Case Study: Vehicle Damage?

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By Phyllis Van Wyhe, CPCU, CIC, CSP

Printable Version

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Francene is going sailing for the first time with her new squeeze, Dilbert.  She brings along a duffel bag containing the base necessities for a day on the water: a cam corder, camera, portable radio, digital phone, makeup bag, nail-repair kit, the latest romance novel, three pair of designer sun glasses, two sweatshirts, one windbreaker, a pair of dockers, and an autographed picture of Zavier Cougat.

Imagine two loss scenarios:

1. The duffel bag falls overboard and, although he jumps in after it, Dilbert is not able to recover it before it sinks.

2. The sailboat sinks and the duffel bag is now at the bottom of Lake Superior, just off Madeline Island

Assume Dilbert has no coverage for the duffel bag and its contents under his boat policy.  Will Francene be able to recover for the loss under her Homeowners policy?

SCENARIO #1: THE BAG FALLS OVERBOARD

The standard Homeowners policy provides named perils coverage for personal property.  For coverage to apply, one must be able to attribute the loss to one of the sixteen listed causes of loss.  A quick review of those perils convinces one there is no coverage for this particular loss.

Some insurance companies are offering open perils coverage on personal property.  This may be included in their preferred contract, or offered as an optional endorsement for a charge.  With this coverage the perils insured against for personal property are identical to those provided for the building.

If Francene has open perils for her personal property insured under her Homeowners policy, the value of the duffel bag, and its contents, will be covered under her contract, subject to the deductible.

SCENARIO #2: THE SAILBOAT SINKS

Does the coverage apply differently if the boat sinks?  Vehicle damage is one of the covered perils under the named perils coverage of the standard Homeowners policy.

Is a boat a vehicle?  Webster’s Ninth New Collegiate Dictionary defines vehicle as "a means of carrying and transporting something."  A boat is certainly a vehicle.

When the boat sank, Franence’s personal property suffered vehicle damage. This loss is payable even under the named perils personal property coverage.

THE BOTTOM LINE

Did you know that a boat can be considered a "vehicle?"  Many agents do not.

Would you have denied the claim?

Or, would you have submitted it to the insurance company?

We all need to occasionally be reminded of the old adage learned early in most agent’s career: Never deny a claim.

This article is excerpted from the book Case Studies In Personal Lines, written by Phyllis Van Wyhe, CPCU, CIC.