A Boat, a Jet Ski, and a Borrowed ATV

The analysis starts with the watercraft exclusion in the homeowners policy. Homeowner forms commonly exclude liability arising out of ownership, maintenance, or use of watercraft owned by or rented to an insured if the watercraft has an inboard or inboard-outboard motor exceeding 50 horsepower, or is a sailboat longer than 26 feet. A jet ski is a powered watercraft, and most forms treat it as excluded when owned by or rented to an insured.

Here the son borrowed the jet ski; he did not own or rent it. That fact matters. If the policy excludes only owned or rented watercraft, the son's use of a borrowed jet ski may fall outside the exclusion and be covered as personal liability, subject to the policy's other terms. However, the friend's policy is likely primary because the friend owns the jet ski and may have permissive-use coverage. The HO-3 would then be excess or would not respond at all depending on the other-insurance condition.

The answer is not automatic. The agent must read the specific watercraft exclusion, the definition of insured, and the other-insurance clause. If the son is an insured under the friend's policy, that policy should be tendered first. The HO-3 should be put on notice, but coverage is uncertain and should not be promised.

The tubing injury involves the Whitfields' owned 24-foot bowrider with a 300-horsepower engine. That is exactly the type of watercraft the HO-3 watercraft exclusion is designed to remove. Because the boat is owned by the insured and exceeds the horsepower threshold, personal liability for the guest's spinal injury should be excluded. The personal auto policy does not cover watercraft liability. The family therefore has a major uninsured liability exposure unless a separate boat policy was purchased.

The ATV analysis is more fact-specific. Homeowner policies typically exclude liability arising out of motor vehicles, but some forms carve back recreational vehicles that are not licensed for road use. The husband's ATV use crosses a public road, which may bring the auto exclusion into play. The $50-per-visit plowing also creates a business-pursuit issue. If the ATV is not registered for road use and the policy has a recreational vehicle exception, off-road use might be covered; the road crossing and payment for plowing weaken that position. A separate ATV or recreational vehicle policy is needed. The personal auto policy should not be assumed to cover an unregistered ATV.

The core need is a stand-alone watercraft policy covering the owned bowrider and jet ski for physical damage, liability, medical payments, and uninsured watercraft. The policy should show the boat's value, horsepower, and marina location, and should include the son as an operator. Liability limits should be at least $300,000 or $500,000, with a personal umbrella above that. The watercraft policy should also address borrowed watercraft, because the son's use of a friend's jet ski is a recurring exposure. If the policy does not cover borrowed watercraft, the friend's policy may be primary, but the Whitfields should confirm that permissive-use coverage exists.

For the ATVs, a separate ATV policy should cover owned units, off-road liability, and physical damage. The husband should stop the paid plowing or move it to a commercial policy; a homeowners or recreational policy will not treat a for-hire plowing operation as a personal activity. The personal auto policy should be reviewed for the road crossing, but it is not a substitute for ATV coverage. Finally, a $1 million to $2 million personal umbrella should sit over the home, auto, watercraft, and ATV policies. The umbrella may require specified underlying limits, so the underlying policies must be coordinated.