General Liability Insurance
Commercial General Liability Forms sections
1. Section I coverages: -Coverage A- bodily injury and property damage -Coverage B- personal and advertising injury -Coverage C- medical payments 2. Section II- who is insured 3. Section III- limits of insurance 4. Section IV- commercial general liability conditions 5. Section V- extended reporting periods (only available in claims-made forms) 6. Section VI- definitions Forms will differentiate between occurrence forms and claims-made forms.
Coverage C exclusions
Medical payments will not pay for bodily injury to or resulting from: -any insured except volunteer workers -employees or anyone hired by the insured -tenants of the insured -if benefits must be provided under a workers compensation or similar law -persons injured while practicing, instructing, or participating in physical games or exercises, sports, or athletic contests -war, insurrection, rebelling or revolution -if excluded under coverage A
Section VI: Definitions
Some definitions as they apply to CGL insurance: -Personal and advertising injury: injury, including consequential bodily injury, arising from copyright, trade secret or slogan infringement used in an insured's advertisement, false arrest, detention or imprisonment, wrongful or unlawful eviction, malicious prosecution, use of another's advertising ideas, slander or libel in oral or written publication in any manner, violation of privacy -Coverage territory: territory in which the policy is applicable- The U.S., its territories, puerto rico, canada, international waters and airspace if the injury or damage occurs during travel to or from the defined coverage territories, anywhere in the world if injury or damage results from goods or products manufactured or sold in a coverage territory -Products and completed operations: bodily injury or property damage occurring away from the insured's premise and arising out of the insured's product or work. Products that are still in the physical possession of the insured do not meet the definition. -Your work: work or operations performed by the insured or on the insureds behalf -your product: any goods or products manufactured, sold, handled, distributed or disposed of by the insured -Employee: includes a leased worker but not a temporary worker. Leased worker is a person who performs duties for the insured for the business and is leased from a labor leasing firm. A temporary employee means a person who is furnished to you to substitute for a permanent employee on leave or to meet seasonal or short term workload conditions -Mobile equipment: bulldozers, farm machinery, forklifts, vehicles maintained for use solely on or next to the insureds premises, vehicles that travel on crawler treads, vehicles used primarily to provide mobility to power cranes, shovels, loaders, diggers, drills, and any other road construction or resurfacing equipment. If a vehicle falls under a compulsory insurance law, financial responsibility law, or motor vehicle insurance law, it will not be considered mobile equipment.
Supplementary payments- coverages A and B
-supplementary payments are provided for coverage A and coverage B -the amounts the insurer will pay in addition to the stated policy limits, but the insurer's duty to defend ceases when the total of all claims paid reaches the aggregate limit Supplementary payments provided: -any expenses incurred by the insurer -up to $250 for the cost of bail bonds and bonds to release attachments -reasonable expenses incurred by the insured, including up to $250 a day for loss of income -court costs taxed against the insured (not including attorney's fees or expenses) -prejudgement interest -interest that accrues on any judgement
Claims-made form feature: trigger
-the coverage trigger is what makes a policy respond to a claim -the policy in force when the claim is first made responds if a claims-made trigger, and the policy in force when the event occurred responds if an occurrence trigger
Coverage A- insuring agreement
-the insurer will pay those sums that the insured is legally obligated to pay as damages because of bodily injury or property damage to which the insurance applies -insurer has the right and duty to defend the insured in a suit against them, does not apply if the nature of the suit is not covered by the policy -the insurer may investigate any occurrence or suit, but will pay no more than the policy limits, and the right and duty to defend ends when the limits of insurance have been exhausted
Coverage B: Insuring agreement
-the insurer will pay those sums that the insured is legally obligated to pay as damages because of personal and advertising injury to which the insurance applies -insurer has the right and duty to defend the insured in a suit against them, does not apply if the nature of the suit is not covered by the policy -the insurer may investigate any occurrence or suit, but will pay no more than the policy limits, and the right and duty to defend ends when the limits of insurance have been exhausted -offense must be committed within the coverage territory and the policy period described in the declarations
Claims-made form feature: extended reporting period (ERP)
-the policy allows the insured a period of time to report a claim and provide coverage even though the policy was cancelled by the insured or the insurer -combination of ERP and retroactive date allows the insurer to better predict when the policy will respond because the ability of the insured to report a claim, and the amount of time in which the policy responds to an occurrence, are now subject to defined periods of time
General liability forms: claims-made form
-used for specialty coverages such as professional liability, malpractice, errors and omissions, environmental liability and employment practices liability
Section IV: Conditions
-Bankruptcy -Insured duties in the event of an occurrence, offense, claim or suit: notify insurer, record specifics of claim, send insurer any demands, authorize insurer to obtain any records, not make any voluntary payments, assume any obligations, or incur any expenses without the insurers consent or it will be at the insured's own cost -legal action against the insurer -other insurance: if other valid and collectible insurance is available to a loss covered under coverages A and B, the general liability policy will pay as follows: 1. primary basis: except as noted in the excess section below, if other insurance is primary, the policy will share depending on how the other insurance shares liability. it can either be in equal shares or pro rata up to the policy limit 2. excess basis: certain types of insurance contracts regardless of the other insurance clause in those policies; any other primary insurance in which the insured has been added as an additional insured -premium audits: insurer can audit the insureds books to make sure adequate premium has been collected for the exposure -representations -separation of insureds -transfer of rights of recovery against others to the insurer (subrogation) -nonrenewal: minimum number of days' notice the insurer will provide to the insured in the event the insurer decides not to renew the coverage is usually 30 days -insureds right to claim and occurrence information: the insurer will provide the first named insured information relating to claim and occurrence, as well as any preceding general liability claims-made coverage part issued in the previous 3 years
Section I- Coverage A
-Bodily injury and property damage liability -provides protection for bodily injury and property damage suffered by third parties due to negligence of the insured and emanating from the insureds premise, operations, product or completed operations that occur within the coverage territory and time frame -coverage in liability policies not determined by perils or cause of loss, instead subject to exclusion
Limits of liability: General Aggregate
-Bodily injury and property damage occurrence -Personal and advertising injury occurrence -Damage to property rented to you -medical payments
Claim information
-additional condition on the claims-made form has to do with the insured's rights to claim and occurrence information -insurer will provide information on any current claims-made policy and any claims-made coverage part it has issued for the previous 3 yeras -if insurer cancels or does not renew, the claim and occurrence info will be provided at least 30 days before the last day of coverage -the first named insured may request the report in writing at any time up to 60 days after the policy ends -the insurer will provide the report within 45 days of the request
Limits of liability: Products and Completed Operations Aggregate
-bodily injury and property damage due to a products or completed operations hazard -subject to the per occurrence limit
Commercial general liability coverage policies
-businesses need general liability insurance to cover their exposure to liability losses that can result from their business operations -CGL's come in 2 forms: occurrence and claims-made -Essential difference between the 2 forms is how the coverage is triggered
Extended Reporting period
-extended reporting periods do not extend the policy period -any claim that is filed during the extended reporting period must have occurred on or after the retroactive date -ERP's often called tail coverage Reporting periods broken into 2 categories:
Occurrence vs. claims-made
-general liability policies come in 2 forms -most common is the occurrence form, which is described above -claims-made form is used for special situations such as professional liability, product liability, employment related liability and environmental liability -often used in situations where the occurrence could take a long time to manifest itself or be spread out over many years
Section III- Limits of liability
-section describes how each limit listed on the declarations page works in the event of a covered claim -aggregate limits are the maximum available for each limit during the policy period. Once the aggregates are depleted, the limits of the policy are exhausted, and any supplementary payments will end -there is an occurrence limit for bodily injury and property damage, as well as an occurrence limit for personal and advertising injury. depending on the type of claim, each limit will be the most the policy will pay. -Products and completed operations claims are also subject to the occurrence limit, but draw down to a different aggregate. -Medical expenses are a per person limit, but subject to the occurrence limit for one event -A specific amount of coverage is also included in the general liability policy for fire damage legal liability, which may be increased
Coverage A exclusions
-if one or more exclusions apply, then the policy may not respond to any settlements or pay for defense costs Exclusions for Coverage A: -Expected or intentional injury, except if caused by the use of reasonable force to protect persons or property -Contractual liability: assumption of liability due to contractual agreements is excluded unless in absence of the agreement the insured would be liable, or if it was assumed in an insured contract such as contracts for lease of premises, sidetrack agreement, easement or license agreements, obligation to indemnify a municipality, elevator maintenance agreements, and liability the insured assumes under any contract that would have been imposed by law even in absence of the contract -Liquor liability: applies to liability arising from causing or contributing to the intoxication of any person, furnishing alcohol to ppl under legal age or ppl under the influence. This exclusion only applies to insureds in the alcoholic bev industry, in which case, there is no liability for alcohol related injuries -Workers comp and employers liability: excludes coverage for bodily injury, sickness, disease or death of any employee while engaged in the employment of the insured. These types of losses are more appropriately insured under workers comp and employers liability policies. -Pollution: excluded for almost any cause under the general liability policy -Aircraft, auto, or watercraft: there is no coverage under the general liability policy for bodily injury or property damage caused by the ownership or use of any aircraft, auto, or watercraft. This exclusion does not apply to nonowned watercraft less than 26 feet long and not being used to transport person or property for a fee, watercraft while ashore on premises the insured owns or rents, parking a nonowned auto on or next to property owned or rented by an insured, liability assumed in an insured contract for the ownership, maintenance or use of an aircraft or watercraft, or operation of mobile equipment. -Mobile equipment: there is no coverage for the transportation of mobile equipment by an auto owned or operated by the insured, or while it is being used in a race or contest -War -damage to property: there is no coverage for damage to property owned, rented by, or loaned to the insured, or property in the insureds care, custody or control -The insured's product -The insured's work, except if the work was performed by a subcontractor for the insured -Impaired property or property not physically injured: property damage to impaired property or property that has not been physically injured that was caused by a defect in the insured's work or product is not covered. -Recall of products, work or impaired property: the policy excludes any loss incurred by the insured or others for the loss of use, withdrawal, or recall of the insureds product or work -Personal and advertising injury: there is no coverage for bodily injury due to personal and advertising injury -Electronic data: there is no coverage for damages arising out of the loss of, loss of use, damage to, corruption of, inability to access, or inability to manipulate electronic data -Recording and distribution of material in violation of communications law
Exclusions for coverage B
-knowing violation of rights of others: no coverage if done intentionally and with the knowledge that the act would violate another's rights -material published with knowledge of falsity: no coverage due to the publication of oral or written material that is known to be false -material published prior to policy period -criminal acts -contractual liability: no coverage for any liability the insured assumes through a contract or agreement unless the insured would be liable for damages in absence of the agreement -breach of contract: no coverage is applicable for any breach of contract unless it is an implied contract to use another's advertising idea -quality or performance of goods-failure to conform to statements: if the product, goods, or services fail to conform to the advertised quality or performance, there is no coverage -wrong description of prices: if the advertising material states the wrong price, there is no coverage for the resulting damage -infringement of copyright, patent, trademark or trade secret -insureds in media and internet-type business: no coverage for insureds who are in the business of broadcasting, advertising or telecasting, designing or determining content of websites for others, or an internet search, access, content, or service provider -electronic chatrooms or bulletin boards: no coverage for damage due to electronic chat rooms or boards hosted, owned, or controlled by the insured -unauthorized use of another person's name or product: no coverage of injury arising out of unauthorized use of another person's or entity's name or product to mislead the person's potential customers -Pollution or pollution related loss -War -Recording an distribution of material in violation of law
Section I- Coverage C
-medical payments -provides necessary medical, surgical, ambulance, hospital, professional nursing or funeral expenses for injuries to third parties -considered good will coverage because payments will be paid without regard to the fault or negligence of the insured -medical expenses must be incurred and reported within 1 year of the date of the accident to be covered -bodily injury must be due to an accident and occur on premises owned or rented by the insured, next to the owned or rented premises, or due to the operations of the insured
General liability forms: occurrence form
-most common form -used for a wide variety of businesses
Reporting Period Category 2: Supplemental reporting period
-must be purchased by the insured and added by endorsement -allows for an unlimited period in which to file a claim against the expired policy This additional coverage has the following characteristics: -The insured must make their election to purchase coverage within 60 days of policy expiration -The extension will not go into effect until the premium is paid when due -The insurer can price the extension based on a number of factors but it will not exceed 200% of the annual premium -It is excess insurance over any other valid and collectible insurance -It will reset the General Aggregate and the Products and Completed Operations aggregate to the limits stated on the declarations page
Section I- Coverage B
-personal and advertising injury -personal injury: result from mental anguish, false arrest or imprisonment, wrongful eviction or detention, malicious prosecution, defamation of character, slander or libel, and invasion of privacy -advertising injury: covers injuries that occur if, in the course of advertising, the insured inadvertently libels, slanders, defames or violates the privacy of another -covers specific acts that result in a non-physical injury to a third party due to offenses defined as personal and advertising injuries
Exposures
-products and completed operations hazard includes injuries or damage that occur after the insured has completed its job and left the site, or relinquished control of a product it manufactured or sold -coverage to protect against the products and completed operations hazard is optional, although for some types of business risks, coverage is included
Reporting Period Category 1: Basic Extended Reporting Period
This period is extended to the insured without an additional premium charge and is broken down into 2 time frames and 2 different situations: 1. Known claim- if the insured reports a claim not later than 60 days after the policy expiration, the claim is covered for up to a 5 year period of time (Midi tail) 2. Unknown claim- coverage is only extended for 60 days after policy extension. this means that if an insured receives notice of a previously unknown claim on day 70 after policy expiration, no coverage would apply. if it became known on day 45, coverage would apply and be applicable up to 5 years after policy expiration (Mini tail)
Claims-made form feature: Retroactive Date
a date is entered on the declarations page to alert the insured that any claim that happens before the date will not be covered in the policy
Section II- Who is an insured
form describes who is an insured based on the following designations in the declarations: -individual (sole proprietor): an individual insured and his or her spouse, but only in respect to the conduct of a business in which the insured is the sole owner -partnership or joint venture: a partnership, including joint ventures, is a legal entity in which 2 or more persons agree to share the profits and losses of the business. under this arrangement, the insureds are the named insured, members, partners, and their spouses, but only in respect to the conduct of business -limited liability company (LLC): named insured and members for business activities. managers are also considered insureds for their duties as managers. -an organization other than a partnership, joint venture or LLC: named insured, executive officers, directors and stockholders but only for their duties or liabilities as such -Trust: named insured and trustees but only for their duties as trustees Regardless of legal entity, each of the following is also considered an insured under the policy: -the insured's employees and volunteers for acts within the scope of their employment -any person or agent while acting as the insured's real estate agent -any person or organization, or legal representatives, having temporary custody of the insured's property if the insured dies -newly acquired or formed organizations for which no other insurance applies for up to 90 days after ownership is acquired or the policy expiration, whichever is earlier -In NC, any person driving mobile equipment that is registered in the insured's name is considered an insured while driving the equipment along a public highway
