During the peak summer days, families naturally gravitate to the great outdoors. For some, this is the ideal time to go for a spin in their favorite recreational vehicle, such as an all-terrain vehicle (ATV) or golf cart, or personal watercraft, such as a Jet Ski. This behavior is especially true for wealthy families who have the greatest ability to afford such vehicles as well as teenagers who are eager to use them.
While fun for both adults and teens, these vehicles are dangerous. Drivers need proper training, and both drivers and riders need appropriate protective gear. Given the potential for serious injury, liability insurance is a crucial component of owning or renting one of these vehicles. Nevertheless, many families overlook or underestimate the need. Wealth advisors can help better protect their clients’ wealth by understanding the risks and underscoring the importance of securing proper coverage through a qualified insurance agent.
The Liability Lawsuit Threat
Lawsuits can arise from a number of dangerous scenarios involving recreational vehicles and boats. Common causes of accidents include improper training, lack of supervision, failure to wear proper safety gear and irresponsible behavior from teens and their friends. In one instance, a $20 million award was granted for the death of a teenage male riding an ATV on a neighbor’s property. The suit claimed the neighbor had permitted him to operate the ATV without proper safety equipment and without adult supervision.
To protect against the threat of a multi-million dollar lawsuit, clients should understand the different levels of insurance required. Homeowners policies often offer a limited degree of protection. Standard industry policies commonly extend liability protection to owned recreational vehicle accidents that occur on the insured property. Liability may also extend to golf carts being driven on a golf course or within the confines of a private residential community. Otherwise, coverage usually stops as soon as the owned vehicle leaves the insured property, unless the client has a superior homeowners policy from a HNW-market carrier. Homeowners policies also typically extend liability protection to recreational vehicles that are rented for short periods of time, such as when the family is on vacation.
Many states require certain types of recreational vehicles to be registered and insured with the rough equivalent of an auto policy for liability. Even in states where they are not required, such policies are wise to consider unless the client is sure the vehicle will not be driven off his insured property—a dubious assumption if teens are involved.
Personal watercraft should also be insured with a dedicated policy. Their powerful motors typically exceed the horsepower limitations for watercraft found in homeowners policies. Standard industry policies will also exclude liability coverage when renting a personal watercraft. By contrast, HNW-market carriers may provide coverage while renting for a short period of time.