Interesting Insurance Facts & Tidbits
Golf Carts & Insurance
Golf carts, once used exclusively on the golf course, are seen frequently on streets in neighborhoods and at beach resorts. These carts are being used as transportation and, with the price of gas so high, we could easily see more and more golf carts on our streets.
What type insurance does one need for golf carts? First, we look at the coverage offered by the typical HOMEOWNERS policy. (Be sure to read your policy as policies do vary!)
The homeowners policy treats a golf cart as personal property (Coverage C) and would insure the cart for “perils insured against”, such things as theft and vandalism, but only if the golf cart is not required to be licensed for road use and 1) is used solely to service an “insured’s residence” or 2) is designed to assist the handicapped. (Note collision is not listed under “perils insured against” and thus the homeowners policy would provide no coverage if the cart was damaged as a result of a collision with another object.)
Suppose you are playing golf and lightning strikes your golf cart (hopefully you are not in the cart!), will your homeowners policy provide coverage? The answer is “no”. Under the above restrictions set by the policy, very few golf carts would be insured for physical damage by the homeowners policy.
Under the liability section of the policy, the policy provides liability protection if the golf cart “is owned by an insured, designed to carry up to 4 persons, not built … to exceed a speed of 25 miles per hour…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.
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 or contains an insured’s residence.”
Suppose you live ¼ mile from the golf course and drive down a public street to reach the course for a game of golf. You cause an accident while on the public roadway. Will the homeowners policy provide coverage? The answer is “no”.
Suppose, while playing golf, you hit another golfer with your cart, causing injuries to the other golfer. Will the homeowners policy provide coverage? The answer is “yes”.
A typical homeowners policy (the above wording is from the ISO HO-3 form dated 10/00 or 10/06) does not provide very broad coverage for a golf cart. So how do you obtain better coverage?
Some companies make available a GOLF CART ENDORSEMENT to be attached to a Homeowners policy. One such endorsement (used by ASI) provides $5,000 physical damage coverage on the cart plus liability subject to this exclusion: “coverage … does not apply to any golf cart while it is …4. being operated outside the boundaries of a recognized retirement or limit access community unless the golf cart is being used for golfing purposes or traveling to and from a golf course.”.
Next we look at special insurance policies designed to insure golf carts – A GOLF CART POLICY. However, be very alert as these policies vary considerably in the coverages provided.
A golf cart policy would be similar to an auto insurance policy in that it provides liability insurance plus physical damage coverage for the cart. Physical damage is somewhat like the comprehensive and collision insurance on your vehicle. Typical wording (in the American Modern Home policy) is “we will pay you for loss to your golf cart less the deductible.” There are, of course exclusions which apply.
The liability section provides equally broad coverage (subject to exclusions) but two main items to look for are:
1) How the policy defines “covered person” while using the golf cart. A typical policy states a covered person to be “you or any relative aged 18 or over with a valid state-issued drivers license”.
2) Is there coverage if the golf cart is being driven on a public road? Some policies may cover the cart only on public roads “within a 24 hour gated community”.
It should be noted that liability coverage does not apply to the driver or any passengers in the golf cart. Thus, if you take a turn too sharply and your passenger falls out and is injured, the passenger has no coverage and you have no liability coverage if legal action ensues.
The third policy we look at is a MOTORCYCLE POLICY, OFF-ROAD VEHICLE, or RECREATIONAL VEHICLE POLICY. Recently several insurance companies began offering golf cart insurance under these policy forms. Safeco uses the recreational policy and Progressive uses the motorcycle policy form, and Foremost, the off-road vehicle policy. Such policies will provide broader physical damage and liability coverage than either the homeowners or golf cart policies with the restrictions mentioned above generally eliminated. If medical payments or passenger liability coverage is purchased, injuries to occupants of the cart would be covered up to the limit of insurance purchased.
Bottom line is that you should have the motorcycle policy, off-road vehicle, or recreational vehicle from rather than relying on a golf cart policy, golf cart endorsement, or your homeowners policy. This is particularly true if you use the golf cart on public roads or allow younger children to operate the cart.
Tips on Insuring Jewelry
Is your jewelry properly insured? The standard homeowners policy provides coverage on your jewelry for the perils insured against as described in the policy, such as fire, vandalism, theft, wind, etc. The policy does restrict coverage to only $2,500 when theft is involved.
The best way to insure your jewelry is by adding a schedule of items to your homeowners policy. Each item of jewelry is specifically described on the schedule and a value and amount of insurance established. This schedule is added to the policy by an endorsement that expands coverage from named perils of the basic policy to an all risk (subject to exclusions) form.
Many times, the stone (diamond, for example) is just lost from the setting of the item of jewelry. This type of loss would be covered if the item was listed on a schedule. It would NOT be covered by the basic policy since “lost” is not a covered peril.
Insurance companies may require an appraisal or a bill of sale to verify the amount of insurance.
Commonly worn pieces of jewelry such as an engagement ring should be insured on a schedule. The cost is usually about $10 for every $1000 of insurance.
Think Twice Before Renting a Jet Ski
Warm weather is coming and a popular recreational activity involves the rental and use of jet skis. Perhaps a member of your family will rent a jet ski some time during this summer. Have you thought about the liability exposure you are assuming in the event of an accident that causes injury to a third party? For example, your teenage daughter rents a jet ski and hits a swimmer, knocking out his teeth and causing many years of reconstructive surgery for facial injuries.
Do your existing insurance policies provide coverage? Surprisingly, neither your personal automobile nor your homeowners policy provide coverage.
Coverage for the above accident is provided under a personal umbrella policy. Do you have such a policy? The cost is usually low, less than $200 per year for $1,000,000 insurance and the policy is usually issued by the insurance company that handles your personal automobile policy. The personal umbrella policy does require your homeowners and automobile policies to have certain limits of liability. A deductible, or retained limit, usually applies.
Interestingly, or oddly, your homeowners policy would provide coverage in such an accident described above if the jet ski was borrowed instead of being rented. For example, your son borrows your neighbor's jet ski and injures someone while operating the jet ski. You have coverage under you homeowners policy.
In neither event, rented or borrowed, does the homeowners policy provide physical damage coverage on the jet ski itself if the jet ski sustains damage while your child is operating it.
HIGHER INSURANCE PREMIUMS (May 2002)
Insurance premiums have been rising recently on both commercial and personal insurance policies. There are very definite reasons for these increases that affect almost all of us.
Generally speaking, the years 2000 and 2001 were very unprofitable for the insurance industry. Premiums had been artificially low, particularly on property insurance such as primary homes and commercial buildings such as offices. Intense competition was the cause. Unexpected lawsuits like the Black Mold cases in Texas cost the insurance industry millions of dollars to settle claims that were never anticipated. Natural disasters around the world are another factor. We generally think of insurance in terms of the United States. However, as the third world countries become more modernized, the insurance industry has become a worldwide player affected by typhoons in the Far East and earthquakes in the Middle East.
Insurance companies often do not make their profits from the premiums they collect. Payments of claims and expenses of doing business usually offset premium income. The profits of an insurance company come from investing premium dollars in the stock market prior to the time the dollars are paid out as claims or expenses. The falling and sluggish stock market eliminated much of this source of income in the 2001- 2003 era.
In mid-2001, insurance premiums began to rise as insurance companies began to recoup their losses. Then came September 11. The terrorists attacks on the United States were certainly unforeseen and unpredicted by the insurance industry. This national tragedy cost the insurance industry upwards of $40 Billion. This man-made catastrophe affected almost all insurance companies - standard companies, the excess markets, the reinsurance companies, life insurance companies. Hardly a company was untouched but it is a tribute to the strength of the insurance industry that the companies were able to pay the claims and remain solvent.
Put very simply, this $40 Billion had to be recouped by the industry and recouped fairly rapidly. Many companies fully expected to offset their 9/11 losses by December 31, 2002. The dramatic rise in insurance premiums was the result.
Another factor causing higher premiums for those of us who live along South Carolina's beautiful coastline is the threat of hurricanes. Hurricane Hugo in 1989 and Hurricane Andrew in 1992 were the first major storms to strike the East Coast since the rapid development of the coast began. When these hurricanes hit, insurance companies had little idea of the amount of insurance they had in place in hurricane-prone areas. Insurance companies with large amounts of exposure in South Carolina and Florida were hit hard and, in some cases, were forced out of business due to the large payout of claims. Other companies insuring along the coast took a long, hard look at their exposure. They were able to use computers to determine their exact exposure and used computer models of potential hurricanes losses to examine their ability to absorb the loss.