Auto Insurance: Frequently asked questions

Our insured had a set of keys stolen from his house and included in that set was the key to his personal auto. The auto key was not just an ordinary key but was also some kind of electronic device that controlled the locks on the car doors. The insured wants to have the locks changed on his car to protect against a possible future theft. Who should pay for this? Would the homeowners policy pay or would the personal auto policy cover changing the locks? In fact, which insurer would pay for the loss to the keys and the electronic device?

Since this case involves both the homeowners policy and the auto policy, each contract needs to be reviewed.

The standard homeowners policy does not apply to motor vehicles, including equipment and accessories while in or on the vehicle. Since the locks are considered part of the motor vehicle, the homeowners policy will not cover the cost of changing locks on the insured's car. Furthermore, the homeowners policy excludes articles separately described and specifically insured under other insurance policies; the homeowners insurer may justifiably claim that, even detached, the car key and the electronic device are covered under the auto policy as part of the "separately described and specifically insured" personal auto or its equipment and thus, being insured under another insurance policy, these items are excluded from the homeowners policy.

As for the personal auto policy (PAP), it pays for direct and accidental loss to covered autos and their equipment. If we presume that the keys are part of the auto or its equipment, then the PAP will pay for the loss of the keys. However, exclusion 4(b) on the physical damage section of the PAP states that the policy will not pay for loss to any electronic equipment that receives or transmits audio, visual, or data signals unless such equipment is necessary for the normal operations of the auto. Therefore, the PAP will not pay for the theft of the electronic device unless it was necessary for the operation of the auto. For example, if the ignition keys and the electronic device are linked together as part of one indivisible item, obviously, that entire item is necessary for the operation of the car, and its loss would be covered by the PAP.

With reference to the locks on the car, the PAP pays for direct and accidental loss to a covered auto. There has been no direct loss to the auto here, so the PAP will not pay for changing the locks under the physical damage insuring agreement.

It makes sense for the insured to want to protect his property from a possible future loss, but the insurance contract is not meant to apply to such activity.

Back to frequently asked auto insurance questions