SCMer Lee Cross, a Shelby enthusiast who organizes the annual GT350 Tour, shared a very interesting story:
I am passing along an incident as something that might present a topic with wide relevance to your audience; i.e., the legal technicalities that arise when a collector attaches a trailer to their tow vehicle.
I usually trailer one of our Cobras across the country when I depart Delaware for Monterey. This year was a little different. My 289 Cobra was already in California for a restoration and needing to come back home. A friend’s 1958 AC Aceca body/chassis happened to be sitting in Michigan following a just-completed repaint and needed to go to California.
So I offered to haul my friend’s Aceca to California. The Aceca was mounted on a dolly, and my friend was only too happy to accept my offer and avoid the headache of trying to find a transport company willing to handle a car mounted on a dolly.
Everything was going exceptionally well until I approached Flagstaff, AZ. I won’t go into all of the details, but a Subaru Forester had broken down in the passing lane of I-40, with no brake lights or emergency flashers! Because I was in the passing lane, with a pick-up truck/camper trailer combo to my right, I could only move so far to the right in my frantic effort to avoid the Subaru.
Just when I thought that I was going to squeeze past the Subaru, I felt the sharp impact of my 24-foot enclosed trailer slamming into the SUV. My rig began to swerve wildly between both lanes of I-40 as I attempted to move off to the right shoulder of the highway. At one point, I was heading directly toward four motorcyclists, and their passengers, who had all stopped underneath an overpass to take a break.
Luckily, no one was injured in the collision. While the damage to the Subaru and to my trailer is not insignificant, I do not believe that either is totaled.
In addition to being stranded in Flagstaff for four days, I got a bit of an education in regard to the legal technicalities associated with auto insurance. My truck is insured by Chubb, my trailer is insured by Hagerty, and the driver of the Subaru is insured by USAA. Clearly, you understand all of this stuff, but, because my trailer was attached to my truck, Chubb is apparently responsible for any liability that might be attributed to me as a result of the collision.
Amazingly, the Subaru driver admitted that the entire incident was her fault. I certainly agree — I am just surprised that she would have admitted this!
Because the other driver admitted fault, I was going to go after USAA on my own. However, after speaking with a few of my friends at Hagerty, including McKeel Hagerty, I was persuaded that the most prudent, and expeditious, course of action was for me to allow Hagerty to deal with USAA.
I never had any reason to ask my friend for the insurance carrier on his Aceca, but this may have added a fourth insurance carrier into the mix!
I would be willing to bet there are many collectors who, just like me, have no idea how trailer and tow-vehicle insurance interplay, or what liabilities may arise when trailering a collector car for a friend.
It is not unusual for me to quip that no good deed goes unpunished... That was nearly the case with this incident!
Quite a topic
Thanks to Lee for raising such an interesting topic, which caused “Legal Files” to expand its understanding of insurance policy coverage. It’s very easy for us to say, “All’s well that ends well,” but what if the Subaru driver had insisted she did nothing wrong and was just another victim? Or what if Lee had been the one at fault?
Those questions get us into the never-never land of insurance coverage.
Liability vs. property damage
It is important to know that insurance policies almost universally cover liability and property damage differently. To understand the coverage, you have to consider which of those two portions of a policy you are dealing with.
Under almost every policy, you are covered for any damage you cause to other persons and their property as a result of your negligence. This is generally referred to as “third-party liability.”
Luckily, in Lee’s situation, the Subaru driver admitted fault, so the claim fell under her third-party liability coverage. That covered Lee’s truck and trailer, as well as his friend’s Aceca. As long as the policy limits are high enough, everyone comes out whole.
But what if Lee had been at fault?
Car and trailer
There is another general insurance principle that applies here.
When trailers are attached to cars, it is generally the case that third-party liability coverage is provided under the policy that covers the tow vehicle. In essence, the trailer becomes an appendage of the truck. There is logic to support that — it’s kind of hard for a trailer to be negligent. If there is negligence, it has to be the fault of the driver of the truck. That makes it logical for the truck’s policy to cover the claim.
Paul Morrissette, President of the Chubb Insurance Solutions Agency, which generally manages Chubb’s collector-car policies, points out that Chubb is a little different in this respect.
“When you insure your trailer with Chubb, you have the option of selecting whether liability is to be covered under your tow vehicle policy or under your Chubb trailer policy,” Morrissette said. “Adding liability coverage increases the premium slightly, but it also increases your effective coverage.”
So under either or both policies, Lee is covered for all damage he caused to third parties. That includes the Subaru and, most likely, the Aceca.
I wrote “most likely” because the lawyers reading this will know it isn’t quite that simple.
If a shop were hauling the car to work on it, there would be no question about it. But here, Lee was just doing a favor for his friend, and local state law may or may not hold him liable for damage to the Aceca.
If he is not legally liable, whether the Aceca is covered depends upon the wording of the policies. If Lee’s policies provide coverage only when he is legally liable for it, then we may have to look to the Aceca’s policy for coverage.
Your policy’s property-damage provisions work differently.
This coverage is not fault-based. If covered property gets damaged, it gets fixed or replaced. Generally, the policy covers whatever property is identified or described as “covered” by the policy.
If this was really just an accident, and neither Lee nor the Subaru driver was at fault, Lee’s Chubb policy would have covered his truck and maybe his trailer — most automobile policies typically provide limited coverage for trailers attached to the tow vehicle, but only to a specified amount — typically around $3,000. But regardless, Lee’s Hagerty policy will cover the damage to his trailer.
What about the Aceca? The first place to look is the Aceca’s policy.
Most collector-car policies should cover it while it is being transported, but we can’t say that about all auto insurance policies. Recall that the Aceca was a shell in restoration — did the owner even carry insurance on it?
If it was uninsured, perhaps we could view it as not being a car at all, but just a “thing,” similar to personal property, such as furniture and furnishings. Now, the Aceca is simply the contents of the trailer. Most auto and trailer policies will cover the contents, but usually only to a very limited value. That won’t help much with the Aceca.
The last place to look would be the friend’s homeowner’s policy.
“A Chubb homeowner’s policy would cover your personal property while being transported, but that is not the case with all homeowners’ policies,” Morrissette said. “It is common to deny or severely limit coverage when the personal property is not at your home, is breakable, etc.”
- As a general statement, you often have better coverage options under the other driver’s third-party liability coverage than under your own policy’s coverage.
- As Lee learned, even where the other driver is at fault, things go more smoothly when you get your own insurance company involved to assist with the claim.
- If you are going to haul your friend’s car, let him/her be the one to load it and tie it down.
- Always maintain coverage on your car while it is being restored.
- Make sure you have enough coverage. Hauling your friend’s McLaren F1 with a $1,000,000 liability policy is not a good idea.
- Claims are easier to handle when the same company insures the tow vehicle and the trailer, although you can’t always do that. ♦
John Draneas is an attorney in Oregon. He can be reached through www.draneaslaw.com. His comments are general in nature and are not intended to substitute for consultation with an attorney.