Coverage for your tractor – Part Duo

Tractor Coverage (Liability) and the Homeowners Policy

This essay is called coverage for your tractor – part duo. You can think of it as Tractor Coverage 2.0 if you like.

The Bottom Line (if you don’t want to read further)

Here is the simplified answer to your question about the tractor:
With respect to liability, you are covered on and off your property, IF the tractor is being used to service a “residence”.
Unless  it is being used for business purposes, it would be covered as personal property for loss/damage.
IF you have a homeowners policy written with an ISO contract
AND you have an ISO 2011 HO 0003 OR ISO 2011 HO 0005
OR you have an ISO 2018 HO 0003 OR ISO 2011 HO 0005

That’s it in a nutshell.

A Tale of Two Scenarios

  • SCENARIO / QUESTION #1
    • Call from insured who gave me the following information: Has two tractors:1990 John Deere 660 with Model 60 Loader – $5,600 2015 John Deere X500 Tractor/Mower – $4,000 Personal use also. It would be used on the premises, but not exclusively necessarily. Due to the value he is interested in property coverage, but is not as concerned with that as the liability. He have endorsement HO 2472 on the policy, but they do not sell anything, or use the property commercially. They have a few pet goats. He will be using the tractor to maintain the property. Someone with a tractor such as this might use it to help a neighbor move dirt, pull a stump, or any number of things related to property maintenance (NOT for a fee), but OFF the residence premises. Assuming NO BUSINESS USE of the personally owned tractor, I have the following questions:1) Liability How does the HO 0005 05/2011 edition treat the use of a tractor ON and/or OFF the residence premises2) Liability – Is there any coverage automatically provided of by HO 2472?3) Physical damage to the equipment – Covered automatically under the HO 0005 05/2011 edition?Lastly, though not related directly to this query, is this question:In that scenario does the new HO3 program provide liability coverage automatically?Please let me know if you have any questions.

ANOTHER STORY…

  • SCENARIO / QUESTION #2
    • Similar situation except that it is not a client, but a friend, who is also glass company rep. He owns a tractor, similar in size to the above. It has a bucket and a backhoe. He uses it on his property, and frequently uses it to help neighbors with their yards/driveways etc. He might plow them out, or move a pile of dirt. In the course of helping out, he needs to drive the tractor on the road. He will ocassionally loan the tractor to a friend/neighbor to use. He asked his daughter, who is his insurance agent, whether he had coverage for that type of activity. The answer from his company, Narragansett Insurance Co was that he did not have coverage if the tractor is used for anything except service to the residence premises. My guess is that that they are still using the 10/2000 edition of the ISO homeowners form, OR have a separate form altogether, maybe AAIS?
  • Articles

Coverage Analysis and Answers

  • ANSWER FROM PIA
    • Director of Research Dan Corbin CPCU, CIC, LUTC PIA
    • Q: Liability How does the HO 0005 05/2011 edition treat the use of a tractor ON and/or OFF the residence premises?
      • Coverage applies to service any residence for non business purposes if that is the sole use of the vehicle.
        • SECTION II – EXCLUSIONS
        • A. “Motor Vehicle Liability”
        • 1. Coverages and do not apply to any “motor vehicle liability” if, at the time and place of an”occurrence”, the involved “motor vehicle”:
          • a. Is registered for use on public roads or property;
          • b. Is not registered for use on public roads orproperty, but such registration is required by a law, or regulation issued by agovernment agency, for it to be used at theplace of the “occurrence”; or
          • c. Is being:
            • (1) Operated in, or practicing for, any prearranged or organized race, speedcontest or other competition;
            • (2) Rented to others;
            • (3) Used to carry persons or cargo for a charge; or
            • (4) Used for any “business” purpose except for a motorized golf cart while on a golfing facility.
          • 2. If Exclusion A.1. does not apply, there is still no coverage for “motor vehicle liability”, unless the “motor vehicle” is:
            • a. In dead storage on an “insured location”;
            • b. Used solely to service a residence;
        • NOTE: The 2018 ISO HO policy provides coverage under the same terms as the 2011 edition.

          MORE QUESTIONS AND ANSWERS

          Q: In that scenario does the new HO3 program provide liability coverage automatically?

          • The 2018 ISO HO policy provides coverage under the same terms as the 2011 edition.
          • Q: Physical damage to the equipment – Covered automatically under the HO 0005 05/2011 edition?
            • Physical damage is covered, but with the same “used solely to service a residence” limitation. 
          • Q: Liability – Is there any coverage automatically provided of by HO 2472?
            • The endorsement exempts the described farming operations as a “business,” but it does not alter the A.2.b. provision shown above.
          • Q: When was the language clarified (in which edition) in the HO3 and HO5 to broaden/clarify/define coverage for the use of service vehicles?
            • A: When ISO went from the 2000 edition to the 2011 edition
            • OKAY, SO WHAT IF…

              • Q: So the use of a tractor to service a residence other than the residence premises (e.g. a neighbor’s house/yard/driveway)  is an allowable use and would be covered by liability. Is this correct?
              • Yes.
              • If the vehicle is being operated on the road (e.g in transit to the neighbor’s house), or if the vehicle is being used to service a private road, or if someone decides to take the tractor for a ride (e.g. taking their grand kids for a ride down the road). Is there any liability coverage?
                • A: It should be covered in between houses, but “solely” means solely.
              • Q: If the homeowner lends his tractor to a neighbor, is there coverage (within the confines of the above)?
                • A: The neighbor is not an insured on the owner’s policy. The neighbor would have to look to his own policy.