6.11 Section II Exclusions

Section II exclusions are organized into four main categories. Understanding these categories helps students determine which exclusions apply to a particular liability or medical payments claim.

1. Exclusions that apply to all of Section II, including the Additional Coverages
2. Exclusions that apply to both Coverage E and Coverage F, meaning they affect both Personal Liability and Medical Payments to Others
3. Exclusions that apply only to Coverage E – Personal Liability
4. Exclusions that apply only to Coverage F – Medical Payments to Others

By separating the exclusions into these categories, the policy makes it easier to identify whether an exclusion applies broadly to all Section II coverages or only to a specific coverage part.

Exclusions Applying to All of Section II

Motor Vehicle Liability

Section II of a Homeowners policy is designed to provide personal liability and medical payments coverage, not auto liability coverage. For this reason, the policy includes motor vehicle exclusions that help clarify when a motor vehicle-related loss is outside the scope of Homeowners insurance. In general, Section II excludes liability for bodily injury or property damage that arises out of the ownership, maintenance, operation, loading, or unloading of a motor vehicle. This exclusion also applies to related liability exposures, such as failing to supervise another person who is using or interacting with a motor vehicle, or being held vicariously liable for a minor's use of or involvement with a motor vehicle.

Coverage is also excluded when, at the time of the occurrence, the motor vehicle was registered for use on public roads or was required to be registered but was not. This helps distinguish vehicles that may fall within limited Homeowners coverage from vehicles that should be insured under an auto policy. The exclusion also applies to liability arising from motor vehicles that are rented to others, used to transport people or cargo for a fee, used for any business purpose, or used in, or while practicing for, an organized racing competition.

Exceptions

Although Section II generally excludes motor vehicle liability, coverage may still apply to certain vehicles based on the vehicle's type, purpose, and location at the time of the occurrence. These exceptions help identify situations where a vehicle-related loss may still fall within the scope of the Homeowners policy. Section II may provide liability coverage for the following:

• Vehicles in dead storage on an insured location, meaning the vehicle is not capable of being driven, such as when the battery has been removed and the vehicle is placed on blocks
• Vehicles used solely to service a residence, such as a riding lawn mower or similar maintenance equipment
• Vehicles designed to assist people with disabilities, while they are being used by or for a person with a disability, or while they are parked on an insured location at the time of the occurrence
• Recreational vehicles not owned by the named insured
• Recreational vehicles owned by the named insured, but only when the occurrence takes place on the residence premises or on vacant land that qualifies as an insured location
• Children's battery-powered toy recreational vehicles owned by the named insured, whether the occurrence takes place on or away from an insured location
• Golf carts that cannot exceed 25 miles per hour, but only when they are being used within the legal boundaries of a golfing facility for approved golfing purposes or within a private residential community that allows golf carts to travel on designated lanes or roadways

Watercraft Liability

Similar to the motor vehicle exclusion, a Homeowners policy is not intended to serve as watercraft liability insurance. However, the policy may provide limited coverage for certain types of watercraft under specific circumstances. In general, Section II excludes liability for bodily injury or property damage that arises out of the ownership, maintenance, operation, loading, or unloading of a watercraft. This exclusion also applies to related liability exposures, including failing to supervise another person who is using or interacting with the watercraft, as well as the insured's vicarious liability for a minor's use of or involvement with the watercraft.

Section II also excludes liability arising from certain uses of watercraft. Coverage does not apply if, at the time of the occurrence, the watercraft is being used in, or while practicing for, an organized racing competition. Liability is also excluded if the watercraft is rented to others, used to transport people or cargo for a fee, or used for any business purpose. However, the racing exclusion does not apply to sailing vessels or to a predicted log cruise, which are treated as exceptions to the organized racing limitation.

Exceptions

The policy restores liability coverage for the personal use of certain types of watercraft. This means that, although watercraft liability is generally excluded, coverage may apply when the watercraft meets specific policy requirements. At the time of the occurrence, Section II may provide watercraft liability coverage if the watercraft is one of the following:

• Stored watercraft, meaning the watercraft is not being operated at the time of the occurrence
• A sailing vessel less than 26 feet in length
• An outboard motorboat with 25 horsepower or less
• An outboard motorboat with more than 25 horsepower, but only if it is not owned by an insured. For example, coverage may apply when the insured rents or borrows an outboard motorboat with more than 25 horsepower.
• An inboard motorboat, including a watercraft powered by a water jet pump, with 50 horsepower or less, but only if it is not owned by an insured. For example, coverage may apply when the insured rents or borrows an inboard motorboat with up to 50 horsepower.
• An inboard motorboat, including a watercraft powered by a water jet pump, with more than 50 horsepower, but only if it is neither owned by nor rented to an insured. For example, coverage may apply when the insured borrows an inboard motorboat with more than 50 horsepower.

Note

Liability coverage is always excluded for any inboard motorboat owned by an insured. For liability coverage to apply to this type of watercraft, or to any other excluded watercraft, the policy must be endorsed.

Section I property coverage may apply to watercraft as personal property under Coverage C. However, this coverage is subject to the policy's special limit of liability for watercraft.

Insureds who need broader protection should consider separate watercraft insurance, which can provide more complete property and liability coverage.

Aircraft Liability and Hovercraft Liability

Section II does not provide coverage for liability arising out of an aircraft or hovercraft. This includes bodily injury or property damage resulting from the ownership, maintenance, operation, loading, or unloading of an aircraft or hovercraft. The exclusion also applies to related liability exposures, such as failing to supervise another person who is using or interacting with the aircraft or hovercraft, as well as the insured's vicarious liability for a minor's use of or involvement with it.

Exclusions Applying to Coverages E and F

Coverages E and F exclude certain types of bodily injury and property damage. These exclusions apply to both Coverage E – Personal Liability and Coverage F – Medical Payments to Others. Coverage is not provided for bodily injury or property damage arising out of any of the following:

• Expected or intended injury, even if the actual injury or damage is different in kind or degree from what the insured expected or intended. However, this exclusion does not apply when an insured uses reasonable force to protect people or property.
• Business pursuits of an insured, including the rendering or failure to render professional services. This exclusion does not apply to the rental, or holding for rental, of an insured location when it is used as an office, school, studio, or private garage.
• A premises or location that is not an insured location
• War or insurrection
• The transmission of a communicable disease by an insured
• Sexual molestation, corporal punishment, or physical or mental abuse committed by an insured
• The use, sale, manufacture, delivery, transfer, or possession of a controlled substance. However, this exclusion does not apply to the legitimate use of controlled substances prescribed by a licensed health care professional.

Exclusions Applying Only to Coverage E – Personal Liability

Coverage E excludes liability for loss assessments, except to the extent coverage is provided under the Loss Assessment Additional Coverage. This means the policy does not generally cover assessments charged to an insured by an association or similar organization unless the loss qualifies under that specific Additional Coverage. Coverage E also excludes liability assumed by an insured under a contract. However, an exception applies when the liability arises from a written contract that is directly related to the ownership, maintenance, or use of an insured location.

Property damage is excluded under Coverage E when the damaged property is:

• Owned by an insured
• Rented to, occupied by, used by, or in the care of an insured

This second exclusion is commonly referred to as the care, custody, or control exclusion. It prevents the Personal Liability coverage from applying to property that the insured is responsible for, using, or controlling at the time of loss. However, the Damage to Property of Others Additional Coverage provides limited coverage that helps reduce the effect of this exclusion.

An exception also applies when the property damage is caused by fire, smoke, or explosion. In those cases, Coverage E may provide coverage for property that is rented to, occupied by, used by, or in the care of an insured.

Coverage E also excludes certain bodily injury claims based on who is injured or what other benefits may be available. Bodily injury is excluded when the injured person is:

• Eligible to receive benefits under Workers' Compensation, occupational disease, or non-occupational disability law. In these situations, the injury is expected to be handled under the applicable statutory benefit system rather than the Homeowners policy.
• The named insured or any other insured under the policy. Coverage E is designed to protect an insured against liability claims made by others; it does not provide liability coverage for bodily injury sustained by an insured.

Coverage E does not apply to bodily injury or property damage when an insured is already covered for that loss under a nuclear energy liability policy. In this situation, the nuclear energy liability policy is expected to respond, rather than the Personal Liability coverage in the Homeowners policy.

Exclusions Applying Only to Coverage F – Medical Payments to Others

Coverage F – Medical Payments to Others contains exclusions that limit when medical payments coverage applies. These exclusions focus on certain injured persons and certain types of injury. Coverage F does not apply to bodily injury:

• To a residence employee, if the injury occurs away from an insured location and does not arise out of the residence employee's employment by the insured
• To any person eligible to receive benefits under Workers' Compensation, occupational disease, or non-occupational disability law, whether those benefits are voluntarily provided or required by law
• Arising from nuclear exposure, including any nuclear reaction, nuclear radiation, or radioactive contamination
• To any person, other than a residence employee, who regularly resides on any part of the insured location. This includes roommates, tenants, boarders, and any insured under the policy.