An agency insures a nonprofit organization that oversees student scholarships and fundraising for a university. The nonprofit recently acquired a Venom Lithium 6-seater G-Wagon electric vehicle, which is commonly referred to as a golf cart, though it lacks a compartment for golf clubs. The vehicle is street legal but is not required to be licensed in the state. The nonprofit intends to use the golf cart for traveling to meetings on the university campus and for conducting campus tours with prospective donors and students.

Q: Given that this vehicle is not required to be licensed, would the commercial general liability policy coverage extend to the operation of this vehicle?

Response 1: The CCL defines an "auto" in multiple ways. If a vehicle meets either of the definitions of an auto, the CGL excludes it rather than providing coverage for “mobile equipment."

First, an auto is "a land motor vehicle that is subject to compulsory or financial responsibility or other motor vehicle insurance law." This may not apply here. You mention that this vehicle does not have a license requirement. However, occasionally, a vehicle may not require licensing but may still have to show financial responsibility coverages, so check that out to be sure. 

If that first definition does not apply, the vehicle may still be considered an auto by the other definition: "land motor vehicle ... designed for travel on public roads" as opposed to mobile equipment, which includes vehicles designed for use principally off public roads. It may be argued that the golf cart was designed for on-public road use more than off-public road use. 

In addition to being designed for use off public roads, one of the other definitions of mobile equipment includes "vehicles maintained for use solely on or next to premises you own or rent." If the university owned the golf cart and it was not subject to financial responsibility, then it certainly would be mobile equipment and covered under the CGL. However, since it's owned by the nonprofit and the nonprofit does not own or rent the premises where it is being used, this definition would not apply. 

For me, the underwriter's decision will center on whether the golf cart is designed for on-road or off-road use, as long as no financial requirement of coverage exists. I recommend contacting the underwriter and getting their decision in writing. That said, there are also disputes between underwriters and claims adjusters at the same carrier. Generally, the claims adjuster wins but it will certainly help if you have it in writing that the underwriter believes it is covered under the CGL. If the CGL underwriter says it is not covered, then you need to move on to another solution.

Response 2: Report it to the CGL and commercial umbrella policy underwriters to note the exposure change and confirm that coverage applies. Our clients' CGL insurers include coverage for similar golf carts—as mobile equipment—used only on the client's premises.

With off-premise use, you should recommend the client register it for a DMV license and arrange a business auto policy for it.

This question was originally submitted by an agent through the Big “I" Virtual University's (VU) Ask an Expert service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.

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