Alberto has an HO-3 contract with $100,000 of Liability Coverage. He is ordered by a judge to pay his neighbor $162,000 because of bodily injuries the neighbor suffered while he and Alberto were fishing in Alberto's old, undeclared 35 horse-power outboard motor boat. How will the contract respond?

Question

Quizplus · Accepted Answer

DA standard HO-3 homeowners insurance policy typically excludes liability coverage for bodily injuries arising from the ownership, maintenance, use, or entrustment to others of watercraft with certain horsepower or length. Since Alberto's boat falls into a category that is likely excluded (given the specific mention of its horsepower), the policy would not cover the liability arising from the accident. However, the policy does provide $100,000 of Liability Coverage for covered incidents, which means if the incident were covered, it would pay up to the policy limit of $100,000 towards the judgment. Since the boat-related injury is excluded, the correct understanding is that no payment would be made for the boat incident itself, but the mention of the policy's liability limit highlights what could have been available if the incident were covered.

Alberto Has an HO-3 Contract with $100,000 of Liability Coverage