Watercraft Liability Coverage for Homeowner's Friend?

Our insured has a homeowners policy that is similar to the ISO HO 00 03. He has a boat with an inboard engine over 50 HP, and does not have a separate watercraft policy. Recently a friend of his borrowed the boat, and ran over his own wife, seriously injuring her. The friend is now claiming coverage for his wife's injury under our insured's policy as an insured, based on this provision: “Under Section II, 'insured' also means: c. With respect to animals or watercraft to which this policy applies, any person or organization legally responsible for these animals or watercraft which are owned by you or any person [qualifying as an insured]…”

We do not think there is coverage for the friend, but would like to be on firm ground before a denial. Can you help?

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