9.3 Automobile Exclusions


Standard homeowner policies exclude coverage for automobiles. The typical exclusion reads:

1. Coverage E Personal Liability and Coverage F - Medical Payments to Others do not apply to "bodily injury" or "property damage":

* * *

f. Arising out of:

(1) The ownership, maintenance, use, loading or unloading of motor vehicles or all other motorized land conveyances, including trailers, owned or operated by or rented or loaned to and "insured";

(2) The entrustment by an "insured" of a motor vehicle or any other motorized land conveyance to any person; or

(3) Vicarious liability, whether or not statutorily imposed, for the actions of a child or minor using a conveyance excluded in paragraph (1) or (2) above.

This exclusion does not apply to:

(1) A trailer not towed by or carried on a motorized land conveyance.

(2) A motorized land conveyance designed for recreational use off public roads, not subject to motor vehicle registration and:

(a) Not owned by an "insured"; or

(b) Owned by an "insured" and on an "insured location";

(3) A motorized golf cart when used to play golf on a golf course;

(4) A vehicle or conveyance not subject to motor vehicle registration which is:

(a) Used to service an "insured's" residence;

(b) Designed for assisting the handicapped; or

(c) In dead storage on an "insured location";

Historically, Arizona courts have upheld automobile liability exclusions in homeowner and commercial general liability ("CGL") policies. The exclusion sets the boundary between auto related and non-auto related coverages and prevents duplication of such coverages. The automobile and homeowner or CGL policies have a mutually exclusive application whereby the coverages afforded under each dovetails with the other, with one filling the gaps created by the other. The personal or business auto policy covers liability claims arising from the "use, maintenance or ownership" of insured autos, while the homeowner or CGL policy provides coverage for non-auto related liability claims. The auto exclusion in the homeowner or CGL policy acts as a mirror image of the insured clause of the personal or business auto policy. Arizona courts have applied auto exclusions where there is a causal connection between the use of an insured auto and the injury. Where the use of the insured vehicle was only incidental to the event that produced liability, the auto exclusion was not applied by the court.

In Morari v. Atlantic Mutual Fire Insurance Co.,[42] a passenger in the insured vehicle was shot when the insured reached behind the seat of his pickup truck to get his rifle, which discharged, injuring the passenger. The injured passenger argued that the automobile exclusion in the insured's homeowner's policy was not applicable because the insured's negligence was in keeping the gun, not on safety, in his truck. The passenger asserted that this negligence did not involve the pickup truck or its use. In rejecting this argument, the court stated:

We think appellant is shifting the meaning of the word "cause." The unloading does not have to be the cause in the sense of the proximate cause of the accident. The accident need only be connected with the unloading. Hallabrin's act in keeping the gun loaded and not on safety created a dangerous condition from which reasonable men might conclude greater care in its subsequent handling was required in order to prevent its accidental discharge. No doubt the rifle could have been removed from the truck with such care that Morari would not have been injured. The careless use in connection with the unloading was the negligent act from which the injury stemmed.[43]

The court held that the carriage of the rifle simply created a dangerous condition that imposed a duty to exercise reasonable care commensurate with all the known circumstances to avoid its accidental discharge. It was the manner of removal from the truck that was the negligent act or omission, without which the injury would not have occurred, and this negligent act was connected to the unloading of the truck.

In Lumbermen's Mutual Casualty Co. v. Kosies,[44] the claimant's daughter was killed as a result of the negligent driving of the insured's son. An action was brought against the driver for negligence and against his parents on a theory of negligent entrustment. The parents were insured under a homeowner's policy that excluded auto liability coverage. The court held that the automobile exclusion was applicable to the negligent entrustment claim. The court observed:

In order to prove negligent entrustment, it is necessary for the plaintiff to show, among other things, that the defendant owned or controlled the motor vehicle concerned and gave the driver permission to operate the vehicle. It is evident that negligent entrustment as a distinct and specific cause of action is not exclusive of, but rather is derived from, the more general concept of ownership, operation, and use of a motor vehicle . . . . Since there would have been no accident in this case without the use or operation of an automobile, the exclusion clearly applies.[45]

In American Modern Home Insurance Co. v. Rocha,[46] the claimant allegedly was injured by the collapse of a tripod being used to pull a slaughtered steer into a vertical position by a rope attached to the trailer hitch of a mobile home. The insured had purchased a home insurance policy that contained a motor vehicle exclusion. That...

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