chapter 9: commercial general liability coverage

claims-made form

- coverage is triggered if an occurrence takes place AFTER the retroactive date AND is REPORTED within the policy period. 1. retroactive date= a date specified in the declarations, after which an occurrence must take place to be covered. (before the retroactive date= not covered) -may be the policies effective date or any date in the past that the insurer agrees to 2. extended reporting period (tail coverage)= if a claims-made policy isn't renewed or replaced, the claims-made form contains a provision for the extension of time during which claims must be reported a. basic extended reporting period (BERP)= in a claims-made form and allows claims to be reported after the policy term for a specific period of time, such as 60 days after the policy's expiration or cancellation date. b. supplemental extended reporting period (SERP)= an optional reporting period of unlimited duration may be purchased by endorsement if requested within 60 days of the end of the policy term. SERP covers claims that took place after the retroactive date and before the end of the policy term, regardless of when the claim is made. **cost may be up to 200% premium**<optional one time charge>

Coverage C: Medical Payments Insuring agreement: (know!)

-Will pay medical expenses caused by an accident on the insureds premises or because of the insureds operations. - includes first aide administered at the time of the accident (know!) - expenses incurred and reported within 1 year of the date of the accident. - payments are made regardless of fault.

Coverage C: Medical Payments Exclusions: (know!)

-any insured (other than a volunteer worker) - any person hired by the insured or the insureds tenant - a person who normally occupies any portion of the insureds premises - injuries that would be covered by workers compensation and similar laws - athletic activities - injuries within the products-completed operations hazard - coverage A exclusions (know!)

legal liability exposures: completed operations exposure

-business performs services or work, such as installation, construction, or repair. - this exposure typically begins after the insureds operations have been completed and the insured leaves the job site. - coverage will pay for bodily injury and or property damage caused by negligent or faulty workmanship by an insured, but will not pay for the cost to replace the work that caused the loss.

Section 3- limits of insurance

-shown in the declarations are the most the insurer will pay regardless of the number of insureds, claims made, suits brought, or persons or organizations making claims or bringing suits. *General Aggregate limit- medical expenses under coverage C, damages under coverage A and damages under coverage B. *Products-completed operations Aggregate limit- most insurer will pay during the policy period, for losses payable under Coverage A included in the Product and Completed Operations Hazard. *Personal and Advertising Injury Limit- most insurer will pay under Coverage B for the sum of all damages because of all personal and advertising injury sustained by any one person or organization. *Per occurrence limit- under coverage A and medical expenses under coverage C because of bodily injury or property damage arising out of any one occurrence. *Medical expense limit- under coverage C for all medical expenses because of bodily injury sustained by any one person

section 4- Commercial General Liability Conditions *these conditions apply in addition to the Common Policy Conditions*

1. Bankruptcy 2. Duties in the Event of Occurrence, Claim, or Suit 3. Legal Action Against the Insurer 4. Other Insurance 5. Premium Audit 6. Representation 7. Separations of Insureds (severability) 8. Transfer of Rights of Recovery Against Others to the Insurer (subrogation) 9. When the Insurer Does Not Renew 10. The Insureds Right to Claim Information (claims made from only)

use the acronym LEASE to remember the 5 items automatically covered under insured contracts:

>Lease of Premises >Easement Agreement >Agreement to Indemnify the Municipality >Sidetrack Agreement (Hold Harmless Agreement) >Elevator Maintenance Agreement

Pollution Liability Coverage

>Pollution Liability Coverage Form (Designated Sites)- provides coverage on a claims-made basis with its own limits of liability. Coverage includes a leak from a waste disposal factory located on the premises. The form provides coverage for clean up imposed by governmental direction if the cost is incurred because of environmental damage caused by a pollution incident. >Limited Pollution Liability Coverage Form (Designated Sites)- this form is identical to the Pollution Liability Coverage Form; except that it does not include clean up. >Pollution Extension Endorsement- this endorsement deletes the Pollution Exclusion for bodily injury and property damage liability, but continues to exclude clean up costs.

Which of the following is not one of the liability exposures of the CGL? A Completed operations B Products C Premises and operations D Advertising injury

Advertising injury

Which of the following is not an insured contract under CGL? A Sidetrack agreement B Elevator maintenance agreement C An advertising contract D Lease for a new store location

An advertising contract

What type of insurance indemnifies the legal liability of an insured for the actions of the insured's subcontractors? A Contractual Liability Insurance B Contingent Liability Insurance C Contractors Liability Insurance D Completed Operations Insurance

Contingent Liability Insurance

Supplementary payments- coverages A and B (know!)

Paid in addition to any applicable limit of liability: - all claim-related expenses incurred by the insurance company - the cost of bail bonds, up to $250 - cost of bonds to release attachments - all reasonable expenses incurred by the insured, at the insurers request, including actual loss of earnings up to $250 per day to the insured for time off from work - all court costs taxed against the insured in a suit - prejudgment interest - post-judgment interest ( does NOT reduce limits of insurance provided by the policy)

Property Damage

Physical injury to, destruction of, or loss of use of tangible property.

An insured contract includes all of the following, except: A A lease of premises B An elevator maintenance agreement C Pollution liability D A side track agreement

Pollution liability

Which of the following is true regarding the Supplemental Extended Reporting Period? A It covers occurrences that take place after the policy term, during the Supplemental Extended Reporting Period B Cancellation by the insurer requires 90 days notice of cancellation C The charge for the Supplemental Extended Reporting Period may not exceed the annual premium of the expiring policy D The premium is a one-time charge

The premium is a one-time charge

All of the following are true of the extended reporting period, except: A Under the mini tail, the insurer must be notified of a claim within 60 days after the end of the policy period B Under the supplemental extended reporting period, the insured must request coverage within 60 days after the end of the policy C The extended reporting period does not increase the policy limits D The supplemental extended reporting period must be purchased at the beginning of the policy period

The supplemental extended reporting period must be purchased at the beginning of the policy period

Coverage A: Bodily Injury and Property Damage Liability EXCLUSIONS:

a. expected or intended injury- intentional unless protecting persons or property b. Contractual liability- liability assumed by the insured under a contract with two exceptions: liability that would exist whether the contract was in place or not and a contract that is specifically listed as being covered under the policy c. Liquor liability- insureds who are in the business (does not apply to a building owner who leases space to a bar) d. workers compensation- no coverage if they have workers compensation insurance, disability benefits, unemployment compensation or any similar type of insurance e. employers liability- no coverage for employee that arises out of and during the course of employment, spouse or kids. f. pollution- no coverage for arising of actual, alleged threatened pollution or the escape of pollutants (does not cover cost of clean-up) g. aircraft, auto and watercraft- no coverage for damages arising out of the ownership, maintenance, use, or entrustment to others of aircraft, autos and watercraft

Supplemental Extended Reporting Period (must know!)

an optional reporting period of unlimited duration may be purchased by endorsement if requested within 60 days of the end of the policy term.

Insured Contract

contract insured by the policy

Coverage A: Bodily Injury and Property Damage Liability EXCLUSIONS part 2

h. transportation of mobile equipment- no coverage for damage arising out of the transportation of mobile equipment by an auto that is owned by, operated by, rented to or loaned to any insured I. war exclusion- no coverage for undeclared and civil war, warlike action by a military force, rebellion, revolution, usurped power j. damage to property- insureds own property and any property in the care, custody, or control of the insured k. damage to insureds product- no coverage for insureds own product l. damage to insured work- products or completed operation hazards. m. damage to impaired property or property not physically injured- no coverage for property that has not been injured- IF the damages arises out of a defect, deficiency, inadequacy or dangerous condition n. product recall- no coverage if it is recalled o. personal and advertising injury- this coverage is provided under coverage B p. electronic data- no coverage for electronic data , including loss of use, corruption of data, and inability to access or manipulate electronic data.

legal liability exposures: premises and operations exposure

insureds legal liability for bodily injury or property damage arising out of the insureds premises or the insureds operations -covered occurrences must take place during the policy period and within the coverage territory

Coverage B - Personal and Advertising Injury

insuring agreement- the policy provides protection for liability arising from "personal and advertising injury" offenses that are committed in the coverage territory and during the policy period. - the policy will pay those sums the insured becomes legally obligated to pay as damages - insurance company has the right and duty to defend the insured against any suit seeking damages because of personal and advertising injury. (doesn't cover anyone else unless they are also an insured)

legal liability exposures: products exposure

means any goods or products that are manufactured, sold, handled or disposed by the insured and others conducting business under the insureds name. -real property= not considered a product *legal liability for defects in product design or manufacture, failure to warn or explain with the respect to its products. *coverage applies to bodily injury or property damage the product causes, but not to loss to the product itself, must occur away from premises the insured owns or rents.

volunteer worker

not an employee but donates their time to help. not paid a fee, salary or other compensation by the insured

Coverage A: Bodily Injury and Property Damage Liability insuring agreement-

the insurer will pay those sums the insured becomes legally obligated to pay as damages because of bodily injury and/or property damage. - took place during the policy period and in the coverage territory - united states of America including Puerto Rico and Canada - products are made or sold in the coverage territory and a suit is brought in the coverage territory (the policy will respond to product-related claims worldwide)

legal liability exposures: contingent liability exposure

when a business is held legally liable for the actions, or failures to act, of other parties, such a sub-contractors or independent contractors - held legally liable for the actions of, or failures to act, of parties per the language of a contract or legal agreement. This is called CONTRACTUAL LIABILITY: * a lease of premises * a service contract * a hold harmless or indemnification agreement

Section 5- Definitions

*advertisement *coverage territory *occurrence *insured contract *bodily injury *impaired property *employee *volunteer worker *your product *your work

Your Product

- Any goods or products (other than real property) that are manufactured, sold, handled, distributed, or disposed of by the named insured, others trading under the named insured's name, or a person or organization whose business the named insured has acquired.

Occurrence Form

- takes place during the policy period and within the coverage territory. - provides coverage for losses that take place during the policy period. it doesn't matter when the loss is reported; what matters is when the loss occurred.

Section 2 - who is an insured (know!)

-individual and his or her spouse - partnership or joint ventures, the partnership, joint venture and members, partners, and their spouses (know!) - limited liability company and its meme era and its managers - trust, it's trust and trustees - any other type of organization it's executive officers, it's directors and it's stockholders -volunteer workers and employees who are not executive officers, directors, or managers - any person or organization having temporary custody of the insureds property if the insured dies - legal representative - newly acquired or formed organization's

All of the following are true of the Claims-Made Form, except: A Supplemental payments are automatically included B The mini tail provides 60 days after the end of the policy period for reporting a claim C A claim occurring 60 days prior to the retroactive date would be covered D For coverage to apply, the injury or damage must have occurred between the retroactive date and the policy termination

A claim occurring 60 days prior to the retroactive date would be covered

advertisement

A notice broadcast or published to the general public or specific market segments about the insureds goods, product, or services to attract customers or supporters.

To which injury would CGL Medical Payments apply? A A child injured when he dismantled a company's product and choked on one of the pieces B A company executive who was injured while playing golf in the company golf league C A tenant of a company's warehouse who cut himself during the manufacturing process of the company's product D A volunteer worker handing out company coupons during a sale

A volunteer worker handing out company coupons during a sale

Coverage B - Personal and Advertising Injury EXCLUSIONS: types of offenses that cause damage:

A. Knowledge that an act will violate rights or cause personal or advertising injury B. Oral or written false material C. Criminal acts D. Contractual liability E. Breach of contract F. The failure of the insureds goods, products or services to conform to advertising statements G. Damage from wrong description of goods, products or services

occurrence

An accident, including continuous or repeated exposure to substantially the same general harmful conditions.

Which of the following insurance forms is designed for the person who has the potential for a liability exposure caused by negligent acts of the contractor or subcontractor he hires to make repairs, construction, or alterations? A Completed Operations Insurance B Contractors Liability Insurance C Contingent Liability Insurance D Contractual Liability Insurance

C Contingent Liability Insurance

Which of the following is not a provision found in Section IV of the CGL? A Bankruptcy B Inspection and surveys C Premium audit D Other insurance

Inspection and surveys

Which of the following is NOT excluded under Part A of the CGL form? A Discrimination B Operation of mobile equipment C Product recall D Damage to insured's work

Operation of mobile equipment

Which of the following would not be excluded under Coverage A of the CGL? A Product recall B Operation of mobile equipment C Damage to insured's work D Discrimination

Operation of mobile equipment

A CGL policy provides coverage for: A Operations Liability B Pollution Liability C Professional Liability D Employee Injury

Operations Liability

Bodily Injury

Physical injury to a person, including sickness, disease, and death.

All of the following are true of Supplementary Payments under the Commercial General Liability Coverage Forms, except: A Supplementary Payments apply to all Section I coverage B They do not reduce the Limit of Liability C Insurer's claim-related expenses are included D The cost of bail bonds is included up to $250

Supplementary Payments apply to all Section I coverage

Impaired Property

Tangible property, other than an insured's product or work, which cannot be used because it is thought or known to be defective, inadequate, deficient, or dangerous.

What is the difference between the Commercial General Liability Occurrence and Claims-Made forms? A The policy period B The deductible C The coverage trigger point D The types of occurrences they cover

The coverage trigger point

Coverage Territory

This includes the US, its territories and possessions, Puerto Rico, and Canada

employee

includes a leased worker, full or part-time employee does not include temporary work

Commercial General Liability

this type of liability insurance can be written as a mono-line policy or as a part of a commercial package policy

Commercial General Liability Coverage Form

two forms: occurrence form claims-made form

your work

work or operations performed by the named insured or on the named insureds behalf

personal and advertising injury offenses include: (know!)

•false arrest, detention, or imprisonment •malicious prosecution •wrongful eviction from wrongful entry into •libel or slander •violation of privacy •use of another's idea in the insureds "advertisement" •infringement of copyright, trade dress, or slogan in the insureds "advertisement" (Policy will pay those sums the insured is legally obligated to pay) ( insurance company has the right to defend the insured against any suit, but will not cover anyone else unless they are also an insured)