, there would be no coverage. There is no coverage for vehicles if the bodily injury or property damage results from the vehicle while engaged in organized or prearranged racing, or stunt activities. So, for example, if an insured decides to arrange a stunt competition for snowmobilers on his own property, and a passenger on the insured's vehicle is injured, there is no coverage.
The AAIS form adds an important coverage not found in the ISO form, and that is coverage for a battery-operated vehicle that is not a motorized bicycle, golf cart, or moped, and is not built or modified to travel over 15 miles per hour on level ground. Kiddie cars come to mind. Thus, if a child is driving a friend in such a car and accidentally tips the car over, injuring the friend, there is coverage for the friend's bodily injury.
The 2006 AAIS form has added similar coverage to that of the ISO form in that there is coverage for use of a golf cart within a private residential community, including its public roads if legally permissible, if the community is subject to an association of property owners and an “insured premises” is located there. Coverage for a non-owned golf cart is found in provision 7.a.4), while coverage for an owned golf cart is found in provision 7.a.6). A difference from the ISO form is that an owned golf cart is covered for use not only for playing the game of golf, but for any recreational or leisure activity allowed by the facility. So, driving the cart around the course simply to take a drive, if allowed by the facility, is a covered activity.
There are some limitations to coverage under this incidental motor vehicle liability coverage: the vehicle cannot be registered for use on public roads or property; be required by law to be registered for use at the location of the “occurrence”; be used in a race or other contest; be rented to others; be used to carry persons or cargo for a fee; or be used for any business purpose (a motorized golf cart on a golf course is exempt). It is conceivable for a limitation to butt up against a coverage grant. In some parts of the country snowmobiles must be registered; however, according to this wording, if the “occurrence” took place on an insured premises there could be a denial of coverage even though provision 7.a.4)b) grants coverage. For example, Wisconsin's statute WSA 350.12 requires snowmobiles that are used exclusively on private property to be registered, although there is no charge; snowmobiles that are used on public property (in a state park, for example) must also be registered and a fee is charged.
The exclusions applicable to coverages L and M apply except as noted.
8.Watercraft
a.Subject to the limitations set forth in b. and c. below, “we” pay for “bodily injury” or “property damage” that arises out of a “watercraft” that:
1)is in storage;
2)is a sailing vessel, with or without auxiliary power, that is:
a)less than 26 feet in overall length; or
b)26 feet or more in overall length and not owned by or rented to an “insured”; or
3)is not a sailing vessel and is powered by:
a)an inboard or inboard-outdrive engine or motor, including an engine or motor that powers a water jet pump, or:
(1)50 horsepower or less if not owned by an “insured”; or
(2)more than 50 horsepower if not owned by or rented to an “insured”; or
b)one or more outboard engines or motors with:
(1)25 total horsepower or less;
(2)more than 25 horsepower if the outboard engine or motor is not owned by an “insured”;
(3)more than 25 horsepower if the outboard engine or motor is owned by an “insured” who acquired it during the policy period; or
(4)more than 25 horsepower if the outboard engine or motor is owned by an “insured” who acquired it before the policy period, but only if:
(a)it is listed on the “declarations” as insured for personal liability; or
(b)a written request for liability coverage is received by “us” within 45 days after it is acquired.
In this Incidental Liability Coverage for Watercraft, horsepower means the maximum power rating assigned to the engine or motor by the manufacturer.
b.The coverage described in a. above applies only to a “watercraft” that, at the time of the “occurrence”, is not being:
1)rented to others;
2)used to carry people or cargo for a fee;
3)used for any “business” purpose; or
4)used in, or in the practice or the preparation for, a prearranged or organized racing, speed, pulling or pushing, demolition, or stunt activity or contest.
However, this does not apply to a sailing vessel or to a “watercraft” being used in a predicted log contest or cruise.
c.This Incidental Liability Coverage for Watercraft is subject to all of the:
1)Exclusions That Apply To Coverage L And Coverage M, other than exclusions c. and e.;
2)Additional Exclusions that Apply Only To Coverage L; and
3)Additional Exclusions That Apply Only To Coverage M.
Analysis
In the earlier form, liability coverage attached to any watercraft so long as it was on an insured premises. So, for example, if a neighbor's child alighted from the insured's boat moored at the insured's private dock, and slipped and fell, the injury would be covered. But in the current edition, this incident would not be covered unless the watercraft was of a type specifically covered in this incidental liability coverage.
There is coverage for a watercraft in storage, or a sailing vessel (with or without auxiliary power) under 26 feet in length. Sailing vessels over twenty-six feet in length are covered only if they are not owned by or rented to an insured—borrowed, perhaps.
Note that inboard or inboard-outdrive motor or engine-powered watercraft now include those with a water jet pump, such as a jet ski. There is liability coverage for such a watercraft that is not owned by an insured, if under 50 horsepower. If the watercraft is over 50 horsepower, there is coverage if the craft is not owned by or rented to an insured; again, if it is borrowed.
With regard to outboard motors or engines, there is coverage for: a watercraft powered by not more than twenty-five total horsepower; more than twenty-five total horsepower if the motor or engine is not owned by an insured; more than twenty-five horsepower if the engine or motor was acquired by an insured during the policy period; or more than twenty-five horsepower if an insured acquired the engine or motor before the policy period and it is listed on the declarations, or a written request for liability coverage is received by the insurer within forty-five days of the acquisition. The ISO form states that the named insured must either declare the engine or motor at policy inception, or the intent to insure the engines or motors must be reported in writing within forty-five days of acquisition.
Unlike the coverage for a golf cart, which states that a golf cart used for “business” purposes on a golf course will be covered, there is no similar exception under the exclusions for watercraft. So, if a businessman decided to host a business party on an otherwise covered boat, and someone was injured, exclusion 8.b.3) would apply. Watercraft used in racing are not covered; the exception is covered watercraft used in a predicted log cruise and sailboats. Predicted log cruises (also called cruiser navigation contests) are races where accuracy, rather than speed, wins. The navigator essentially competes against him or herself.
The exclusions applicable to Coverages L and M apply to the incidental coverage for watercraft except as noted.
Exclusions Applying to Liability and Medical Payments Coverages
As noted previously in this discussion, the format of the AAIS form is such that many of the liability coverages are given in the incidental liability coverages section. Although the following section contains the exclusions, there are provisions of coverages in the exceptions.
The earlier form contained the following preface to the exclusions:
“We do not pay for “bodily injury” or “property damage” resulting from one or more of the following excluded “occurrences”, regardless of other causes or “occurrences” that contribute to or aggravate the “bodily injury” or “property damage”, whether such causes or “occurrences” act to produce the “bodily injury” or “property damage” before, at the same time as, or after the excluded “occurrence”.
This anti-concurrent causation language has been eliminated from the 2006 form.
1.Exclusions That Apply to Coverages L and Coverage M—Coverage L and Coverage M do not apply to:
a.”bodily injury” or “property damage” caused directly or indirectly by:
1)war, including undeclared war or civil war;
2)warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign, or other authority using military personnel or other agents; or
3)insurrection, rebellion, revolution, usurped power, or action taken by governmental authority in hindering or defending against any of these.
Discharge of a nuclear weapon is deemed a warlike act even if accidental.
b.”bodily injury” or “property damage” arising out of:
1)the ownership or leasing of “aircraft” or “hovercraft” by an “insured”;
2)the operation, maintenance, use, occupancy, loading, or unloading of “aircraft” or “hovercraft” by any person;
3)the entrustment or loaning of an “aircraft” or “hovercraft” by an “insured” to any person; or
4)an “insured's” negligent supervision of or failure to supervise any person with respect to “aircraft” or “hovercraft”.
However, this exclusion does not apply to “bodily injury” to a “domestic employee” arising out of and in the course of his or her employment by an “insured”.
c.”bodily injury” or “property damage” arising out of:
1)the ownership or leasing of a “motorized vehicle” or “watercraft” by an “insured”;
3)the entrustment or loaning of a “motorized vehicle” or “watercraft” by any person; or
4)an “insured's” negligent supervision of or failure to supervise any person with respect to a “motorized vehicle” or “watercraft”.
However, this exclusion does not apply to “bodily injury” to a “domestic employee” arising out of and in the course of his or her employment by an “insured” or if coverage is provided under the Incidental Liability Coverage for Motorized Vehicles or the Incidental Liability Coverage for Watercraft.
d.”bodily injury” or “property damage” for which an “insured” is vicariously liable if the “bodily injury” or “property damage” arises out of the actions of a child or minor with respect to:
1)”aircraft”; or
2)”hovercraft”.
This applies whether or not such liability is imposed by law.
e.”bodily injury” or “property damage” for which an insured is vicariously liable if the “bodily injury” or “property damage” arises out of the actions of a child or minor with respect to a:
1)”motorized vehicle”; or
2)”watercraft”.
This applies whether or not such liability is imposed by law.
However, this exclusion does not apply to the extent that coverage for the “motorized vehicle” or “watercraft” is provided under the Incidental Liability Coverage for Motorized Vehicles or the Incidental Liability Coverage for Watercraft.
f.”bodily injury” or “property damage” arising out of the rendering of or the failing to render a professional service.
g.”bodily injury” or “property damage” arising out of or in any way related to a “business” conducted from an “insured premises” or undertaken by an “insured”, regardless of location, whether or not the “business” is owned or operated by an “insured” or employs an “insured”.
This includes but is not limited to “bodily injury” or “property damage” arising out of an act or a failure to act, regardless of its circumstance, involving a service or duty owed, promises, provided, or implied to be provided because of the nature of the “business”.
However, this exclusion does not apply to the extent that coverage is provided:
1)for the use of a motorized golf cart while on a golfing establishment under the Incidental Liability Coverage for Motorized Vehicles; or
2)under the Incidental Liability Coverage for Business.
h.”bodily injury” or “property damage” that arises out of premises that are:
1)owned by an “insured”;
2)rented to an “insured”; or
3)rented to others by an “insured”;
and that are not “insured premises”.
However, this exclusion does not apply to “bodily injury” to a “domestic employee” arising out of and in the course of his or her employment by an “insured”.
i.”bodily injury” or “property damage” that is:
1)expected by, directed by, or intended by an “insured”;
2)the result of a criminal act of an “insured”; or
3)the result of an intentional and malicious act by or at the direction of an “insured”.
This exclusion applies even if the “bodily injury” or “property damage”:
1)that occurs is different than what was expected, directed, or intended; or
2)is suffered by persons, entities, or property not expected, directed, or intended.
However, this exclusion does not apply to “bodily injury” or “property damage” that arises out of the use of reasonable force to protect people or property.
j.”bodily injury” or “property damage” that arises out of the transmission of a communicable disease by an “insured”.
k.”bodily injury” or “property damage” that arises out of sexual molestation.
l.”bodily injury” or “property damage” that arises out of physical or mental abuse.
m.”bodily injury” or “property damage” that arises out of corporal punishment.
n.”bodily injury” or “property damage” that arises out of the use, sale, manufacture, delivery, transfer, or possession by any person of a Controlled substance as defined by the Federal Food and Drug law at 21 U.S.C.A. Sections 811 and 812, including any amendments. Controlled Substances include but are not limited to cocaine, LSD, marijuana, and all narcotic or hallucinogenic drugs.
However, this exclusion does not apply to the legitimate use of prescription drugs by a person following the orders of a licensed physician.
Analysis
The current form has been amended so that there is no coverage for bodily injury or property damage arising out of the ownership or leasing—but not renting—of an aircraft or hovercraft. However, the next exclusion eliminates coverage for bodily injury or property damage arising out of the operation, maintenance, use, occupancy, loading, or unloading of an aircraft or hovercraft, so occurrences arising from any aircraft or hovercraft, whether leased, rented, or owned, would appear to be excluded. There is liability coverage for an insured for bodily injury to a domestic employee while in the course of employment if the injury arises from ownership, maintenance, or use of an aircraft or hovercraft as defined. For example, say a domestic employee unloads his employer's luggage from a private aircraft, and injures his back. There is coverage for medical payments or a suit against the employer. There is also coverage for a domestic employee while in the course of employment if the injury or property damage arises out of a motorized vehicle or watercraft, even if the vehicle or watercraft is not of the type covered in the incidental liability coverages.
Coverage is precluded for bodily injury or property damage arising out of the rendering or failure to render professional service, and for bodily injury or property damage arising out of or in any way connected to a business conducted from the insured premises or undertaken by an insured, whether or not the business is owned by, operated by, or employs an insured. Exclusion 3.b. applying to bodily injury to a person on the insured premises because of a business has thus been eliminated. As noted earlier in this discussion, there is no longer an exception for activities not normally thought of as businesslike in nature. The exceptions are found in the incidental liability coverage for use of a golf cart while on a golf course, or under the incidental coverage for business.
There is no coverage for bodily injury or property damage arising out of any premises owned, rented to, or controlled by an insured, other than the insured premises. However, there is coverage for bodily injury to a domestic employee while in the course of his or her duties if such injury occurs at another premises.
Although there is no coverage for bodily injury or property damage arising out of an expected or intended act, note the provision of coverage for a reasonable action taken to protect persons or property. There was no like provision in the 1991 ISO form, but it now appears in the ISO 2000 form. So, for example, if an insured saw a burglar climbing up a ladder into the insured's children's bedroom, reasonable force used to protect the children is covered under the AAIS form, even force resulting in expected and intended injury.
Exclusions j. through n. were previously found in the definition of “bodily injury.” In the 2006 form, they appear as exclusions rather than as statements as to what “bodily injury” does not include. Exclusion j. states that there is no coverage for transmission of a communicable disease by an insured; in the earlier edition bodily injury did not mean “arising out of” a communicable disease.
Exclusions Applying Only to Liability Coverages
2.Additional Exclusions That Apply Only To Coverage L—Coverage L does not apply to:
a.”bodily injury” to an “insured” as defined in 13.a., 13.b., 13.c., 13.d., or 13.e. under Definitions.
b.any claim made or suit brought against an “insured” seeking:
1)reimbursement of; or
2)contribution toward;
damages for which another person may be liable because of “bodily injury” to an “insured”.
c.liability under a contract or an agreement entered into by an “insured”, except as provided under the Incidental Liability Coverage for Contracts.
d.”property damage” to property owned by an “insured”.
e.cost or expense for measures performed on property owned by an “insured” to prevent:
1)injury to a person; or
2)damage to property of others;
on or away from an “insured premises”, whether such cost or expense is incurred by an “insured” or others.
f.”property damage” to property that is rented to, occupied by, used by, or in the care of an “insured”.
However, this exclusion does not apply to “property damage” to such property caused by fire, smoke, or explosion.
g.sickness, disease, or death of a “domestic employee” unless a written notice is received by “us” within 36 months after the end of the policy period in which the injury occurred.
h.”bodily injury” to a person, including a “domestic employee”, if:
1)an “insured” has a workers' compensation policy covering the injury; or
2)benefits are payable or are required to be provided by the “insured” under a workers' compensation, non-occupational disability, occupational disease, or like law.
i.liability for any assessment levied by a homeowners, condominium, or similar residential association, except as provided by Incidental Liability coverage for Loss Assessment.
j.”bodily injury” or “property damage” for which an “insured” under this policy is also an insured under a nuclear energy liability policy or would be an insured under a nuclear energy liability policy but for the exhaustion of its “limits”. (A nuclear energy liability policy is a policy issued by Mutual Atomic energy Liability Underwriters, Nuclear Energy Liability Insurance Association, or Nuclear Insurance Association of Canada or their successors.)
Analysis
These exclusions are common to both the AAIS and the ISO forms. Two of the exclusions of coverage—2.c., liability assumed under contract, and 2.i., loss assessment—exclude coverage except as provided under the incidental liability coverages. Property damage to property owned by an insured is excluded. There is no liability coverage for property rented to, occupied by, used by, or in the care of an insured except for loss resulting from fire, explosion, or smoke (this is sometimes referred to as the “fire legal liability” clause).
Note that, in event of any loss involving bodily injury that results in sickness, disease, or death of a domestic employee, the insurer must be notified within thirty-six months after the end of the policy period in which the injury occurred.
There are two exclusions, new in this form, which merit particular attention. The first is for any claim against an insured for reimbursement or contribution toward damages for which another person may be liable because of bodily injury to an insured. There have been instances of, for example, a child's being injured in a store or fast food restaurant. Parents bring suit against the company, which in turn sues the parents for negligent supervision. Coverage is denied for this action. See, among other cases, Salviejo v. State Farm Fire and Casualty, 958 P.2d 552 (Ha. App. 1998), Knoblock v. Prudential Property and Casualty Insurance Co., 615 A.2d 644 (N.J. App. Ct. 1992), and West American Insurance Co. v. Bedwell, 715 N.E.2d 759 (3 App. Ill. 1999). In this latter case, the exclusion for bodily injury to an insured (and its reinforcement, reimbursement or contribution), would have prevailed except that the injury to an insured took place on a golf cart. Because Illinois law allows insured to sue insured when a motor vehicle is involved, there was coverage; otherwise, the exclusion would have been upheld.
The second exclusion is 2.e., cost or expense for measures performed on property owned by an insured to prevent injury to another, or to prevent property damage to property of another. On a small scale, an insured could claim he or she should be reimbursed for expense to repair an uneven sidewalk. On a grand scale, see the case of Aetna Insurance Company v. Aaron, 685 A.2d 858 ( Md. App. 1996). Here, an insured's condo association was forced to make some $97,000 in repairs to a glass enclosure on the insured's balcony since it was alleged that a downstairs unit, as well as common property, had sustained water damage because of the enclosure. The court found that the costs to repair the enclosure were potentially covered under the liability portion of the policy. This exclusion would appear to preclude such coverage.
The previous form contained one exclusion that applied to both coverages L and M, for bodily injury or property damage for which an insured was also insured under a nuclear energy policy. The current form has separate exclusions: exclusion 2.j. applies to coverage L, while exclusion 3.d. applies to coverage M.
Exclusions Applying Only to Medical Payments
3.Additional Exclusions That Apply Only To Coverage M—Coverage M does not apply to “bodily injury”:
a.to an “insured” or other person, other than a “domestic employee”, who regularly resides on any part of the “insured premises”.
b.to a person, including a “domestic employee”, if a workers' compensation policy covers the injury or if benefits are provided or required to be provided under a workers' compensation, non-occupational disability, occupational disease, or like law.
c.to a “domestic employee” if the “bodily injury”:
1)occurs away from an “insured premises”' and
2)does not arise out of or in the course of his or her employment by an “insured”.
d.from any:
1)nuclear reaction;
2)nuclear radiation; or
3)radioactive contamination;
whether controlled or uncontrolled or however caused; or
4)any consequence of 1), 2), or 3) above.
Analysis
Members of the insured's household—those meeting the definition of an “insured”—or any other person except a domestic employee regularly residing on the insured premises—are excluded from medical payments coverage.
The previous form excluded coverage for persons on the insured premises because a business is conducted there. The current form contains a broad exclusion (1.g.) for bodily injury and property damage arising out of or in any way connected to a business conducted from an insured premises or undertaken by an insured, regardless of location, so there is no need to repeat the exclusion here. (If coverage for an office, studio, or private school conducted by an insured on the insured premises is desired it can be added by endorsement.)
Medical payments are not provided for any person, including domestic employees, if a workers compensation policy covers the injury, or if benefits are provided or required to be provided by law. Domestic employees are not entitled to medical payments coverage if injured away from the insured premises and the injury does not arise out of or in the course of employment by an insured.
Finally, no medical payments coverage is available for any nuclear reaction.