Aircraft and other conveyances' liability

Bodily injury

Business

Employee

Insured

Insured location

Motor vehicle

Occurrence

Property damage

Residence employee

Residence premises

The Named Insured

In this policy, "you" and "your" refer to the "named insured" shown in the Declarations and the spouse if a resident of the same household. "We," "us" and "our" refer to the Company providing this insurance. In addition, certain words and phrases are defined as follows:

Analysis

Throughout the policy when the words "you" and "your" appear, they will always mean the named insured—that is, the person whose name appears on the declarations page—and that person's spouse, if residing in the same household. "You," or the "named insured" is altogether different from "insured." The terms are never used interchangeably.

Aircraft and Other Conveyances' Liability

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; and

(5)Vicarious liability, whether or not imposed by law, for the actions of a child or minor involving such vehicle or craft.

b. For the purpose of this definition:

(1)Aircraft means any contrivance used or designed for flight except model or hobby aircraft not used or designed to carry people or cargo;

(2)Hovercraft means a self-propelled motorized ground effect vehicle and includes, but is not limited to, flarecraft and air cushion vehicles; and

(3)Watercraft means a craft principally designed to be propelled on or in water by wind, engine power or electric motor; and

(4)Motor vehicle means a "motor vehicle" as defined in 7. below.

Analysis

The definition for aircraft, hovercraft, motor vehicle, and watercraft liability incorporates "occupancy" into the list of activities that will not be covered with regard to certain conveyances. This seems harsh, since an insured could occupy an excluded aircraft and inadvertently bump the wheel, causing the aircraft to plow into another plane parked nearby. For example, at air shows people are often allowed to climb into planes for a look. Does this constitute "use"? Probably not. Does this constitute "occupancy"? Yes. There would be no coverage, which there was under the 1991 forms.

Bodily Injury

2."Bodily injury" means bodily harm, sickness or disease, including required care, loss of services and death that results.

Analysis

"Bodily injury" means broken bones, lacerations, illness, or disease (and any money spent to care for the injured person), and loss of services, which includes not only the affection and companionship of a spouse, but also services provided by that spouse. For example, if a noninjured spouse must hire a full-time housekeeper because a spouse can no longer fulfill that function, this "loss of services" is covered.

In some jurisdictions bodily injury may include emotional distress. For example, in Wolf. v. State Farm Insurance Co., 540 A.2d 871 (New Jersey 1988), a father pulled his daughter out of a car where she had been overcome with carbon monoxide. The court ruled that the trauma suffered by the father at seeing his daughter die was emotional trauma and constituted "bodily injury for coverage purposes.

"Bodily injury" is differentiated from "personal injury," which is commonly held to be injuries arising out of libel, slander, malicious prosecution, invasion of privacy, wrongful eviction, or wrongful entry. (This coverage may be purchased by endorsement.) Bodily injury is actual physical harm to the body; personal injury is harm to the psyche. (Coverage for personal injury may be endorsed onto the policy through use of HO 24 82 10 00, Personal Injury Protection; see Standard Homeowners Endorsements.)

Business

3."Business" means:

a.A trade, profession or occupation engaged in on a full-time, part-time or occasional basis; or

b.Any other activity engaged in for money or other compensation, except the following:

(1)One or more activities, not described in (2) through (4) below, for which no "insured" receives more than $2,000 in total compensation for the 12 months before the beginning of the policy period;

(2)Volunteer activities for which no money is received other than payment for expenses incurred to perform the activity;

(3)Providing home day care services for which no compensation is received, other than the mutual exchange of such services; or

(4)The rendering of home day care services to a relative of an "insured".

Analysis

A profit motive is generally the hallmark of a "business." Courts have frequently taken the approach that a business involves two elements: continuity of the activity and monetary gain.

The 2000 and 2011 forms clearly define activities that are considered to be business that the 1991 form did not. The 2000 and 2011 forms state that activities for which the insured receives more than $2,000 during the twelve months preceding the policy counts as a business activity. Therefore, if the son is mowing yards and earns $3,000 during the summer, that is considered to be a business under the homeowners policy. The definition clearly states activities may be full- or part-time. The current definition includes such things as hobbies—for example, an insured might make and sell ceramics—by adding a monetary restriction on business earnings. This impact will be seen in the discussion on exclusions. (See Homeowners Section II Exclusions).

By definition, voluntary activities are not "business" activities; nor is providing home day care services to an insured's relative or on an exchange basis. Note that the relative being cared for need not be a resident of the insured's household. So, for example, an insured may be paid to care for her nonresident grandchildren, and the "business" exclusion will not apply.

Employee

4."Employee" means an employee of an "insured", or an employee leased to an "insured" by a labor leasing firm under an agreement between an "insured" and the labor leasing firm, whose duties are other than those performed by a "residence employee".

Analysis

With this definition, ISO distinguishes an "employee" from a "residence employee." The definition comes into play notably in endorsements that involve a business of some sort, such as Home Day Care Coverage endorsement, HO 04 97 10 00

Insured

5."Insured" means:

a.You and residents of your household who are:

(1)Your relatives; or

(2)Other persons under the age of 21 and in your care or the care of a resident of your household who is your relative;

b.A student enrolled in school full-time, as defined by the school, who was a resident of your household before moving out to attend school, provided the student is under the age of:

(1)24 and your relative; or

(2)21 and in your care or the care of a resident of your household who is your relative; or

c.Under Section II:

(1)With respect to animals or watercraft to which this policy applies, any person or organization legally responsible for these animals or watercraft which are owned by you or any person described in 5.a. or b. "Insured" does not mean a person or organization using or having custody of these animals or watercraft in the course of any "business" or without consent of the owner; or

(2)With respect to a "motor vehicle" to which this policy applies:

(a)Persons while engaged in your employ or that of any person included in 5a. or b.; or

(b)Other persons using the vehicle on an "insured location" with your consent.

Under both Sections I and II, when the word an immediately precedes the word "insured," the words an "insured" together mean one or more "insureds".

Analysis

As noted, "you" and "your" specifically refer to the named insured and spouse. The distinction between "you" and any other "insured" becomes clear in this definition. While "you" are most definitely an insured, so also are relatives by blood, marriage (including common law), or adoption who reside in the named insured's household. Also included are wards or foster children under the age of twenty-one, but not "significant others." The 2011 form revises the wording for clarification purposes that children under the age of twenty-one are insureds but only when in the care of a resident relative of the named insured.

However, in response to changes in living arrangements, ISO has developed endorsement HO 04 58 10 00, Other Members of Your Household. When attached to the policy, this endorsement essentially extends "insured" status for both property and liability to the person named in the endorsement. Endorsement 05 43 10 00, Residence Held in Trust, may be attached when the dwelling has been titled to a personal trust. (If a policy is written in the name of the trust, then the persons residing in the dwelling may not be covered; the endorsement addresses this situation.) For more information, see Standard Homeowners Endorsements.

Students away at school are specifically defined. For a student to be considered an insured, he or she must be under the age of twenty-four (twenty-one for a ward or foster child), a full-time student as defined by the school, a relative, and a resident of the household prior to leaving to attend school. Since many students complete undergraduate work before age twenty-four, the bulk of such students will be covered; however, anyone contemplating post-graduate work may wish to obtain his own coverage. Alternatively, ISO has introduced endorsement HO 05 27 05 11, Additional Insured—Student Living Away from the Residence Premises, which eliminates the twenty-four-year age restriction (but not the twenty-one-year restriction) for a student insured. For more information on this endorsement, see Standard Homeowners Endorsements. The definition of "insured" expands to include coverage, under Section II, for persons or organizations having custody or control of animals or watercraft owned by an insured (as described in 5.a. or 5.b.). not otherwise excluded. For example, a neighbor volunteers to help you (the named insured) by walking your dog. On the walk, the dog slips her leash and runs into another neighbor's yard, tearing up and ruining newly planted flowers and shrubs. Or worse, the dog bites the neighbor when she tries to stop the dog. The outraged neighbor sues both the insured and the dog walker. For coverage purposes, therefore, the voluntary dog walker becomes an "insured" under your policy. Of course, if the neighbor walked dogs for a fee or took the dog without consent, coverage would not apply.

The definition of "insured" expands, as well, to include employees of the named insured (or of any person described in 5.a. or 5.b.) while using a nonexcluded motor vehicle. For example, a chauffeur driving a golf cart for his employer, while the employer enjoys a round of golf, is an insured for any negligent act occurring while he operates the golf cart. Similarly, a nonemployee may be afforded coverage while operating a covered vehicle on an "insured location" with the named insured's permission.

Note that if the word "an" precedes "insured," one or more insureds is the intent.

Insured Location

6.Insured location" means:

a.The "residence premises;"

b.The part of other premises, other structures and grounds used by you as a residence and:

(1)Which is shown in the Declarations; or

(2)Which is acquired by you during the policy period for your use as a residence;

c.Any premises used by you in connection with a premises in a. and b. above;

d.Any part of a premises:

(1)Not owned by an "insured" and

(2)Where an "insured" is temporarily residing;

e.Vacant land, other than farm land, owned by or rented to an "insured";

f.Land owned by or rented to an "insured" on which a one, two, three or four family dwelling is being built as a residence for an "insured";

g.Individual or family cemetery plots or burial vaults of an "insured"; or

h.Any part of a premises occasionally rented to an "insured" for other than "business" use.

Analysis

The definition of "insured location" remains the same as in the prior editions. The definition of "residence premises" includes one to four family dwellings, and endorsement HO 04 44 has been withdrawn.

An insured location can include a hall rented for a wedding reception, or a plot of ground leased for a garden, or even a boat slip. Other examples of an "insured location" include a hotel room where an insured is vacationing, a lot where the insured is constructing a new home for himself, or a vacant plot of ground. There is a subtle distinction here. While the plot used for gardening is clearly used by the insured in connection with the residence premises, no such usage applies to the vacant land. The term "vacant" generally is held to mean free from any man-made structure or activity.

Motor Vehicle

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.

Analysis

This definition clarifies the section II liability exclusions pertaining to these types of vehicles. Previously, there was no definition for a motor vehicle in the exclusion of coverage for liability arising out of the ownership, maintenance, use, loading or unloading of a motor vehicle. Although it would seem far-fetched, under this definition a battery-powered wheel chair, or even a child's battery-powered car, could be considered "motor vehicles"—they are, after all, self-propelled, though not by a motor. In event of a question arising, hopefully common sense will prevail.

Occurrence

8."Occurrence" means an accident, including continuous or repeated exposure to substantially the same general harmful conditions, which results, during the policy period, in:

a."Bodily injury"; or

b."Property damage."

Analysis

An event constituting an "occurrence" may be either sudden and definite in time or place or one that is continuous or repeated and difficult to pinpoint specifically.

"Accident" is generally given its ordinary meaning. Webster's Collegiate Dictionary gives the meaning as "an unforeseen and unplanned event or circumstance." Since "occurrence" is used in section II liability, the intent to cover only those actions arising out of negligence is conveyed. (There is an exception, however. See Homeowners Section II Exclusions.)

Property Damage

9."Property damage" means physical injury to, destruction of, or loss of use of tangible property.

In other words, property belonging to another must sustain damage for coverage to be provided. For example, if the named insured decides to surround his or her property with a high, ugly fence, the neighboring premises has suffered no physical injury, nor is the neighboring premises unable to be used for dwelling purposes. The neighbor may no longer have the spectacular view they once enjoyed; however, this does not constitute property damage.

Residence Employee

10."Residence employee" means:

a.An employee of an "insured", or an employee leased to an "insured" by a labor leasing firm, under an agreement between an "insured" and the labor leasing firm, whose duties are related to the maintenance or use of the "residence premises," including household or domestic services; or

b.One who performs similar duties elsewhere not related to the "business" of an "insured."

A "residence employee" does not include a temporary employee who is furnished to an "insured" to substitute for a permanent "residence employee" on leave or to meet seasonal or short-term workload conditions.

Analysis

This definition makes it clear that those whose scope of employment by an insured falls outside duties related to the residence premises cannot be considered residence employees. This definition adds that a leased employee may be considered a residence employee, if the duties are household or domestic in nature. A temporary worker furnished to an insured, either because the regular residence employee is on leave, or to meet a short-term workload condition, will not be considered a residence employee. The definition, therefore, conveys a degree of permanence in the arrangement.

For example, the household employs a nanny on a full-time basis. She is called home for a month for a family emergency. The family hires a neighbor as a substitute; the substitute is not considered a residence employee.

Residence Premises

11″Residence premises" means:

a.The one family dwelling where you reside;

b.The two, three or four family dwelling where you reside in at least one of the family units; or

c.That part of any other building where you reside;

and which is shown as the "residence premises" in the Declarations.

"Residence premises" also includes other structures and grounds at that location.

Analysis

As noted earlier under "insured location," the definition of "residence premises" has been amended to include a one, two, three, or four family dwelling.

There is a distinction between residence premises, as applying with respect to various property coverages, exclusions, and limitations under section I of the homeowners policy, and insured location, as applying to liability and medical payments under section II. For example, an insured may have a barn shown in the declarations as an "insured location" for section II coverage, but, should the barn burn, the insured must look elsewhere for property coverage. (Of course, the barn can be added for property coverage; see Standard Homeowners Endorsements. for information on coverage B—off premises endorsement HO 04 91 05 11.)

July 19, 2011