Malpractice Insurance. Business Insurance. Benefits.

Your Auto Policy & GPS

Present on your Homeowners and Personal Auto policy are various exclusions, however these exclusions can be reversed by certain endorsements or policy additional coverage or coverage extensions. An endorsement is a form separate from that of the policy that can change, add or alter coverage. While additional coverage or coverage extensions may be present in the actual policy form. It is important with any policy that the policyholder review what coverage is provided as well as what may be added, limited or taken away. Coverage for such electronic equipment or high value items that are not solely used in the home or permanently attached should be discussed with your agent to make sure that you are financially protected. Contact our personal lines agents to discuss these valuable policy attributes.

Consumer Article:

“The Personal Auto Policy & GPS Systems”

Global Positioning Systems (GPS), once the fodder for science fiction tales, are becoming increasingly common.

 Recently, our "Ask an Expert" service received an email asking whether the personal or business auto policies cover a GPS (and other hi-tech equipment). Below is an analysis of both "ISO standard" policies relative to coverage (or lack thereof).

First, let's examine the Global Positioning System (GPS) issue under the ISO Personal Auto Policy (PAP), then the ISO Business Auto Policy (BAP).

GPS Coverage Under the PAP

The applicable exclusion for this type of equipment in the current policy is:

5. Loss to any electronic equipment that receives or transmits audio, visual or data signals and any accessories used with such equipment.

This includes but is not limited to:

  1. Citizens band radios;
  2. Telephones;
  3. Two-way mobile radios;
  4. Scanning monitor receivers;
  5. Television monitor receivers;
  6. Video cassette recorders;
  7. Audio cassette recorders; or
  8. Personal computers.
  9. Any electronic equipment that is necessary for the normal operation of the auto or the monitoring of the auto's operating systems; or
  10. A permanently installed telephone designed to be operated by use of the power from the auto's electrical system and any accessories used with the telephone. [emphasis added]

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This Exclusion (5.) does not apply to:

Since a GPS receives and transmits data signals and the exclusion says that the excluded equipment is not limited to the listed equipment, the initial (and probably safe) presumption is the the PAP excludes a GPS. Ask any auto insurance underwriter or adjuster and that's probably the answer you'll get.

So, to remove any doubt, it is advisable to attach endorsement an endorsement to explicitly cover the GPS. However, note that there is an exception to the exclusion for any electronic equipment that is necessary for the "normal operation of the auto." At first glance, this would not seem to apply to a GPS since it is not necessary for an auto to operate. But, the policy language does not say "normal operation of AN auto"...it says "normal operation of THE auto."

If your car is equipped with a GPS, wouldn't it be normal for YOUR specific auto to be operated with the GPS and the equipment, obviously, would be necessary for such normal operation? The fact that AN auto can be operated normally without a GPS doesn't change the fact that THE auto with a GPS cannot be operated normally without it. While this may seem to be a splitting of hairs, it's this kind of imprecise wording that results in court interpretations of policy language at variance with the coverage intent. To clarify such intent, it would seem appropriate to change the word "the" to "an."

A small point, but one that could affect coverage.

However, using the motto "better safe than sorry," it is in your best interest to clarify coverage (or lack thereof) in your policy in advance, then seek an appropriate remedy.

GPS Coverage Under the BAP

The applicable exclusion for this type of equipment in the current policy is:

4. We will not pay for "loss" to any of the following:

c. Any electronic equipment, without regard to whether this equipment is permanently installed, that receives or transmits audio, visual or data signals and that is not designed solely for the reproduction of sound.

Exclusions 4.c. and 4.d. do not apply to:

b. Any other electronic equipment that is:

(1) Necessary for the normal operation of the covered "auto" or the monitoring of the covered "auto's" operating system;

This exclusion (and exception) is similar to that in the PAP, but the "devil's advocate" argument that the exception is not precisely worded has even more credence since the policy refers to "the covered 'auto'," making it clear that it is referencing a specific vehicle.

Again, this may be a seemingly small (and debatable) point, but why take chances? We suggest revising the wording to make it clear to everyone, including insureds, juries and judges, that the intent is to NOT cover such electronic equipment.

Finally, just like the PAP, the BAP has an endorsement designed to provide coverage for excluded equipment.

Since an adjuster would almost assuredly deny a GPS claim, we suggest scheduling this type of equipment on this endorsement to explicitly cover it.

Please contact Desert Mountain Insurance if you'd like a complete review of your insurance coverage.

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Copyright 2000 by the Independent Insurance Agents & Brokers of America, Inc. Reprinted with permission. NOTE: Policy coverages and circumstances can change at any time, so the information above may not be accurate at the time of reprinting or subsequently to that time. IIABA does not assume and has no responsibility for liability or damage which may result from the use of any of this information. The most current, up to date version of this article can be found at IIABA’s Virtual University at http://vu.iiaa.net.