Coverage Alert: Progressive and Trailers Dateline: 06/18/99 I've discovered what I feel is a huge gap in Progressive Insurance's personal auto policy, and would like to share my findings with you as a caution that it is very important to know what you are buying as a consumer, and what you are selling as an agent. Some Background The standard ISO personal auto policy covers an insured for liability resulting from an auto accident. The form goes on to include anyone using "your covered auto" as being an "insured". Under the ISO policy, the definition of "your covered auto" includes trailers. Progressive's Ohio auto policy provides liability coverage for the ownership, maintenance, or use of a "vehicle". Under Progressive's policy, the definition of a vehicle specifically does NOT include trailers. The Problem Ok, so what does it mean? Let's say John owns a travel trailer, and loans that travel trailer to his brother. The brother, being down on his luck at the time, has let his auto policy lapse. The brother hooks up John's travel trailer to his uninsured vehicle, and heads off for the weekend. On the way there, the axle on John's trailer breaks, and causes the trailer to go left of center and collide with an oncoming vehicle. How is this accident insured? Under an ISO personal auto policy, the trailer is treated as a covered auto, and John's brother would be considered an insured, since he was using John's "covered auto". Since John's brother has no primary insurance, the claim falls back on John's ISO policy, and the claim is covered. If John were insured with Progressive, however, the trailer is NOT included in the definition of a vehicle, so John has NO LIABILITY COVERAGE for his travel trailer while being pulled by someone else. Since there is no primary coverage (the brother let his policy lapse, remember) John is going to be looking at a law suit that he will have to pay for out of his own pocket. I could hardly believe it when I discovered this, so I called my local Progressive claims office and spoke with a supervisor. After reading through the policy, he came to the same conclusion as I did. Progressive insured's DO NOT have liability coverage for owned trailers while they are being used by a third party. From an agent's perspective, this is a huge E&O exposure. Even if John's brother had an insurance policy that would respond, are his limits adequate to cover John's exposure here? The Solution? Progressive does not write trailers on their auto policy, so there is no way to get liabilty insurance for trailers used by third parties under their auto product. Progressive also does not offer a liability option on their recreational vehicle policy, so there is NO WAY to cover this situation with Progressive. An umbrella may provide some drop-down coverage for John, and is really the only way I can see insuring this exposure for John, short of placing his personal auto business with another carrier. An excess policy would probably NOT "drop down", so you need to be careful here. The Conclusion Since discovering this, I have relearned a valuable lesson. You must ALWAYS read and understand the policy you are selling and/or buying. Most personal auto policies act similarly, but there ARE differences in the coverage afforded. Sometimes the difference can come from such a simple thing as the definition of a term. I'm not picking on Progressive here. The claims supervisor I spoke with seemed genuinely surprised that this situation would not be covered, and expressed concern that Progressive had no way of rectifying it with their current products. I haven't yet examined any other non-ISO policies to see if this gap exists elsewhere, but I suspect that it does. I have not had the opportunity to examine Progressive's policy in other s. It MAY read differently than their Ohio policy. I would encourage all agents and consumers to examine their insuring agreement and the definitions of their personal auto policies. Especially those with non-ISO auto policies who own travel trailers. For those who may have picked up on it, Progressive's auto policy does not explicitly provide ANY liability coverage for towed trailers , since they are not included in the definition of a "vehicle". My agency has on file a clarification letter from Progressive claims that s that Progressive includes the towing of a trailer to be a legitimate "use" of a vehicle, and as such would be covered. It doesn't read that way in the policy, so I insisted on getting it in writing. I would encourage you to do the same. Related Sites: Progressive Auto Insurance Insurance Services Office (ISO) We're Talking About It Let's talk About this some more. Join me on the bulletin board to discuss the way Progressive, and other carriers handle liability for trailers. You can jump right to this discussion by clicking here. You can enter as a guest to read all discussions, or join as a member (it's free) and post your own comments.
.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. . .. ... .. .. .. .. .. .. ..
Search Engines: Excite,Infoseek,Alta-Vista,Lycos,Hotbot