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Insurance Adjusting > 4/B - Commercial General Liability > Flashcards

4/B - Commercial General Liability Flashcards

1
Q

What a Commercial General Liability Insurance (CGL) Covers

A

Covers liability for:

  • bodily injury/property damage resulting from a business premises and its operations
  • damage to a premises used or rented by the insured
  • products and completed operations
  • acts of others: employees, agents, contractors acting on behalf of business
  • contracted responsibilities: insured agreed to take on liability
  • personal and advertising injury: injury other than bodily injury resulting from actions of the insured
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2
Q

Chapter Outline

A
  1. Two different forms of CGL
    a. Occurrence
    b. Claims-made
  2. Structure of CGL
    a. Declarations and Definitions
    b. Insuring Agreements or Coverages and their Exclusions
    Coverage A: Bodily Injury and Property Damage
    Coverage B: Personal and Advertising Injury Liability
    Coverage C: Medical Payments to Others
    Damage to Premises Rented by You
    c. Conditions
    d. Endorsements
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3
Q

Occurrence vs. Claims-made

A

Two forms of CGL policies:

  • Occurrence: triggered by occurrence or accident
  • Claims-made: triggered by claim

Trigger: what initiates coverage

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4
Q

Occurrence Form CGL

A

Occurrence Form:

  • Triggered by when the actual injury or damage occurred
  • Covers events that happened during policy period, no matter when claim is made
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5
Q

Claims-Made

A
  • Triggered by when the claim is filed
  • Covers any claim filed during the policy period, no matter when the damage or injury occurred (within certain limits, which we’ll go over soon)
  • Insurers can price premiums to reflect current risks of lawsuit awards
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6
Q

Claims-Made & Reported vs. Pure Claims Made

A

Pure Claims-Made:

  • Claim must be made within the policy period
  • Insured must report claim to insurer ASAP

Claims-Made & Reported:

  • Claim must be made within the policy period
  • Insured must report claim to insurer within the policy period
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7
Q

Claims-Made Form CGL: Retroactive Date

A
  • Determines how far back an occurrence will be covered

- Helps reduce premiums by defining a start date for coverage eligibility

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8
Q

Claims-Made Form CGL: Extended Reporting Periods

A

CGL Tails:

  • Cover claims filed after the policy period
  • Do not cover incidents which occurred after the policy period
  • Apply to policies which have been
    • cancelled
    • not renewed
    • replaced with more recent retroactive date or occurrence form
  • Cannot be cancelled
  • Come in 2 kinds:
    • basic
    • supplemental
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9
Q

Claims-Made Form CGL: Basic Tail

A

The Basic Extended Reporting Period:

  • Adds extra 60 days to report incidents
  • Adds extra 60 days for claims to be made on non reported incidents (mini tail)
  • Adds extra 5 years for claims to be made on reported incidents (midi tail)
  • Applies automatically, for no extra cost
  • Starts when policy period ends
  • Does not reset policy limits
  • Will not cover any claim that is covered by other insurance
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10
Q

Claims-Made Form CGL: Supplemental Tail

A

The Supplemental Extended Reporting Period (Maxi Tail):

  • Extends the window for making a claim (on a reported incident) forever
  • Insured must request coverage and pay the extra premium within 60 days of the policy period
  • Added via endorsement
  • Starts when basic tail ends
  • Resets policy limits
  • Will act as secondary insurance to other insurance
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11
Q

Pros and Cons of each Coverage Form

A

Occurrence Form:

  • Lower risk for businesses
  • Higher risk for insurer
  • Higher premiums

Claims-made Form:

  • Higher risk for businesses
  • Lower risk for insurer
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12
Q

Declarations

A

CGL Declarations Page lists:

  • Named insured
  • Address of every premises the insured owns, rents, or occupies
  • Policy period
  • Policy premium
  • Limits of insurance
  • Retroactive date (if policy is a claims-made form)
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13
Q

Who is Covered?

A

Declarations page specifies who is covered.

CGL will usually cover:

  • Executives
  • Partners
  • Employees
  • Managers
  • Volunteers
  • Agents
  • Representatives

But only if they are engaged in business activities of the insured.

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14
Q

Definitions Part 1

A

CGL does not cover “autos”:

  • Vehicles designed for travel on public roads
  • These require a Business Auto Policy

CGL does cover “mobile equipment”:

  • Designed for use principally off public roads
  • Primary purpose is the machinery attached, not transportation
  • Examples include bulldozers and forklifts

If a small truck is used exclusively within warehouse or factory premises, it may qualify as mobile equipment.

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15
Q

Definitions Part 2

A

“Your Product”: what the insured makes, sells, handles, distributes

“Your Work”: operations done by insured, includes:

  • Parts, materials, and equipment used in work
  • Warranties and instructions (or the lack thereof)

“Advertisement”: Anything shown or said to the public to attract new customers

“Occurrence”: a sudden accident, or the repeated exposure to something that causes injury or damage

“Impaired property”: items that can’t be used because of defects in insured’s product or work

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16
Q

Definitions Part 3

A

“Leased Worker”: worker hired through a labor leasing firm

“Temporary Worker”: donates labor without compensation from insured

“Employee”: works for insured under contract

  • Includes leased workers
  • Does not include temporary workers
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17
Q

CGL Coverage Forms: A, B, & C

A
  1. Coverage A -
    a. Bodily Injury and Property Damage
    b. Premises and Operations Liability
    c. Products and Completed Operations Liability
    d. Contractual Liability for Insured Contracts
  2. Coverage B - Personal and Advertising Injury Liability
  3. Coverage C - Medical Payments to Others
  4. Damage to Premises Rented By You
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18
Q

Coverage A: 3 Kinds of Hazards

A

Protects the insured from liability to bodily injury and property damage.

Covers 3 Kinds of Hazard:

  • Premises and Operations
  • Products and Completed Operations
  • Contractual Liability for Insured Contracts
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19
Q

Premises Liability

A

Premises and Operations
Premises liability covers bodily injury and property damage on:
- premises owned, rented or leased by insured
- ways immediately adjoining, i.e. sidewalks, etc

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20
Q

Operations Liability

A
  • Covers bodily injury and property damage when working outside premises
  • Important for companies like plumbers, contractors, etc.
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21
Q

Product Liability

A

Products and Completed Operations

Product Liability: the insured’s liability for bodily injury (BI) and property damage (PD) caused by the use of products made or sold by insured

3 Types of Product Liability Claim:

  1. Strict Liability: any defect in safety is manufacturer’s fault
  2. Negligence: manufacturer did not exercise a reasonable amount of caution
  3. Breach of warranty: insured failed to notify public of a known safety hazard, or failed to deliver the quality of item advertised
22
Q

Completed Operations Liability

A

The insured’s liability for work completed away from the insured premises

Work is “complete” the moment that:

  • the insured has fulfilled the terms of an agreement OR
  • any portion of the work is used for its intended purpose
  • whichever is earlier
23
Q

Insured Contracts

A

Include:

  • Lease of premises
  • Sidetrack agreements
  • Easement or license agreements
  • An obligation to indemnify a municipality
  • Elevator maintenance contracts
  • Any contract in which the policyholder assumes the tort liability of another party for bodily injury or property damage
24
Q

Exclusions to Coverage A Liability

A
  • Expected or intentional injury by the insured, unless in self-defense or protection of property
  • Injuries to employees (covered by worker’s compensation)
  • Automobiles, aircraft or watercraft (unless parked on the insured premises)
  • Contractual Liability (except for “insured contracts”)
  • Liquor Liability
  • Transportation of mobile equipment
  • Pollutants
  • War and terrorist attacks
  • Property of the insured, property in the care, custody and control of the insured and property loaned to the insured
  • Property damage to insured’s work or products
  • Electronic data
  • Recall of products or work
25
Q

Libel & Slander

A

Coverage B protects insured against claims of Personal Injury in the form of:

  • Libel: false written words that damage another’s reputation
  • Slander: false spoken words that damage another’s reputation
26
Q

False Arrest

A

Coverage B “Personal Injury”:

  • False arrest, detention, or imprisonment: e.g., a store detaining someone unjustly because of suspected shoplifting
  • Malicious Prosecution: Suing someone without profitable cause. Such a claim can only be filled after the insured loses the original lawsuit
27
Q

Wrongful Entry

A

Coverage B “Personal Injury”:

  • Wrongful Entry: when a landlord uses improper means to repossess real estate or rented space. This may also involve invasion of privacy
  • Wrongful Eviction: when a landlord or shop-owner evicts a person from public space without cause
28
Q

Advertising Injury

A

Coverage B: protects insured from claims of advertising injury

An “Advertising Injury” means a third party suffered damages as the result of the insured party advertising their goods and/or services in a public arena.

Advertising injury may take the form of:

  • Libel and slander
  • Copyright Infringement
  • Stealing advertising ideas
29
Q

Exclusions to Coverage B Liability

A
  • Knowingly publishing, disseminating, or spreading false information to the public
  • Knowingly violating the copyrights of another
  • Infringing on copyright, patent, trademark, or intellectual property rights outside of advertisements, whether criminally or not
  • Failing to adhere to price, quality, and performance claims
  • Acts committed prior to the current policy period (or retroactive date)
  • Advertising liability by contract, or assumed liability
  • All claims if the insured is in an advertising, broadcasting, or publishing business, or involved in the design of websites or operation of internet search services
  • Electronic chat rooms or bulletin boards
30
Q

Supplementary Payments - Coverages A and B

A
  • Assist policyholder with a variety of claim or lawsuit expenses
  • Not subject to liability limits

May include:

  • Lost wages: up to $250/day
  • Expenses due to insurer’s request such as retrieving official reports or records, copy fees
  • Bail bonds: up to $250
  • Accrued interest after a judgment is entered
  • Premiums on appeal bonds and attachment bonds
31
Q

Supplementary Payments - Coverages A and B

cont.

A
  • Covers litigation expenses for a third party named in the same suit as the insured

Conditions

  • Insured must have assumed liability for the other party through an insured contract
  • That liability is covered under the policy
  • There is no conflict of interest
  • The third party must agree in writing to cooperate with the insurer
32
Q

Coverages C: Medical Payments

A

Is no-fault coverage that pays:

  • Medical
  • Dental
  • Hospital
  • Nursing
  • Funeral costs

resulting from an occurrence on insured’s premises, or from its business operation

33
Q

Coverage C Liability Exclusions

A
  • Any “insured”
  • Employees of the insured (covered by worker’s compensation)
  • Tenants of the insured
  • Athletic contests, games, physical challenges, or sporting events
  • Injuries resulting from completed operations

Insurer can require the insured party to see a physician chosen and paid for by the insurer.

34
Q

Damage to Premises Rented by You

A
  • Coverage A usually excludes loaned or rented properties.
  • Damage to Premises Rented by You lifts this exclusion (i.e. it adds coverage)
  • It applies to properties that the insured rents for 7 or fewer consecutive days.

Look closely! This form covers fire differently than other perils.

Fire: damage to rented premises only
Other perils: damage to rented premises and contents

35
Q

CGL Conditions Page

A
  • Contains provisions the policyholder must meet as a condition of coverage
  • Highlights the rights and duties of insured and insurer
  • States the rights of each re: cancellation, changes, lawsuits, etc.
36
Q

Policy Territory

A
  • CGL policies cover occurrences in US, Puerto Rico, and Canada, their airspace, and territorial waters
  • Products Liability is worldwide, as long as the product was made or sold in US, Puerto Rico or Canada
37
Q

Duties of Insured in the Event of an Occurrence

A
  • Reporting details to the insurer promptly, including:
    a. who was hurt, when, and how
    b. names of relevant witnesses
  • Notifying insurer promptly of lawsuits filed against insured
  • Cooperating with the insurer in any matter involving a claim, including:
    a. forwarding legal papers
    b. authorizing the insurer to obtain all relevant materials
  • Assisting the insurer in enforcing subrogation rights
  • Not making voluntary payments upon a claim on behalf of the insurer without the insurer’s authorization
38
Q

Other Insurance

A
  • Divides responsibility for claims among all applicable policies
  • Claims-made form pays after any non-claims-made form
39
Q

Limits of Insurance

A

The maximum amount the insurer will pay during policy period to satisfy claims

40
Q

Aggregate Limits

A

The maximum amount a policy will pay per policy period

  1. Products-Completed Operations Aggregate Limit: the maximum amount the policy will pay out over the policy period to satisfy claims regarding Products and Completed Operations
  2. General Aggregate Limit: the maximum amount the policy will pay out over the policy period to satisfy claims for all coverages except for Products and Completed Operations
41
Q

General Aggregate Limit

A

Products and Completed Operations has a separate aggregate limit from all other coverages.

General Aggregate Limit: payments under these coverages are all under one aggregate:

  1. Coverage A: Premises and Operations Liability and Contractual Liability
  2. Coverage B: Personal and Advertising Injury Liability
  3. Coverage C: Medical Payments to Others
  4. Damage to Premises Rented by You
42
Q

Per Occurrence Limit

A

The maximum amount the insurer will pay for any one occurrence

Subject to aggregate limit that precedes it

43
Q

Per Occurrence Sub-Limits

A

General Aggregate Limit

  • Per Occurrence Limit
  • Medical Payments Sub-Limit: the maximum amount the insurer will pay for bodily injury sustained by any one person
  • Damages to Premises Rented by You Sub-Limit: the maximum amount the insurer will pay for damages to any one premises
44
Q

Personal and Advertising Injury Sub-Limit

A

General Aggregate Limit
- Personal and Advertising Injury Sub-Limit: the maximum amount the insurer will pay for personal and advertising injury to any one person or organization

45
Q

No Limit on Legal Defense

A

CGL covers all legal expenses, without limit, up until judgment or settlement

46
Q

Owners & Contractors Protective Liability

A

Responds to all liability claims filed against the hiring business arising out of work performed by the independent contractor

  • Protects the hiring business from losses due to contractor’s work
  • Vicarious liability means a company can be held responsible for the actions of a hired contractor
  • Is purchased by contractor, but hiring business is named as insured
  • Is specific to a single project and place
  • Expires when project is completed
  • Only uses the “occurrence” form
47
Q

Advantages of Owners and Contractors Protective Liability

A
  • Contractor cannot cancel coverage without knowledge of hiring business
  • Hiring business’ policy limits are not affected by claims against work of contractor
  • Provides primary coverage for all claims related to work of contractor
  • Can be used on projects likely to produce claims
  • Protects named insured from negligent acts of incompetent contractors
48
Q

Exclusions to the Owners and Contractors Protective Liability

A

This form includes:

  • auto/watercraft
  • contractual liability
  • war and terrorist acts
  • liquor liability
  • workers compensation
  • property in the care, custody and control of the insured
  • products
  • completed operations
49
Q

Laser Beam Endorsement

A

Allows an insurer to exclude specific types of accidents, products, work, or locations from CGL coverage.

50
Q

Liquor Liability Coverage Form

A
  • Alcohol-related occurrences are excluded in the regular CGL policy
  • An added Liquor Liability Coverage Endorsement fills this gap
  • Includes cases involving over-service or illegal service to minors
51
Q

Who Needs It?

A

Some establishments that may require Liquor Liability include:

  • grocery stores
  • hotels
  • casinos
  • golf courses
  • department stores
  • inns and motels
  • comedy clubs
  • bars
  • breweries
  • wineries
  • restaurants
  • liquor stores
  • taverns
  • caterers
  • nightclubs
  • convenience stores
52
Q

Pollution Liability Coverage

A
  • Responds when pollution causes bodily injury or property damage when released into air, water, or land
  • Covers pollution excluded by CGL
  • Claims-made coverage
  • “Pollution incidents” include pollution releases:
    a. at insured site
    b. off-site due to pollutants emanating from site
    c. during transportation
    d. at non-owned disposal sites

Pollution-Liability Coverage Broad Form:

  • Bodily injury and property damage
  • Clean-up costs

Pollution Liability Limited Coverage Form:
- Bodily injury and property damage only

Insurance Adjusting (46 decks)

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