By Irene Morrill, CPCU, CIC, ARM, CRM, LIA, CRIS, CPIW — VP of Technical Affairs
So, as we watch TV, we see various commercials and news features of how some of us are “rising” to the occasion to help one another through this pandemic. It is always great to feel good about fellow Americans in a time of crisis. I know that a lot of you agents are doing exceptional things for your customers and for the community these days (and all the time). Wouldn’t it be “awesome” if the consumer knew “we are the good guys”? (Or, at least …YOU are the good guys – I live vicariously through you).
But it has also been said that “no good deed goes unpunished” – and sometimes there are insurance implications of putting others before yourself.
I received the following email from an agent:
The question of the day for me is: “If I am allowing someone to use (live in) my camper trailer temporarily am I covered?” This is through a sponsored program to provide housing for medical staff so they can isolate from their families if they desire. Also, this camper trailer will be located away from the insured's home premises. So, there is the normal day to day question about ‘vacation’ or ‘RV’ liability and whether people should have that normally and not rely on their MAP and HO policy.
And the second question is this case where the camper is not being occupied by an insured, but loaned to someone else. (Of course, the host agency could extend coverage, but alas, they are asking those loaning to hold them harmless instead...)
Massachusetts Auto Policy and Allowing Others to Use Your Trailer
My response: I “assume” you are volunteering the use for free – one of the many civic Americans who are doing what they can to help. (Thank you!)
What Does the Auto Manual State?
If you are letting it be used for “free,” then it is not a business or “public or livery conveyance,” nor can it be considered “rented to others,” which are the two major businesses not allowed in Rule 27 for private passenger autos in the MAIP auto manual:
The trailer seems to fit the definition of trailer in the MAIP auto manual, as generally it is not a “home.”
What Would “Rented to Others” Entail?
Rental implies money or some other compensation. Dictionary.com says:
verb (used with object) to grant the possession and enjoyment of (property, machinery, etc.) in return for the payment of rent from the tenant or lessee. (often followed by out). to take and hold (property, machinery, etc.) in return for the payment of rent to the landlord or owner.
No payment … no “rent” … HURRAH!!!!
Is It Still An “Auto”?
As long as the trailer is still an “auto” … then there shouldn’t be a problem with coverage under the 2008 or 2016 MAP.
Auto – means a land motor vehicle or trailer but does not include:
The trailer has GOT to stay an “auto” to retain coverage under the Massachusetts auto policy. If the trailer is used as a “residence or premises,” it is no longer an auto unless this use is “recreational.”
What Is Recreational Use?
Recreational is NOT defined in the MAP, so let us look at Dictionary.com again:
recreational: of or relating to recreation
Don’t you hate it when they define the word with the word?
recreation: refreshment by means of some pastime, agreeable exercise, or the like.
a pastime, diversion, exercise, or other resource affording relaxation and enjoyment.
Or, according to the Cambridge dictionary:
Neither definition is much help. Allowing a friend to borrow the trailer for a short vacation should qualify as recreational use. But allowing medical staff to stay in the camper trailer so they don’t have to go home during their stint of ministering to COVID-19 patients? Is that “recreational use”? Well, hopefully they are being afforded some “relaxation” in between shifts! I don’t know if they are really “enjoying themselves when not working” … but the trailer IS being used for a “non-work” activity!
The catch is, they are using it as a living place – a residence – because they don’t want to bring the virus home. How long can a trailer be utilized this way before the “use” is beyond “recreational”? There could be a problem with the word “recreation” in the definition of “auto” for trailers.
If the trailer is considered an “auto,” then it receives Parts 1-6 for free from the definition of “your auto” in the MAP:
5. Your Auto – means:
A. The vehicle(s) described on the Coverage Selections Page.
For Parts 1, 2, 3, 4, 5 and 6 the term your auto also includes any trailer not described on the Coverage Selections Page as covered under those Parts.
6. Trailer – means a vehicle designed to be pulled by a private passenger auto, motorcycle, pick-up truck, van, or similar vehicle and designed for use on public roads. This includes a farm wagon or a farm implement.
If the trailer qualifies as “your auto,” Part 1-6 apply. HOWEVER, Part 6 Medical Payments has an exclusion that is NOT found in Parts 1-5:
We will not pay for expenses resulting from injuries to:
1. Anyone injured while in a vehicle which had been placed off the public roads for use as a residence.
This has always been more restrictive than the concept of recreational use in the definition of “auto.”
Part 2 PIP does not have this exclusion nor does Part 5, so if someone is injured, PIP could respond and when sued, the trailer owner and permissive user has Part 5 Optional Bodily Injury to provide defense and payment if considered negligent.
If it is an “auto” and a “trailer,” then the trailer can be added to the MAP for collision and comprehensive coverages.
The agent also mentioned the “service” organization, which is helping to provide the donated trailer to medical personnel, wanted to be “held harmless.” So, the trailer owner is assuming responsibility for injury to others, not only for himself but for this “service” organization?
The 2016 MAP has the following exclusion under Optional Bodily Injury:
6. For Liability assumed under any other contract or agreement.
Any assumption of responsibility will not be “honored.”
What If The “Trailer” Is Not Considered An “Auto”?
Collision and comprehensive coverages that might have been shown on the Coverage Selections Page will NOT apply if the trailer is not an “auto,” because the first sentence in the insuring agreement of each coverage states:
Under this Part, we will pay for any direct and accidental damage to your auto caused by a collision.
If it is not an auto, then Parts 1-6 found in definition #5 Your Auto also do not apply.
So, Bottom Line…
We MUST make sure the trailer is an “auto” for there to be coverage under the auto policy!
Some carriers are “stepping up” during the pandemic, in not exercising delivery exclusions and/or giving back premium for “lack of use.” Maybe this carrier will agree in writing that the trailer in this case is still an “auto” and therefore, the MAP of the owner will apply if something happens to the trailer or an injury occurs during the use of the trailer.
What About the Homeowners Policy?
Your ISO HO policy could provide defense and personal liability for a detached trailer, should you become legally responsible for injuries.
ISO HO-91 Section II discussion re: trailers
- Coverage E – Personal Liability and Coverage F – Medical Payments to Others do not apply to "bodily injury" or "property damage":
f. Arising out of:
(1) The ownership, maintenance, use, loading or unloading of motor vehicles or all other motorized land conveyances, including trailers, owned or operated by or rented or loaned to an "insured";
(1) This exclusion does not apply to:
A trailer not towed by or carried on a motorized land conveyance.
All motorized land conveyances and trailers are excluded under Section II, but if the trailer is not attached, the exclusion does not apply. There is Section II (BI/PD to others and MP to others) coverage for unattached trailers!
HO-2000/2011 and Section II for trailers
- "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.
- "Aircraft Liability", "Hovercraft Liability", "Motor Vehicle Liability" and "Watercraft Liability", subject to the provisions in b. below, mean the following:
- Liability for "bodily injury" or "property damage" arising out of the:
SECTION II – EXCLUSIONS
- "Motor Vehicle Liability"
Under the ISO HO-2000 and HO-2011 versions of the homeowners policy, the term “motor vehicle” is defined. It includes an ATTACHED trailer. So, if the trailer is NOT attached to a self-propelled vehicle, it is not a motor vehicle and therefore the liability exclusion will not apply – A longer-winded way of getting to the same result as the ISO HO-91!
Good News for Contractual Assumption of Responsibility
All editions of the ISO HO policy allow certain contractual assumptions:
F. Coverage E – Personal Liability
Coverage E does not apply to:
- 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;
If the assumption of BI/PD to others is assumed PRIOR to the injury in a WRITTEN contract, the ISO HO policy should honor the contractual assumption as long as the injury would normally be covered. An example could be a guest exiting the trailer who trips on a faulty step and sues the owner.
Physical Damage Coverage for the Trailer
None of the ISO HO editions provides sufficient contents value for the trailer, so one needs a recreational vehicle physical damage policy. And then, one would need to READ it to make sure that coverage allows this “use by others as a living arrangement” activity.
So … when people who are NOT insurance agents do a good deed …. I hope they contact their insurance agent to make sure that the good deed GOES “unpunished”!
Please remember that part of MAIA service is answering questions and providing information. Please feel free to email me when you have a coverage question, problem, or issue. Perhaps I can help at firstname.lastname@example.org
This article has been developed expressly for the members of MAIA.
Reprint by other than members without the express permission of the author is not permitted.