Coverage Corner

A FORM’S TAKE: DRONES, VIRTUAL CURRENCY, AND LAWN MOWERS

By Kevin C. Amrhein, CIC, CBIA

As with any ISO form revision (that took 11 years to develop/ release), the changes in the March 2022 edition to its Homeowners policies are plentiful. This article focuses on three specific areas that represent a personal interest of mine: drones (because flying things are cool), virtual currencies (because it’s interesting tech), and riding lawn mowers (because I’m a red-blooded American male). Below is my effort to contrast the new form’s take on these issues with its 2011 predecessor.

DRONES

Regarding personal property coverage: While the 2011 form considers aircraft as Property Not Covered, it contains an exception for model or hobby aircraft not used or designed to carry people or cargo. Most recreational drones would meet this exception. The 2011 form does not specify a limit for covered drones. As such, they would be subject to the Coverage C – Personal Property limit.

The 2022 form does not amend the exclusion or exception regarding aircraft. However, this form does create a specific limit of $2,000 on model or hobby aircraft not used or designed to carry people or cargo.

Regarding liability coverage: In both the 2011 and 2022 forms, the definition of “aircraft liability” contains an exception for model or hobby aircraft not used or designed to carry people or cargo. This exception is notable as it means the liability exclusion for “aircraft liability” does not apply to most recreational drones.

VIRTUAL CURRENCY

The 2011 form contains no specific mention of virtual currency. As anyone alive today would expect, this needed to be addressed in the revision. As anyone alive today would expect, the ISO’s position on coverage in this form is … um, no. The specific language is contained in the Property Not Covered section and reads as follows:

We do not cover: … (m.) Virtual currency of any kind, by whatever name known, whether actual or fictitious including, but not limited to, digital currency, crypto currency or any other type of electronic currency;

It’s worth noting that this language is specific to currency. With regards to virtual assets/collectibles, the form is silent.

RIDING LAWN MOWERS

Permit me a story. One of my neighbors became a local celebrity for frequently piloting his lawn mower down neighborhood streets to the corner convenience/beer store. You might be thinking, “How is the HOA okay with that?” or “Can’t this knucklehead get a traffic citation? Where the %^#* are the cops?!” In response to those completely rational and fair inquiries, I offer you the following:

1) He was the long-time president of our HOA, and

2) Remember … I’m in Florida.

For a coverage analysis, let’s call this guy Kevin … er … um … John. Yes, definitely John.

The 2022 form amends the definition of “motor vehicle” by referencing its capability. The updated language is in part a. of the definition and reads as follows:

“Motor vehicle” means: a. A land or amphibious vehicle that is self-propelled or capable of being self-propelled;

Regarding personal property coverage: While both the 2011 and 2022 forms consider “motor vehicles” as Property Not Covered, both contain an exception which would allow coverage for certain vehicles including most riding lawn mowers * :

4. Property Not Covered We do not cover:…

c. “Motor vehicles”… However, this Paragraph 4.c. does not apply to:…

(2) “Motor vehicles” not required to be registered for use on public roads or property which are: (a) Used solely to service a residence; or (b) Designed to assist the handicapped;

* For example, if John also uses his riding lawn mower to cut the lawn at his office or to make frequent beer runs, the exception no longer applies.

Regarding liability coverage: Both forms contain a lengthy exclusion for “Motor Vehicle Liability” which is subject to several exceptions. In the 2011 form, the exception most likely to allow coverage for a liability claim involving the use of a riding lawn mower contains language similar to that found in (2)(a) above. However, the 2022 form adds an exception that broadens liability coverage specifically for riding lawn mowers. In summary, the 2022 form contains both the traditional exception language (seen below in 2.b.) and the newly added exception language (seen below in 2.c.):

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

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;

Since it’s no longer restricted to a residence, provided he’s actually mowing (not making a beer run, pulling a float in a holiday parade, or both simultaneously,) John now can expect his liability coverage to apply should he cause BI or PD while mowing the lawn at his office, church, vacant lot next door, or other non-residential location.

That’s all for now. Until the next round…. Cheers!

Kevin C Amrhein, CIC, CBIA is IA&B's education consultant. He works with our CISR and CIC programs, as well as our special topic seminars and live webinars. Catch him at one of our upcoming professional training offerings: IABforME.com/education