So, where’s the problem? For many years, typical homeowners policies offered an automatic liability extension for motorized vehicles “not subject to motor vehicle registration.” So you could pick up coverage for your operation of the APV from the homeowners policy. But what if the motorized vehicle is now required to be registered? It appears that the mere fact of being registered disqualifies the liability coverage. Meaning you won’t have any. Do you think this is a potential problem?
A classic example- your friend brings over his APV to your residence and you both are having fun driving around the property. You lose control at a high rate of speed and plow into your friend. He’s paralyzed. Forever. Your homeowners policy would have paid for the friend’s injuries and damage to his APV, before the law. Now, not likely. Could this be an issue for you?
A quick aside- the automatic liability coverage has always been limited to operation at an “insured location”, such as your residence premises. It’s a very safe bet that ANYTIME you take your APV (or snowmobile, trail bike, or other type of off-road bike) off your property, your liability coverage vanishes. This has always been the case, regardless of the new law. A separate APV policy would solve this problem.
As stated before, the exceptions are VERY few:
- Snowmobile or off-highway motorcycle operated exclusively on your land or land to which you have a contractual right
- Used for agricultural purposes when the owner qualifies for the agricultural use valuation tax credit
Besides the major insurance coverage gap this will cause, there are financial penalties as well: Fines for operating an unregistered APV can range from $50 minimum up to $100. There are also pretty stiff penalties for those who commit criminal trespass- get convicted three times and the registration and license plate is impounded for a minimum of 60 days.
I’m pretty sure the majority of current APV owners are blissfully operating under the assumption that they have liability coverage where they don’t. And that concerns me, due to the potentially devastating impact. So, if you’re in doubt whether your APV qualifies under House Bill 2, I say contact your local deputy registrar and ask. Be specific in your request, such as providing the make and model and a description if necessary.
If it qualifies for registration and licensing, I’m reasonably certain you will need to obtain separate liability coverage. I can’t state that for fact, since there are many insurance companies and they all have their own rules. But if they all use a similar contract, then it wouldn’t surprise me to find no coverage exists. But, to be absolutely certain, please ask your own agent to explain how your policy reacts to this new law.
Some companies may be able to add to an existing auto policy, while others may require a stand-alone policy. The good news is there is a solution. If you’re a client of Alan Galvez Insurance, give us a call and we’ll be happy to discuss and let you know what solutions are available. We can help, whether that’s by adding onto an existing auto policy, or writing a separate policy.
So what are your thoughts? Does this raise lots more questions? Have you spoken with a deputy registrar for any clarification? What did you find out? I would be interested to know, since this is all so new and is a fundamental change in how the insurance industry views APV’s and liability coverage. As always, thanks for reading.