If your home is situated on several acres and you own a tractor, Bobcat, skid steer or other motorized machine that you use to maintain your premises, I’m sure that you want to make sure that this equipment is properly covered, both for its value and also with liability protection if an accident occurs. Unfortunately, while your Homeowners insurance may provide some coverage for your machine, most policies will leave uninsured gaps which might escape your notice without a close examination of your policy.
As I see it, the problem is not that your Homeowners carrier doesn’t want to properly cover your bobcat or tractor; it’s more that the writers of your Homeowners policy didn’t really anticipate policyholders owning this kind of machine to begin with.
First let me explain that there are typically only two types of motor vehicles covered under most Homeowners policies: a) vehicles intended to assist the handicapped (think motorized wheelchairs) and b) unregistered, off-road vehicles used to service your premises (aka “service vehicles”). While the primary intent of service vehicle coverage is for incidental machines such as riding lawnmowers, it may also work to cover your tractor or similar machine, but let’s dig a little deeper before we assume that you’re good to go.
First, most Homeowners insurance policies only cover service vehicles while they are on your premises. Even if that is the main place you use your machine, do you ever take it over to a relative’s home to help them out or maybe to hunting land you own to do a little work? Or how about when you bring it into town for servicing? If you got in a car accident while trailering it or if it was damaged or stolen while at at another location, most carriers would likely deny your claim.
Secondly, there are other exclusions and limitations that could come into play. Some Homeowners policies place a limit on coverage for service vehicles, which might be as low as $5000 or less. While $5000 should be enough to cover most riding lawnmowers, it’s probably nowhere near the value of your bobcat, skid steer or other tractor or machine. Occasionally I see policies that don’t provide any service vehicle coverage at all.
Unfortunately, most Homeowners carriers simply don’t offer a way to overcome these restrictions or fully cover your motorized equipment. It’s not so much that they don’t care about your coverage needs, but a suburbanite working in a 4x6 cubicle in a high rise may not be able to imagine why a private homeowner would need such a machine to begin with.
There are a few insurance companies out there who will allow you to specifically add your motorized equipment to your Homeowners policy (or on a separate companion policy) to ensure that it is covered up to its value both on and off premises. Depending on the carrier and the value of your machine, this often costs one or two hundred dollars a year and is probably money well spent. However, it is important to note that this addition provides property coverage only and does not broaden your Liability coverage, which might remain a major gap in coverage. We do see a few carriers that provide off-premises Liability coverage service vehicles, and you probably need to go with one of these carriers. Or your other option would be to buy a farm policy if you are able, as farm policies tend to be more friendly to insuring motorized equipment.
Let me bring up a very important word of caution. If you are relying on your Homeowners or other personal policy for coverage, I’d strongly discourage you against ever using your machine for pay. The temptation is definitely there: Once you have this machine, why not make a little money with it on the side doing a few cash jobs for friends or acquaintances? The problem is that as soon as you use your machine for any business or money-making purpose, you are probably voiding coverage, even if your machine is specifically listed. If you want to use your equipment to make money even occasionally, your only option for coverage is likely a commercial equipment policy.
As I’m sure you can tell from this post, coverage for large motorized machines as a home owner is quite tricky. We recommend seeking the help of a knowledgeable, experienced local agent – one who takes the time to read and understand policy contracts (many don’t). We also recommend carefully reading your insurance policy yourself. If I can be of any assistance, I’d be happy to help.
This post only addresses the coverage needs of a private homeowner who lives on residential property not used for farming or business and who insures their home via Homeowners coverage (not farm coverage) and who owns a motorized machine for the primary purpose of maintaining their primary residential premises. While the coverage described in this post is typical in our experience, there can be significant coverage differences from one policy to the next. Therefore, your own policy coverage may vary from what we describe here. Please read your insurance policy carefully.
Ken Cobb is owner of Pine Country Insurance and has been active in the insurance industry for over 15 years. Meet Ken.
Coverage descriptions found in this blog are summaries provided for general educational purposes and cannot fully detail the terms, conditions, limitations or exclusions of a specific insurance policy. Please read your policy carefully.