Did You Know? Your Kid's 'Barbie Car' is an Uninsured Motor Vehicle

As a member of the IIABA's Countrywide Technical Affairs Committee since 2008, I've been introduced to a wide variety of coverage gaps, both large and small. Following CTAC's February meeting near Cincinnati, I decided to occasionally post on this blog about some of the more interesting and lesser known coverage gaps. ISO has agreed to address some of these but is reluctant to take action on others.

Today, I want to point out to insurance producers and their Homeowners insurance clients an interesting anomaly in the ISO Homeowners 3 Special Form. Which of the following exposures do you think the HO-3 covers for liability?

1. A golf cart that can hit a top speed of 25 MPH tooling around the public roads of a private residential community.
2. The Power Wheels Ford F-150 riding toy, which maxes out at 5 MPH with a kindergartner at the controls, while going for a spin around the block.

If you guessed "a", you're correct. The HO-3 covers an insured's legal liability for bodily injury or property damage arising out of the use of:

A motorized golf cart that is owned by an "insured", designed to carry up to 4 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.

However, the policy excludes coverage for other types of motor vehicles unless they are:

• In dead storage on an insured location
• Used solely to service an insured's premises
• Designed to assist the handicapped and, at the time of the occurrence, being used by a handicapped person or parked at an insured location
• Designed for recreational use off public roads, but only if the insured doesn't own it or if it's being used on an insured location.

Once little Timmy pops it into fourth gear and hits the open road, he's off an insured location and has no liability coverage. This could be an issue if Timmy's driving skills are not up to par and he plows into Susie down the street while she's seeing the world on her tricycle.

CTAC raised this issue with ISO in 2006, and I'm happy to report that ISO has recognized it as a problem. Based on their communications, we expect to see new language in the next edition of the HO-3 that will add coverage for these so-called "Barbie cars." Discussions about a possible safe driver credit have stalled, however.

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Comments

[Shelly Kozel]

Now, if only you can change the accident chargeability to $2000 from $1000! Only kidding!

[GaryPaulson]

Very interesting. Also of concern would be the motorized skateboards that are very popular for kids to ride up and down the sidewalks.

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[Maria Johnson]

I'm a little confused. About the Golf Cart. My daughter owns her own cart. It is parked at the campground where her camper is located on a permanent site year round. They pay an annual rental fee for their site. they use the cart to get around the campground. where is the liability coverage for this covered? She doesn't have a homeowners policy, she lives with me. I have an HO policy.

[Tim Dodge]

Maria, The Homeowners policy will not cover your daughter's golf cart because the campground is not "a private residential community...which is subject to the authority of a property owners association..." The best bet for coverage is to add the miscellaneous vehicles coverage endorsement to her auto policy (ISO endorsement number PP 03 23 01 05 if you are not in New York, number PP 03 29 01 05 if you are.)

[Golf Cart Parts]

much better to insured your Golf Cart just in case of any emergency happens... ride safe!

[Golf cart parts fan]

I used to always dream of having one of those barbie cars but never got one. Guess it's a good thing I didn't what with the lack of insurance ;) I'm somewhat surprised about the golf carts though. In fact I know of a couple people in my apartment complex who have them, and are constantly buying golf cart parts to make them nicer. Thanks for the headsup!

[Tim Dodge]

GCPF,

Well, if you can still fit in a Barbie car, the new ISO Homeowners insurance policy will cover you. :) Many people are probably unaware of the uninsured exposure from golf carts used off the golf course.