The earlier discussions on the Section I portion of the form can be found beginning here.

SECTION II – LIABILITY COVERAGES

A. Coverage E – Personal Liability If a claim is made or a suit is brought against an "insured" for damages because of "bodily injury" or "property damage" caused by an "occurrence" to which this coverage applies, we will:

1. Pay up to our limit of liability for the damages for which an "insured" is legally liable. Damages include prejudgment interest awarded against an "insured"; and 2. Provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent. We may investigate and settle any claim or suit that we decide is appropriate. Our duty to settle or defend ends when our limit of liability for the "occurrence" has been exhausted by payment of a judgment or settlement.

B. Coverage F – Medical Payments To Others We will pay the necessary medical expenses that are incurred or medically ascertained within three years from the date of an accident causing "bodily injury". Medical expenses means reasonable charges for medical, surgical, x-ray, dental, ambulance, hospital, professional nursing, prosthetic devices and funeral services. This coverage does not apply to you or regular residents of your household except "residence employees". As to others, this coverage applies only:

1. To a person on the "insured location" with the permission of an "insured"; or 2. To a person off the "insured location", if the "bodily injury":

a. Arises out of a condition on the "insured location" or the ways immediately adjoining; b. Is caused by the activities of an "insured"; c. Is caused by a "residence employee" in the course of the "residence employee's" employment by an "insured"; or d. Is caused by an animal owned by or in the care of an "insured".

Analysis

Section II provides liability coverage for the insured. Coverage is for "bodily injury" or "property damage" caused by an "occurrence" as long as coverage applies in the given situation. As always, there are exclusions and exceptions to the coverage.

First, coverage is for damages for which the "insured" is legally liable, including prejudgment interest awarded against an insured. The policy does not delve into what makes someone legally liable, that is left to the court system.

Defense

A defense is provided by the insurer at its expense by a counsel of the insurer's choice, even if the suit is groundless, false or fraudulent. If there is possible coverage under the policy, then the insurer will provide a defense. If the insured's dog bites a neighbor and the neighbor sues, the insurer provides a defense. However, if the insured shoots the neighbor because he is playing his music loudly then no defense will be provided because that action of the insured is an intentional act to cause damage or harm, and that is excluded.

The insurer may investigate and settle any claim or suit that it deems appropriate; an insurer may find it less expensive to settle a claim than fight it in court, regardless of the wishes of the insured. Once the limit of liability for an "occurrence" has been exhausted by a payment or settlement then technically the insurer's duty to settle or defend ends. However, should a carrier abandon its insured in the middle of a suit courts would frown upon such action. A carrier may continue the defense but make it clear to the insured that he is responsible for paying the expenses.

Medical Payments to Others

Coverage F is Medical Payments to Others, and coverage is provided for medical expenses established within three years of the date of the accident that caused a "bodily injury" to another party. Included in medical expenses are reasonable charges for medical, surgical, x-ray, dental, ambulance, hospital, professional nursing, prosthetic devices and funeral services that may be required. Coverage does not apply to the insured or regular residents other than "resident employees". "Resident employees" are not relatives, and are on the premises because they are hired to be there.

There are six scenarios where coverage for medical payments applies to others. The first is when the person is on the "insured location" with the permission of the "insured". An insured invites a friend over to watch movies and the friend is injured while in the house. There is coverage for medical expenses.

Off the Insured Location

If a person is off the "insured location", there is still coverage for injury if it arises out of certain conditions or activities. The first is if the injury arises out of a condition on the location or the ways immediately adjoining it; the insured's deck has a rotten plank that a friend falls through, or a pedestrian walks into a low hanging tree branch, for example. Also, if the activities of an insured cause an injury to someone while the insured is off the "insured location" there is coverage. The insured could be in a park practicing juggling and a juggling club goes astray and injures a passerby; that would be covered.

Residence Employee

Injuries caused by a "residence employee" as long as the injury results from the employee being in the course of his employment – if the gardener cuts a limb off a tree but did not realize someone was standing under the tree, that would be covered since the gardener was performing his duties.

Animal

Lastly, an injury that is caused by an animal owned by or in the care of an "insured" would be covered. If the insured's cat bites a visiting neighbor, that is covered, as would be an injury if the "insured" was dog-sitting a friend's dog and that dog bit a neighbor. If the animal is in the "insured's" custody, then the insured's coverage would pay for the injury.

SECTION II – EXCLUSIONS

A. Motor Vehicle Liability

1. Coverages E and F do not apply to any "motor vehicle liability" if, at the time and place of an "occurrence", the involved "motor vehicle":

a. Is registered for use on public roads or property; b. Is not registered for use on public roads or property, but such registration is required by a law, or regulation issued by a government agency, for it to be used at the place of the "occurrence"; or c. Is being:

(1) Operated in, or practicing for, any prearranged or organized race, speed contest or other competition; (2) Rented to others; (3) Used to carry persons or cargo for a charge; or (4) Used for any "business" purpose except for a motorized golf cart while on a golfing facility.

2. If Exclusion A.1. does not apply, there is still no coverage for "motor vehicle liability", unless the "motor vehicle" is:

a. In dead storage on an "insured location"; b. Used solely to service a residence; c. A riding lawn mower that, at the time of the "occurrence", is being used to mow a lawn; d. Designed to assist the handicapped and, at the time of an "occurrence", it is:

(1) Being used to assist a handicapped person; or (2) Parked on an "insured location";

e. Designed for recreational use off public roads and:

(1) Not owned by an "insured"; or (2) Owned by an "insured" provided the "occurrence" takes place:

(a) On an "insured location" as defined in Definition B.10.a., b., d., e. or h.; or (b) Off an "insured location" and the "motor vehicle" is:

(i) Designed as a toy vehicle for use by children under seven years of age; (ii) Powered by one or more batteries; and (iii) Not built or modified after manufacture to exceed a speed of five miles per hour on level ground;

f. A motorized golf cart that is owned by an "insured", designed to carry up to four persons, not built or modified after manufacture to exceed a speed of 25 miles per hour on level ground and, at the time of an "occurrence", is within the legal boundaries of:

(1) A golfing facility and is parked or stored there, or being used by an "insured" to:

(a) Play the game of golf or for other recreational or leisure activity allowed by the facility; (b) Travel to or from an area where "motor vehicles" or golf carts are parked or stored; or (c) Cross public roads at designated points to access other parts of the golfing facility; or

(2) A private residential community, including its public roads upon which a motorized golf cart can legally travel, which is subject to the authority of a property owners association and contains an "insured's" residence.

B. Watercraft Liability

1. Coverages E and F do not apply to any "watercraft liability" if, at the time of an "occurrence", the involved watercraft is being:

a. Operated in, or practicing for, any prearranged or organized race, speed contest or other competition. This exclusion does not apply to a sailing vessel or a predicted log cruise; b. Rented to others; c. Used to carry persons or cargo for a charge; or d. Used for any "business" purpose.

2. If Exclusion B.1. does not apply, there is still no coverage for "watercraft liability" unless, at the time of the "occurrence", the watercraft:

a. Is stored; b. Is a sailing vessel, with or without auxiliary power, that is:

(1) Less than 26 feet in overall length; or (2) 26 feet or more in overall length and not owned by an "insured"; or

c. Is not a sailing vessel and is powered by one or more engines or motors, including those that power a water jet pump, totaling:

(1) 25 horsepower or less; or (2) More than 25 horsepower; and

(a) Not owned by an "insured"; or (b) Are outboard engines or motors owned by an "insured" who acquired such engines or motors:

(i) During the policy period; or (ii) Before the policy period, but only if you declare them at policy inception or your intent to insure them is reported to us in writing within 45 days after you acquire them. The coverages in (b) above apply for the policy period. Horsepower means the maximum power rating assigned to the engine or motor by the manufacturer.

C. Aircraft Liability This Policy does not cover "aircraft liability". D. Hovercraft Liability This Policy does not cover "hovercraft liability"

Analysis

Because this policy is designed to provide coverage for the insured's dwelling, the liability coverage applies to the insured as an individual and for incidents that occur on the dwelling property. Therefore anything related to a vehicle, be it an auto, boat, plane, or hovercraft, is excluded.

Motor Vehicles

The first exclusion is for motor vehicles and coverage under liability or medical payments is excluded if the "motor vehicle" involved in the incident is registered for use on public roads or property; or is not registered for use on public roads or property but is required to be registered by local laws or a governmental agency to be used at the place of the "occurrence". A registered auto generally is required by the registration agency to have automobile insurance.

For example, an insured has a snowmobile and while it does not have to be registered for use on public roads or property, it still must be registered with the local registration office in order to be used on local snowmobile trails. Because it must be registered, whether or not the registering agency requires the snowmobile to be insured, there is no coverage for the snowmobile on the homeowners policy.

Coverage is also excluded if the vehicle is operated in or practicing for any sort of organized race or contest, is rented to others, is being used to carry people or property for a fee, or is used in any "business" purpose except for a golf cart while on a golfing facility. Racing a vehicle is always excluded on personal lines policies. LIkewise, the renting of a vehicle to others or carrying people or property for a fee is excluded, even if it is an ATV or snowmobile. This is too close to a business use to be covered by the homeowners policy. "Business" use of a vehicle is also excluded except for a motorized golf cart while on a golfing facility. This may seem like an odd exception, but if the insured meets a client for an afternoon of golf at the local golf course and the client is injured while the insured is driving the golf cart, there would be coverage.

Any time a vehicle is required to be registered for use on public roads, it should be insured under an auto policy. For example, an ATV being driven on certain public trails would fall under this category, but if the ATV is only driven on the insured's or other private property, it would not.

There are a few exceptions. If the vehicle is in dead storage on an "insured location", is used solely to service a residence, is a riding lawn mower that at the time of loss is being used to mow a lawn, or is designed to assist the handicapped and at the time is either being used to assist the handicapped or is parked on an "insured location", there is coverage.

Dead storage is not defined, but the common interpretation is that the vehicle has been drained of gas and is not functional. The insured would have to go to a certain extent of preparation in order to move the vehicle, he can't just go out to the garage and turn the key or push the ignition button.

A vehicle that is used solely to service a residence would be a lawnmower or a little tractor that the insured only uses on his premises, or that he could take to an elderly neighbor's in order to assist the neighbor with yard maintenance.

A new exception in this edition of the policy is for a riding mower that at the time of the incident is being used to mow a lawn. It doesn't have to be the insured's lawn, it could be that elderly neighbor's lawn. But the riding mower must be in use cutting a lawn at the time of the incident. If it is parked and somehow a person is injured on the mower, there would be no coverage.

A vehicle designed to assist the handicapped must either be in use assisting the handicapped person or must be parked on an "insured location" at the time of an incident in order for there to be coverage. If the insured's grandchild is driving the powered wheelchair around the neighborhood and hits and injures another person, there would be no coverage.

Another exception is for vehicles designed for recreational use off of public roads that are not owned by an "insured" or are owned by an "insured", as long as the "occurrence" takes place on an "insured location" as defined in certain sections of the definitions, or is off an "insured location" and is designed as a toy for use by children under seven years of age, is powered by one or more batteries and is not built or modified after manufacture to exceed five miles per hour on level ground. This exception would cover for example, a visiting child injured at the birthday party when the homeowner's three-year-old son drove over her in his child-sized firetruck.

The defined parts of the "Insured location" where a vehicle would be covered are definitions B.10.a., b., d., e. or h. These definitions are as follows:

The "residence premises" The part of other premises, structures and grounds used as a residence which is shown in the declarations or is acquired by the insured during the policy period for use as a residence d. Any part of a premises not owned by an "insured" and where the "insured" is living temporarily e. Vacant land other than farm land owned or rented to an "insured" h. Any part of a premises occasionally rented to an "insured" for other than business purposes. In general, the exception applies to locations where the insured is living even if only temporarily, a rented premises as long as it isn't rented for business use, or vacant land other than farm land. For example, if the insured regularly takes his dirt bike to join up with other dirt bike owners at a vacant property and someone is injured by the insured's bike driving, there would be coverage for the third party's injury.

Golf Carts

A separate set of exceptions exists for golf carts owned by an insured as long as it is designed to carry no more than four people, hasn't been modified to go any faster than 25 miles per hour on level ground, and at the time of an "occurrence" is within a golfing facility or residential community under certain circumstances.

Coverage applies if the cart is on a golfing facility and is stored or parked there; or, is being used by an "insured" to play golf or participate in other leisure or recreational activities at the facility; is being used to travel to or from where vehicles or carts are parked or stored, or is being used to cross public roads at access points to access other parts of the golfing facility.

A golf cart can also be used within a private residential community including that community's public roads where a motorized golf cart can legally travel, and the community is subject to the authority of a property owners association and the insured's residence is within the community itself. There are many communities surrounding golf courses where residents travel around the community on their golf carts. As long as the cart is within the community, there is coverage.

For example, grandpa Joe owns his own golf cart and lives in the Villages senior community. If grandpa is driving his golf cart across the highway from his villa to the community's golf course and hits a bicyclist on the highway, this exception would cover the cyclist's injuries.

Watercraft

The watercraft exclusion applies to vehicles that are operated in or practicing for any prearranged, organized race, speed content or other competition, unless the watercraft is a sailing vessel or the contest is a predicted log cruise. Likewise, there is no coverage if the vessel is rented to others, used to carry persons or cargo for a fee, or used for any "business" purposes.

The exceptions to the exclusion for watercraft have been simplified in this form. There is an exception for a vessel that is stored or that is a sailing vessel, with or without auxiliary power that is less than 26 feet, or is more than 26 feet and not owned by the "insured". This has not changed.

Coverage for powered vehicles has been changed and the horsepower listed in the exceptions is now maximum 25 horsepower instead of 50. If the vessel has less than or equal to 25 horsepower there is coverage. If the vessel has more than 25 horsepower, coverage exists if the vessel is not owned by the "insured", or the engines are outboard motors owned by an "insured" who acquired the motors during the policy period, or before the policy period if they were declared at the inception of the policy, or the insurer was notified within 45 days of acquisition. The following chart displays the coverages:

The policy states that the coverages apply for the policy period, and defines horsepower as the maximum power rating assigned to the engine by the manufacturer.

Aircraft and hovercraft liability are completely excluded with no exceptions.

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