[REPLAY] Is an Apple Watch a Watch?

During this time of year as many people are exchanging presents, I’m sure you’re all wondering exactly how those various gadgets would be classified under the HO3 policy. So for this holiday week, we’re sharing a classic episode featuring an excellent coverage scenario.

The insured, a father of 4, was out buying Christmas gifts for his children. This year he decided to splurge and buy each of them a drone and an Apple Watch. On his way back home, he stopped to get gas, and when he went into the minimart for coffee, a thief stole everything out of the back seat. The insured notified the police and submitted a claim under his ISO 1991-edition HO3. The adjuster considers this to be a covered Theft loss, but she knows there are specific provisions in the policy for watches and aircraft.

Notable Timestamps

[ 00:17 ] - A theft claim is submitted for four drones and four smartwatches under the 1991 HO3. The question arises whether special provisions for aircraft and watches applies.

[ 01:27 ] - The team debates the merits of drones and smartwatches, their capabilities for wall damage and dog-scaring, and the wisdom of being notified emails the instant they are received.

[ 03:09 ] - A $1,000 special limit of liability applies to theft of “watches.” Is an Apple Watch a watch?

[ 03:42 ] - Alissha argues that smartwatches are too different from a basic time-telling watch, and is more like a phone. Smartwatches were likely not part of the original policy intent.

[ 04:55 ] - Mike argues that it’s called an “Apple Watch” -- its makers and users consider it a watch, even if it’s more complex.

[ 06:05 ] - The group quotes Shakespeare and Merriam-Webster; it tells the time and it’s on your wrist, so…

[ 06:30 ] - Grassie v. Merrimack Mut. Fire Ins. Co., 291 A.2d 254 (N.H. 1972) (watches that were inoperable and kept in display case were still subject to special limit of liability for theft of watches).

[ 07:00 ] - Ambiguities are construed in favor of the insured. So both sides need to hire a good lawyer.

[ 07:52 ] - How would the policy treat an iPhone strapped to your arm? Coverage C would likely provide full coverage for a smartphone.

[ 09:51 ] -  “Property Not Covered” includes “aircraft”… but “model or hobby aircraft not used or designed to carry people or cargo” are covered. 

[ 10:20 ] - Toy drones likely fall under hobby aircraft.

[ 11:15 ] - This scenario looked at what’s covered property, but a drone could also be a covered cause of loss, even if it destroys itself.

[ 12:40 ] - Unlike BP and CP forms, there’s no concern about the loss happening off-premises; homeowners get worldwide coverage for Coverage C.

[ 14:19 ] - In the 2022 ISO form, a $2,000 special limit of liability applies to model or hobby aircraft.

[ 15:51 ] - Under the recovered property provision, if the thief is caught after the amount is paid, the insured can choose to return the payment or have the insurer salvage the goods.

[ 18:00 ] - Tim provides a recap of the scenario and the points above.

Your PLRB Resources

FAQ, Drones and First Party Property Coverage, http://search.plrb.org/?DN=60514

FAQ, Is a Drone an Aircraft Under the CGL Policy?, http://search.plrb.org/?DN=56440

Coverage Question on “Is An Apple Watch Considered A Watch Or A Computer?” - https://search.plrb.org/?dn=58826&src=gsa

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The views and opinions expressed in this resource are those of the individual speaker and not necessarily those of the Property & Liability Resource Bureau (PLRB), its membership, or any organization with which the presenter is employed or affiliated. The information, ideas, and opinions are presented as information only and not as legal advice or offers of representation. Individual policy language and state laws vary, and listeners should rely on guidance from their companies and counsel as appropriate.

Music: “Piece of Future” by Keyframe_Audio. Pixabay. Pixabay License.

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