That's not
exactly right.
In the event of an accident involving an automobile, i.e. to use Foreman500es's example you have an accident while towing, your auto policy would cover the trailer you are towing as well, and, therefore any liability for personal injuries sustained as a result of the accident. Your insurance policy - which is a contract - provides that you pay a premium for certain services in return - one of those services is the duty to defend you in a lawsuit, and also to provide benefits to injured parties as per the contract of insurance. As long as you haven't done anything grossly negligent, like DUI, your policy will cover you. As for damages to the ATV itself, you would have to read your policy to see if it would cover it. Also, I'll pretty much guarantee that your auto policy will not cover theft of the ATV while it's trailered.
In the event you injure yourself or someone else while driving the ATV itself, you are most likely not covered under your auto policy. It is *possible* that the damages would be covered under your homeowners policy, however. You would need to read your policy and/or ask your agent or insurance representative these questions specifically with regard to YOUr policy. In all likelihood, you would not be covered, and this is the sole reason you would want to purchase separate liability coverage for the ATV.
Factors to take into consideration:
- Your auto/homeowners policy: the first thing that is looked at for coverage. Is it covered? I don't know, read your policy.
Your state laws: the second thing that is looked at for coverage. All the little idiosyncrasies particular to each state's laws aren't going to make that much of a diference in the whole picture.
Judgment proof: you don't have the assets to be sued (which is why we all carry liability insurance by law). It means that when a lawyer takes a case, the very 1st thing he looks at is whether or not there is insurance coverage, even potentially. If the lawyer's claims are denied due to lack of coverage, he's dropping that case like a hot potato: if there's no insurance, who's going to pay the damages? Lawyers don't get paid if the plaintiff doesn't get paid, and trying to collect on a personal judgment like that - forget about it. Would you bet on a losing horse? No, and neither do attorneys. Mr. Joe Reckless ATV Driver who has a mortgage and a car payment and 2.4 kids and works for The Man five days a week? I don't think so. How is the plaintiff going to collect on the debt? Unless Mr. Reckless is a doctor or executive with tons of assets (which they will promptly hide anyway), there's no point in suing for individual assets. Lawyers may be scummy, but they're not that scummy. Besides, Mr. Reckless will have to hire an attorney to defend him, which is just that much less cash in the bank for assets.
(BTW, I'm a paralegal and do PI liability/litigation for a living so I'm not talking out of my a$$.)