What a difference two miles an hour can make.
Distributors of the popular Pukka Electric Mini
Bike advertise its ability to attain a maximum speed of 17 miles per
hour (mph).
If the Pukka (pronounced POO-ka) reached only 15
mph, it would qualify for liability coverage under standard
homeowners endorsements that provide liability coverage for certain
motorized vehicles that are not designed or modified to exceed 15
mph.
With an advertised maximum speed of 17 mph, the
Pukka does not qualify for coverage under such endorsements.
Unless someone had the foresight to insure the
bike separately, a household might have no coverage for bodily
injury or property damage (BI/PD) arising from the use of a Pukka it
owned. (There would be coverage under a standard homeowners policy
for BI/PD arising from use of a non-owned motorized vehicle designed
for use off public roads.)
Until contacted by Viewpoint, the question of
how to insure use of a Pukka had never come up, says Darren Jensen,
managing member of Pukka USA, American Fork, Utah.
The question whether a Pukka is a toy or a
vehicle apparently has, however.
While online promotions for the bike feature
pictures of children riding them, at least one listing carries this
warning: “We do not recommend this to be purchased as a toy. It is
a vehicle and not made for kids!”
How many parents understand that?
There are hundreds of thousands of
self-propelled ride-on toy vehicles in the United States, judging
from figures included in product recall announcements by the
Consumer Product Safety Commission.
Many of these vehicles are considered hazardous
enough to have prompted municipalities across the U.S. to enact
ordinances regulating their use in public places.
An ordinance from Green River, Wyo., enacted in
July 2005, states that “toy vehicles include, but are not limited
to, roller skates, roller blades, motorized and non-motorized
skateboards, coasters, push scooters, toy cars, and similar
non-licensed riding toys designed for off-road use.”
Under the ordinance, those vehicles are
prohibited from public roads, except crosswalks. Ordinances in other
communities prohibit or restrict the use of such vehicles on
sidewalks as well.
The Green River ordinance treats motorized
skateboards separately, mandating that they be operated only during
daylight hours at speeds not to exceed 20 mph. Operators can be no
less than eight years old, must have completed a local safety class
if they are under 12, and must wear a helmet and other protective
gear if they are under 18.
A 2004 ordinance from Sandusky, Ohio essentially
subjects toy vehicles to all traffic laws, and prohibits any child
under age 14 from operating a motorized toy vehicle or motorized
skateboard.
Among other things, the Sandusky ordinance
distinguishes between electric scooters with a top speed of 15 mph,
which are classified as bicycles, and those that exceed 15 mph,
which “shall be treated as motorcycles” for purposes of traffic
regulation.
Homeowners insureds should reasonably expect to
be covered for BI/PD arising from the use of toys by young children
and adolescents, observed members of an AAIS personal lines advisory
committee in 2005. (The committee has 14 members, most of them from
primary carriers, but also including representatives of agents,
reinsurers, and AAIS staff.)
Yet, a strict reading of standard, unendorsed
homeowners policies could leave insureds without coverage for a
BI/PD claim arising from the use of a motorized vehicle designed for
recreational purposes away from the insured premises.
Most parents would certainly expect to be
covered for an injury claim arising from use of the miniature
Porsche Boxster produced by Berchet and distributed by “KidsWheels.”
Similar to other “kiddie cars,” the battery-powered Boxster is
clearly designed for young children and can go only up to 2.5 mph.
Indeed, it’s hard to imagine a homeowners
carrier denying such a claim, unless it was unusually severe.
Still, without a motorized vehicle endorsement,
one could argue that standard homeowners exclusions eliminate
liability coverage for BI/PD arising from the use of certain
motorized vehicles away from the insured premises. (Coverage is
provided for BI that occurs at the insured premises, and for
motorized vehicles used to service the premises or assist the
handicapped.)
There could be no question about coverage for a
kiddie car if parents knew to purchase motorized vehicle
endorsements, but it is unlikely that many do.
“Who thinks to change their insurance coverage
when they buy a kiddie car?,” says Susan Luecke, AAIS assistant
vice president for personal lines.
The questions grow murkier as we consider more
powerful toy vehicles.
From appearances alone, many parents might
regard the Cobra Strike Pro Electric Scooter as a toy, and the Honda
MiniMoto XFR-500, a
miniature electric motocross motorcycle, as a
vehicle.
Even if they were knowledgeable enough to seek a
motorized vehicle endorsement, many parents would be surprised to
learn that the scooter would not qualify for coverage under the
endorsement, while the miniature motocross motorcycle would.
That’s because the Cobra Strike Pro scooter
promotes “the fun you’ll have zipping around your neighborhood
at 17 mph,” while the Honda MiniMoto claims a top speed of only 15
mph.
Even if one’s scooter does not actually reach
the advertised speed, it is ineligible under the standard
endorsement because it is designed to exceed 15 mph.
In response to input from its personal lines
advisory committee, and to ensure that homeowners clearly have some
coverage for use of children’s toy vehicles, an upcoming revision
to the AAIS Homeowners Program includes a new provision that expands
incidental motor vehicle coverage to provide coverage for certain
types of toy vehicles.
The new “kiddie car” provision establishes
built-in coverage--on or off premises--for BI/PD arising out of
vehicles (other than motorized bicycles, mopeds, and golf carts)
that meet two conditions:
With those stated criteria, agents and insureds
can readily deduce what is not covered under the base policy:
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There is no coverage for off-premises use of
vehicles owned by the insured and powered by gasoline or any
other fuel. Certain vehicles that burn fuel but do not exceed 15
mph can be covered for off-premises use by adding a motorized
vehicle liability coverage endorsement, which will still be
available under the revised AAIS Homeowners Program.
-
There will be no off-premises homeowners
coverage at all for motorized vehicles designed or modified to
exceed 15 mph (except for those that are not licensed or
required to be licensed and are used to service insured premises
or assist the handicapped).
The AAIS approach seeks to meet an expectation
of insureds--that they will be covered for use of children’s
toys--while meeting an expectation of insurers--that homeowners
policies will avoid vehicle exposures.
In doing so, AAIS utilizes one recognized
insurance standard: maximum speed of 15 mph. For that or any other
standard to become a commonly understood benchmark, toy
manufacturers must be more mindful of insurance considerations when
designing toy vehicles.
As it is, homeowners cannot assume that use of
their children’s toy vehicles is insured unless they learn the
characteristics of those vehicles and the implications for coverage.
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Toys or Vehicles?
