Section I Perils Insured Against

Section I Exclusions

Section I Conditions

Section II Liability Coverages

Section II Exclusions

Section II Additional Coverages

Section II Conditions

Sections I and II Conditions

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.

Analysis

Like the homeowners policy, since the condo policy is designed to provide coverage for a dwelling and its related liability issues, motor vehicles are excluded from the policy. However, there are some exceptions, so the policy explains exactly what vehicles are not covered and what special exceptions exist.

Coverages E Personal Liability and F Medical Payments do not apply to any "motor vehicle liability" as defined if at the time of the loss the "motor vehicle" is registered for use on public roads or property, or is not registered for such use but registration is required by law for the use of the vehicle where it is being operated at the time of loss. Also, if the vehicle is being operated in or practicing for any sort of prearranged or organized race, speed contest or other competition, or the vehicle is rented to others, used to carry people or cargo for a fee or used for "business" except for a golf cart on a golfing facility, there is no coverage. Even if this exclusion does not apply, coverage is further excluded unless the vehicle fits some very specific parameters as follows. First, coverage is allowed if the vehicle is in dead storage on an "insured location". Dead storage is not defined in the policy; a vehicle in dead storage is often considered to be one that is not operable, or at least has all the gas drained, may have had the battery removed, and may not be registered for use on public roads. The vehicle is stored will not be used regularly. A vehicle in this condition is more a piece of property than a functioning motor vehicle that should be covered under a personal or business auto policy, therefore an exception can be made for such a vehicle on the condo or homeowners policy.

An exception also exists for vehicles used solely to service a residence or designed to assist the handicapped and at the time of the "occurrence" is either being used to assist someone or is parked on an "insured location". Newly added in 2022 is the exception for riding lawn mowers that, at the time of the "occurrence", are being used to mow a lawn. This new exception further clarifies the exception for vehicles used solely to service a residence, although most condo owners aren't mowing the lawn. Further exceptions include 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 B.10.a., b., d., e., or h. Those locations include the "residence premises", other premises used by you as a residence and shown in the declarations or acquired during the policy period for use as a residence, any part of a premises not owned by an "insured" where an "insured" is temporarily residing, vacant land other than farm land owned or rented by an "insured" or any part of a premises occasionally rented to an "insured" for other than "business" purposes. Vehicles off an "insured location" that are designed as toy vehicles for children under the age of seven that are powered by one or more batteries and that are not built or modified to exceed five miles per hour on level ground are also granted coverage.

Golf carts have their own exception. If the cart is owned by an "insured', designed to carry up to four people, not built or modified to exceed 25 miles per hour on level ground, coverage is granted if at the time of an "occurrence" the vehicle is within the legal boundaries of a golfing facility and is parked or stored there. Also, if the vehicle is being used by an "insured" at such a facility to play golf or for other recreational/leisure activities available, or traveling to or from where the carts are stored or parked, or crossing public roads at designated points within the facility, or within a private residential community subject to a property owners association and contains an "insured's" residence, then coverage would be afforded. There are many retirement communities where individuals travel around the community via golf cart; this exception allows coverage for those vehicles.

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.

Analysis

The watercraft liability exclusion has been updated to make the described exceptions and the exclusion itself easier to understand. Similar to the motor vehicle exclusion, there is no coverage if the vehicle is being operated in or practicing for any sort of prearranged or organized race, speed contest or other competition. An exception is made for sailing vessels or predicted log cruises. Also coverage is excluded if the vehicle is rented to others, used to carry people or property for a fee or used for a "business" purpose. Exceptions for certain size vehicles with certain size motors are made as follows:

It is important to note that the horsepower has been changed in the exceptions and the trigger point is more or less than 25 horsepower instead of 50.

C. Aircraft Liability

This Policy does not cover "aircraft liability".

D. Hovercraft Liability

This Policy does not cover "hovercraft liability".

E. Coverage E – Personal Liability And Coverage F – Medical Payments To Others Coverages E and F do not apply to the following:

1. Expected Or Intended Injury "Bodily injury" or "property damage" which is expected or intended by an "insured", even if the resulting "bodily injury" or "property damage":

a. Is of a different kind, quality or degree than initially expected or intended; or b. Is sustained by a different person, entity or property than initially expected or intended. However, this Exclusion E.1. does not apply to "bodily injury" or "property damage" resulting from the use of reasonable force by an "insured" to protect persons or property;

2. Business

a. "Bodily injury" or "property damage" arising out of or in connection with a "business" conducted from an "insured location" or engaged in by an "insured", whether or not the "business" is owned or operated by an "insured" or employs an "insured". This Exclusion E.2. applies but is not limited to an act or omission, regardless of its nature or circumstance, involving a service or duty rendered, promised, owed or implied to be provided because of the nature of the "business". b. With respect to other than "home-sharing host activities", this Exclusion E.2. does not apply to:

(1) The rental or holding for rental of an "insured location";

(a) On an occasional basis if used only as a residence; (b) In part for use only as a residence, unless a single-family unit is intended for use by the occupying family to lodge more than two roomers or boarders; or (c) In part, as an office, school, studio or private garage; and

(2) An "insured" under the age of 21 years involved in a part-time or occasional, self-employed "business" with no employees;

3. Professional Services "Bodily injury" or "property damage" arising out of the rendering of or failure to render professional services;

4. Insured's Premises Not An Insured Location "Bodily injury" or "property damage" arising out of a premises:

a. Owned by an "insured"; b. Rented to an "insured"; or c. Rented to others by an "insured"; that is not an "insured location";

5. War "Bodily injury" or "property damage" caused directly or indirectly by war, including the following and any consequence of any of the following:

a. Undeclared war, civil war, insurrection, rebellion or revolution; b. Warlike act by a military force or military personnel; or c. Destruction, seizure or use for a military purpose. Discharge of a nuclear weapon will be deemed a warlike act even if accidental;

6. Communicable Disease "Bodily injury" or "property damage" which arises out of the transmission of a communicable disease by an "insured";

7. Sexual Molestation, Corporal Punishment Or Physical Or Mental Abuse "Bodily injury" or "property damage" arising out of sexual molestation, corporal punishment or physical or mental abuse; or

8. Controlled Substance "Bodily injury" or "property damage" arising out of the use, sale, manufacture, delivery, transfer or possession by any person of:

a. A Controlled Substance as defined by the Federal Food and Drug Law at 21 U.S.C.A. Sections 811 and 812; or b. Any "cannabis" regardless of whether such "cannabis" is considered a Controlled Substance.

Controlled Substances include but are not limited to cocaine, LSD and all narcotic drugs. However, this exclusion does not apply to the legitimate use of prescription drugs by a person following the lawful orders of a licensed health care professional.

Exclusions A. "Motor Vehicle Liability", B. "Watercraft Liability", C. "Aircraft Liability", D. "Hovercraft Liability" and E.4. "Insured's" Premises Not An "Insured Location" do not apply to "bodily injury" to a "residence employee" arising out of and in the course of the "residence employee's" employment by an "insured".

Analysis

The aircraft and hovercraft liability exclusions are self-explanatory and complete. There is no coverage for any aircraft or hovercraft, and there are no exceptions to these exclusions.

Then a series of exclusions applies to both Coverages E and F, Personal Liability and Medical Payments to others. These exclusions are mostly unchanged. The first exclusion is for expected or intended injury. If an insured intends to cause harm to another person or damage to the property of another party, coverage is excluded. But the exclusion doesn't stop there – it also excludes unintended injury or damage if the injury or damage is of a different degree than expected or intended, or happens to a different person or property than intended. The insured is at a bar and gets into an altercation with another patron. The insured takes a swing at the other party but misses and hits an innocent bystander, breaking that person's jaw. That injury is excluded because the insured intended to cause harm, even though the injury was intended for another party. An exception exists if the injury or damage results from an insured's attempt to protect persons or property by reasonable force. If an insured pulls someone out of the way of a speeding vehicle and the other person falls to the ground because of the insured's actions and is injured, that injury would be covered as the insured was trying to protect that person from the speeding vehicle.

Because the policy is designed to provide coverage for an insured's personal property and liability, injury or damage that arises out of or in connection with a "business" that's conducted from the "insured location" or engaged in by an "insured" is excluded. The exclusion applies whether or not the "business" is owned or operated by an "insured" or employs an "insured'. Likewise the exclusion applies but is not limited to acts or omissions, regardless of nature or circumstance, that involve a service or duty rendered, promised, owed or implied because of the nature of the "business". An exception exists for the rental or holding for rental of an "insured location" under three conditions. Those conditions are if the property is rented on an occasional basis for use of the property as a residence, is rented in part for use as a residence unless a single-family unit is intended for use by the occupying family to house more than two roomers or boarders, or for rental in part as an office, school, studio or private garage. If the property is a single-family residence, it may be rented occasionally and as long as no more than two roomers or boarders are renting the property. It may also be rented in part as an office, school or private garage. The condo could have a detached garage that the insured occasionally rents out as a studio. This exception for the occasional rental of the property does not apply to "home-sharing host activities". This is new language in the 2022 edition of the form.

Any injury or damage that results from an insured's performance of any professional service is excluded. Professional services are not defined and there are no exceptions to the exclusion. Merriam-Webster Online defines professional as: characterized by or conforming to the technical or ethical standards of a profession. So any service that requires specific training would be excluded, whether it's accounting, nursing, or therapy.

Coverage is excluded when a premises that is owned, rented to an "insured" or rented to others by an "insured" is not an "insured location". Remember "insured location" is a defined term with very specific parameters that include the "residence premises", other property shown in the declarations or acquired during the policy period, premises not owned by an insured but where the insured is temporarily residing, vacant land, land where a dwelling is being built for the insured, premises occasionally rented to an insured for other than "business" use, or premises used by the insured in connection with the "residence premises".

War, including warlike acts, insurrection, rebellion, revolution, or destruction or seizure for a military purpose is excluded. It is impossible to predict and develop coverages and premiums for such events. The discharge of a nuclear weapon is considered a warlike act even if the discharge is accidental because of how dangerous nuclear weapons are.

Any transmission of a communicable disease by an insured that results in injury or damage is excluded. Such damages are difficult if not impossible to predict and develop rates for.

Likewise, sexual molestation, corporal punishment or physical or mental abuse is excluded. These are deliberate acts of an insured with the intent to cause harm to another, and providing coverage for such actions is against public policy.

Controlled substances, and an injury or damage that arises out of the use, sale, manufacture, delivery, transfer or possession of such substances is excluded. Controlled substances are those that are defined by the Federal Food and Drug Law at 21 U.S.C.A. Sections 811 and 812 as such. Newly added as a controlled substance is "cannabis", whether or not "cannabis" is considered a Controlled Substance by the food and drug law. With the changing nature of where cannabis is legal and for what purposes throughout the country, keeping it excluded makes it easier to address the liability issues. Controlled Substances are listed as including, but not limited to, cocaine, LSD, and all narcotics. There is an exception for the legitimate use of prescription drugs if the person is following the instructions of a licensed healthcare professional. The intent of the exclusion is to remove coverage for any injury or damage that could result from any illegal drug manufacture, dealing, or use.

The last section states that the motor vehicle, watercraft, aircraft, hovercraft, and insured's premises not an insured location exclusions do not apply to injury to a "residence employee" arising out of the employee's employment by an "insured". If a "residence employee" is picking up the children from school and has an accident, there would be coverage. Likewise, if the family is staying at the beach on vacation and the residence employee is injured while watching the children, there would be coverage for those injuries.

F. Coverage E – Personal Liability Coverage E does not apply to:

1. Liability:

a. For any loss assessment charged against you as a member of an association, corporation or community of property owners, except as provided in D. Loss Assessment under Section II – Additional Coverages; b. Under any contract or agreement entered into by an "insured". However, this exclusion does not apply to written contracts:

(1) That directly relate to the ownership, maintenance or use of an "insured location"; or (2) Where the liability of others is assumed by you prior to an "occurrence"; unless excluded in a. above or elsewhere in this Policy;

2. "Property damage" to property owned by an "insured". This includes costs or expenses incurred by an "insured" or others to repair, replace, enhance, restore or maintain such property to prevent injury to a person or damage to property of others, whether on or away from an "insured location";

3. "Property damage" to property rented to, occupied or used by or in the care of an "insured". This exclusion does not apply to "property damage" caused by fire, smoke or explosion;

4. "Bodily injury" to any person eligible to receive any benefits voluntarily provided or required to be provided by an "insured" under any:

a. Workers' compensation law; b. Non-occupational disability law; or c. Occupational disease law;

5. "Bodily injury" or "property damage" for which an "insured" under this Policy:

a. Is also an insured under a nuclear energy liability policy issued by the:

(1) Nuclear Energy Liability Insurance Association; (2) Mutual Atomic Energy Liability Underwriters; (3) Nuclear Insurance Association of Canada; or any of their successors; or

b. Would be an insured under such a policy but for the exhaustion of its limit of liability; or

6. "Bodily injury" to you or an "insured" as defined under Definition 9.a. or b. This exclusion also applies to any claim made or suit brought against you or an "insured" to:

a. Repay; or b. Share damages with; another person who may be obligated to pay damages because of "bodily injury" to an "insured".

Analysis

The next set of exclusions applies to Coverage E Personal Liability only. The first exclusion is for any loss assessment charged against an insured as a member of an association or community of property owners except for the Loss Assessment coverage provided under Additional Coverages. There is a limited amount of coverage for loss assessment which will be discussed further in this article. Liability is also excluded for any contract entered into by an insured with two exceptions. Those exceptions are for written contracts that directly relate to the ownership, maintenance of use of the "insured location" or where the liability of others is assumed by the insured before an "occurrence" happens, unless that liability is excluded elsewhere in the policy.

An insured cannot be liable to himself, therefore any "property damage" to property owned by an insured is excluded. Damage to property owned by an insured would be covered under the Section I portion of the policy. Likewise damage to property rented, occupied, used by or in the care of the insured is also excluded, except to losses caused by fire, smoke or explosion. Again, property is covered under Section I of the policy.

Bodily injury to anyone eligible to collect benefits from any workers compensation, non-occupational disability law or occupational disease law is excluded. Such injuries should be handled under the applicable programs if the programs are able to be provided voluntarily or are required to be provided by an insured. If an insured is required to provide workers compensation benefits for his household staff, then any injuries staff receive on the job would be covered under workers compensation, and not the homeowners policy.

If an insured is provided coverage under a nuclear energy liability policy issued by the Nuclear Energy Liability Insurance Association, the Mutual Atomic Energy Liability Underwriters, the Nuclear Insurance Association of Canada or successors to any of these then coverage is excluded. Coverage is still excluded if the insured is covered under such a policy but the limits have been exhausted. Damage or injury from any nuclear event is not something the condo policy is designed to provide coverage for.

Injury to an "insured" as defined is also excluded, and includes any claims brought against an "insured" to repay or share damages with another person who might be obligated to pay damages because of injury to an "insured". Again, an insured cannot be liable for injuries to himself, and likewise cannot be held liable when another party is obligated to pay damages because of injury to an "insured".

G. Coverage F – Medical Payments To Others

Coverage F does not apply to "bodily injury":

1. To a "residence employee" if the "bodily injury":

a. Occurs off the "insured location"; and b. Does not arise out of or in the course of the "residence employee's" employment by an "insured";

2. To any person eligible to receive benefits voluntarily provided or required to be provided under any:

a. Workers' compensation law; b. Non-occupational disability law; or c. Occupational disease law;

3. From any:

a. Nuclear reaction; b. Nuclear radiation; or c. Radioactive contamination; all whether controlled or uncontrolled or however caused; or d. Any consequence of any of these; or

4. To:

a. A "home-sharing occupant"; or b. Any person, other than a "residence employee" of an "insured", regularly residing on any part of the "insured location".

Analysis

Certain exclusions apply to the Medical Payments coverage only. The first is for injury to a "residence employee" if the injury occurs off an "insured location" and does not arise out of the employee's employment by an insured. If an employee is off duty and is injured while going to the grocery store, there is no coverage since the injury is not related to the duties of the employee for the insured.

Likewise, if there is any coverage available under a workers compensation, non-occupational disability law or occupational disease law, then there is no coverage under this policy. Again such injuries should be handled under the appropriate program.

Any injury from a nuclear reaction, radiation, radioactive contamination, whether controlled or however caused or any consequence of any of these is excluded. There are no exceptions to this exclusion for injuries from resultant fire or other aftereffects of a nuclear release.

Newly added to this exclusion is injury to "home-sharing occupants". Likewise, injury to any person regularly residing on any part of the "insured location" other than a "residence employee" of the "insured" is also excluded. If someone is a regular resident of the premises, then medical payments coverage does not apply.

Includes copyrighted material of Insurance Services Office, Inc., with its permission.