Chapter 8 - Standard CGL Policy Flashcards
In what two years were the large overhauls of CGL wordings?
1986 and 2005
In what two years were large CGL revisions made?
1992 and 1998
What are the five sections of CGL wordings?
Coverages Who is an Insured Limits of Insurance Conditions Definitions
What is used to define specific terms within a CGL?
Quotation marks
What are the four distinct agreements under Section I - Coverages?
A) Bodily Injury & Property Damage Liability
B) Personal & Advertising Injury Liability
C) Medical Payments
D) Tenants’ Legal Liability
What is covered under Section I-A?
Bodily Injury & Property Damage Liability
The sums that the insured becomes legally obligated to pay as compensatory damages because of bodily injury or property damage to a third party.
What are the three conditions of a claim under Section I-A?
- Must occur during the policy period
- Must be caused by an occurence
- Must take place in the coverage territory
What is meant by legally obligated to pay?
- Must meet the agreement of the contract
- Primarily intended for tort liability
- May extend to contractual or statutory liability
- Just because an insured is sued, insurer is not obligated
What are compensatory damages?
Compensate the third party for injuries sustained
What are the three things the policy will not extend to?
- Any penalty sum
- The cost of complying with a mandatory injunction
- The cost to prevent future losses
Define bodily injury
Bodily injury, sickness or disease sustained by a person including death resulting from any of these at any time.
Define property damage
Physical injury to tangible property including all resulting loss of use of that property.
Define occurrence
An accident including any continuous event or exposure to substantially the same general harmful conditions.
Why was the term accident restrictive?
It suggested that an incident must be sudden or definite.
What is a claims-made policy?
It triggers when the third party first makes the claim.
The timing of the event that caused the damage does not wholly determine coverage.
Define coverage territory
Includes Canada, the United States, its territories or possessions, international waters, or airspace if the injury or damage occurs in the course of travel or transportation between these two countries
Coverage anywhere in the world for the travelling sales person who is away for a short time on business.
Goods or products made or sold by the insured in Canada, United States, its territories or possessions are also covered anywhere in the world.
Why is it a requirement that action be brought in North America?
They are more familiar with their own legal environment and feel more confident they can reasonably predict the outcome of cases.
What is the limitation time of occurrence coverage?
One policy term
What was the relevance of Alie et al v. Bertrand et al?
Coverage was triggered on successive policies even though damages stemmed from one occurrence. Limits under successive CGL policies were tapped to pay for the same occurrence.
List the exclusions
- Expected or intended injury
- Contractual liability
EXCEPT for compensatory damages arising from liability the insured would have had whether there was a contract or not - Workers Compensation Legislation obligations
- Employers liability arising from bodily injury to an employee during course of employment
EXCEPT for employees who were denied coverage or benefits through workers comp even though contributions were required - Aircraft and watercraft
EXCEPT watercraft on shore at premises, non owned watercrafts less than 8m long and not being used to carry for a fee, contingent employers liability when workers comp payments are made but coverage denied) - Automobiles
EXCEPT bodily injury to employee and contributions are made under workers comp, BI or PD arising out of a defective condition owned by the insured while leased to others for a period of 30+ days provided lessee is obligated to insure it, ownership use or operation of machinery, apparatus or equipment mounted on or attached to any vehicle while at the site of the use or operation of such equipment UNLESS it is being used for unloading - Owned, rented or occupied by the insured
- Property damage to premises that are sold, given away or abandoned
- Property that is loaned to the insured
- Personal property in the insured’s care, custody or control
- The particular part of real property in which the insured or any contractor or subcontractor is working OR must be restored, repaired or replaced because the insured’s work was incorrectly performed
- Property damage to the insured’s product
- Property damage to the insured’s work
EXCEPT if the damaged work or the work out of which the damage arises was performed by the insured’s subcontractor - Property damage to impaired property or property that has not been physically injured, arising out of a defect or deficiency in the product or work OR a delay or failure to perform a contract or agreement in accordance with its terms
- Product recall
- Electronic data (as not tangible)
- Personal and advertising injury
- Professional services
EXCEPT for incidental medical malpractice injury. See the CGL definitions section for more details on professional services - Abuse
Which endorsement might be used if a cherry picker were to be insured?
Standard Endorsement Form No. 30 Excluding Attached Machinery
What was the damage to property exclusion formerly known as?
Care custody or control exclusion
The term “alienated premises” has been updated to what?
Premises that are sold, given away or abandoned
Is product recall covered?
No - unless they purchase product recall insurance
What are the seven insuring agreements under Coverage B: Personal and Advertising Injury Liability?
1) False arrest, detention or imprisonment
2) Malicious Prosecution
3) Wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies committed by or on behalf of its owner, landlord or lessor
4) Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services
5) Oral or written publication, in any matter of material that violates a person’s right of privacy
6) Use of another’s advertising idea in the insured’s “advertisement”
7) Infringing upon another’s copyright, trade dress or slogan in the insured’s “advertisement”
What are the exclusions under Personal and Advertising Injury?
a) Knowing violation of rights of another
b) Material published with knowledge of its falsity
c) Material published prior to the policy period
d) Criminal acts
e) Contractual liability
f) Breach of contract
g) Quality or performance of goods
h) Wrong description of price
i) Infringement of copyright, patent, trademark or trade secret, or other intellectual property rights
EXCEPT infringement in the insure’d advertisement of copyright, trade dress of slogan
j) Insureds in media and internet type businesses
EXCEPT for false arrest, malicious prosecution and wrongful eviction
k) Electronic chatrooms or bulletin boards which the insured hosts, owns or has control over
l) Unauthorized use of another’s name or product
Define trade dress
The total image and overall appearance of a company or product that may include features such as size, shape, color or color combinations, texture graphics or even particular sales techniques
What are the three locations in which bodily injury must occur in order for Medical Payments coverage to respond?
- On premises the insured owns or rents
- On a way next to such premises
- As a result of the insured’s operations
Within which timeline must expenses be reported to the insurer?
Within one year
What types of medical expenses are covered?
Immediate first aid, necessary medical, surgical, x-ray & dental services: including prosthetic devices and necessary ambulance, hospital, professional nursing or funeral services
What are the medical payments exclusions?
a) Any insured under the policy except volunteers
b) A person hired to do work for or on behalf of any insured or a tenant of any insured
c) Any person injured on premises normally occupied by the injured party
EXCEPT the tenant of an apartment if the injury takes places outside the occupied apartment
d) Anyone who is entitled at the time of the injury to compensation from a provincial workers compensation plan
e) Persons taking part in athletics which includes practicing, instructing or participating
f) Products-completed operations hazard
g) Exclusions under Coverage A
What is covered under tenants legal liability?
Protects the insured against liability from all perils (unless excluded) to the rented (real property) premises.
Often a retail owner renting a store in a shopping mall.
What did prior versions of a tenants legal liability policy cover?
Fire, explosion, smoke or leakage from fire protective equipment
What is excluded under a tenants legal liability policy?
a) Property damage expected or intended from the standpoint of the insured
b) Contractual liability
EXCEPT which the insured would have had in the absence of a contract or is assumed in an insured contract
What are the six common exclusions of all CGL policies?
- Asbestos
- Fungi or spore
- Nuclear energy liability
- Pollution
- Terrorism
- War risks
Where may insurance for nuclear risks be obtained?
NIAC (Nuclear Insurance Association of Canada)
What is NIAC?
Nuclear Insurance Association of Canada
What are the exceptions to the pollution exclusion?
a) BI-PD resulting from smoke, fumes, vapour or soot from the building’s heating, cooling or dehumidifying equipment
b) From premises of an additional insured named in a contractors liability policy
c) Claims arising out of heat, smoke or fumes from a hostile fire
d) BIPD due to accidental escape of operational fluids that form part of a storage component to hold fluids
e) BIPD caused by release of gases, fumes or vapours from materials brought into a building in connection with the insured’s operation
f) Smokes and fumes from a hostile fire at premises from a hostile fire where an insured performs operations
What is part two of the pollution exclusion?
Relates to legislation and government authority
Which coverage can a supplementary payment be applied to?
- A: Bodily Injury & Property Damage
- B: Personal & Advertising Injury
- D: Tenants Legal Liability
What five types of payments does an insurer agree to pay under supplementary payments?
- Expenses incurred by the insurer
- Cost of a bond to release seized property
- Reasonable expenses of the insured
- All costs assessed against the insured
- Interest after judgment
How much is covered under the loss of earnings supplementary payment?
Up to $250 per day
What is the limit of defence costs for qualified indemnitees?
Certain policies include it within the policy limits, in Quebec; it is in addition beyond the policy limits.
What is the restriction of the spouse in section II?
Spouse is confirmed with respect to conduct of the business if insured is an individual, partnership or joint venture
Who does coverage extend to when the insured is a limited liability company?
Company members, executive officers, directors and shareholders with respect to their liability pertaining to their business duties
Volunteer workers or employees are covered, but who does it not extend to?
Injury to co-employees, persons entitled to workers compensation or to persons providing or failing to provide professional health care services
Who are “other persons” under Section II?
Trustees, real estate managers and if the insured dies, legal representative who has temporary custody of the property
How long is a newly acquired or formed organization covered?
90 days after acquisition or end of policy period, whichever comes first
What is a general aggregate limit?
The total amount payable in any one policy period.
Which exposure is the exception to the general aggregate?
Products-completed, operations hazard
It has an additional aggregate limit.
What is the each occurrence limit?
The maximum amount payable for any one occurrence for section A & C.
What is the personal and advertising injury limit?
The maximum amount payable for any such injury sustained by any one person or organization.
What is the medical expense limit?
The maximum amount payable for each person
What is the tenants legal liability limit?
The maximum amount payable for each premises
What limit does the supplementary payments coverage fall under?
It is not subject to any of the limits
What coverage does the deductible apply to?
Property damage under coverage A
Tenants legal liability under coverage D
What are the statutory conditions of a CGL policy?
There are none
How are policy conditions set out in Quebec?
By legislation
Who is deemed to have power of attorney on a CGL policy?
The first named insured has power of attorney for all insureds
What are the 15 conditions found in the standard CGL policy wording?
1) Bankruptcy - insurer must perform duties even if insured is bankrupt
2) Canadian currency clause - all amounts are in Canadian currency
3) Policy changes - the first named insured is authorized to make changes, can only be made by issuing an endorsement
4) Claims condition - duties of the insured in the event of a claim
5) Examination of books and records - insurer has right to examine books or records any time during the policy period or up to three years afterwards
6) Inspections and surveys - insurer has a right to perform inspection to confirm insured meets underwriting criteria
7) No action clause - outlines circumstances in which insurer can be sued for coverage
8) Other insurance clause / contribution clause - insurance is primarily unless prop insurance for the insureds work or rented premises, watercraft coverage for loss arising out of maintenance or use
9) Premium due - when the premium must be paid beyond the deposit
10) Premium payment - outlines the first named insured is responsible for payment of all premiums
11) Representations - insured must guarantee the accuracy of statements, utmost good faith & material fact
12) Cross liability clause - when more than one insured listed, policy responds as though each named insured has a seperate policy
13) Termination - 15 days notice for non payment and 30 days notice for other reasons (Quebec is 15 days after receipt of notice)
14) Transfer of recovery rights to insurer - if the insured can subrogate, rights are transfered to insurer
15) Transfer of insured’s right and duties - insured cannot transfer without written consent of the insurer
What is detailed in section V?
Definitions
Define abuse
Any act or threat involving molestation, harassment, corporal punishment or any other form of physical, sexual or mental abuse
Define action
A civil proceeding in which compensatory damages because of alleged BIPD or personal& advertising injury to which insurance applies
Define advertisement
A notice that is broadcast or published to the general public or specific market segments
Define automobile
Any self-propelled vehicle being used to transport people or property on public roads
Define bodily injury
Sickness, disease and death should it ensue from bodily injury, sickness or disease
Define compensatory damages
Damages due or awarded in payment for actual injury or economic loss
Define coverage territory
Canada, the United States and territories & possessions. Sea & air travel included between insured areas, if traveling to an uninsured area, no coverage exists.
Define employee
Includes leased worker and temporary worked
Define executive officer
Person holding any of the officer positions created by the insured, the insured’s chart, constitution, by laws or any other similar governing document
Define fissionable substance
Any prescribed substance capable of releasing atomic energy by nuclear fission
Define fungi
Any form of mould, yeast, mushroom or mildew and any substances emitted or arising out of fungi
Define hostile fire
One which becomes uncontrollable or breaks out from where it was intended to be
Define impaired property
Tangible property other than the insured’s product or work that cannot be used or is less useful
Define incidental medical malpractice injury
BI arising out of the rendering of or failure to render the following service;
- Medical, surgical, dental, xray or nursing
- Furnishing or dispensing of drugs or medical, dental or surgical supplies or appliances
Define insured contract
a) Contract for a lease of premises except a lease that indemnifies anyone for damage to premises while it is rented to the insured
b) A sidetrack agreement (owner assumes liability)
c) Easement or license agreement w/ vehicle & pedestrian crossings
d) Any other easement agreement (easement is right of one party to use the land of another)
e) An obligation to a municipality
f) Elevator maintenance agreement
g) Assuming negligence of another in a hold harmless agreement (insured agrees to assume negligence of another party)
Define leased worker
A person leased to the insured by a labour leasing firm under an agreement between insured and firm
Define loading or unloading
The handling of property:
a) After it is moved from the place or onto an aircraft, watercraft or automobile
b) While it is in or on an aircraft, watercraft or automobile
c) While it is being moved from an aircraft, watercraft or automobile to where it is being delivered
Define nuclear energy hazard
Radioactive, toxic, explosive or other hazardous properties of radioactive material
Define nuclear facility
a) Any apparatus that sustains nuclear fission or to contain a critical mass of plutonium, thorium and uranium
b) Any equipment used for separating the isotopes of plutonium, thorium and uranium and processing or packaging waste
c) Any equipment used for processing, fabricating or alloying plutonium, thorium or uranium
d) Any structure, basin, excavation, premises or place used for the storage or disposal of waste radioactive material
Define occurrence
An accident, including continuous or repeated exposure to substantially the same general harmful conditions
Define personal and advertising injury
Injury, including consequential bodily injury arising out of the offenses as already noted under Section 1 of Coverage B
Define pollutants
Any solid, liquid, gaseous or thermal irritant, or contaminant, including smoke, odour, vapour, soot, fumes, acids, alkalis, chemicals and waste
Define products-completed operations hazards
Products have left the insured’s premises and insured’s possession, operation must be completed or abandoned
What is included under professional services?
a) Medical, surgical, dental, xray or nursing service
b) Any professional service or treatment conducive to health
c) Professional services of a pharmacist
d) Furnishing or dispensing of drugs or medical, dental, or surgical supplies
e) Handling of deceased human bodies
f) Any cosmetic body piercing, tonsorial, massage, physio, etc.
g) Preperation or approval of maps, shop drawings, opinions, reports, etc.
h) Supervisory, inspection, architectual
i) Accountant’s advertisers, notaries, paralegals, lawyers, etc.
j) Any computer programming or reprogramming
k) Claim, investigation, appraisal
Define tonsorial
Refers to the service of a hairdresser or hairdressing
Define chiropody
The medical specialty of treating the feet
Define optometrical
The optical services such as measuring eyesight, detecting eye disease, and prescribing corrective lenses
Define property damage
a) Physical injury to tangible property
b) Loss of use of tangible property that is not physically injured
Define radioactive material
Uranium, thorium, plutonium and any other substances designated by any legislation as being prescribed substances capable of releasing atomic energy
Define spores
Any reproductive particple or microscopic fragment produced by, emitted from, or arising out of any fungi
Define temporary worker
A person who is furnished to the insured to substitute for a permanent employee on leave or to meet seasonal or short-term workload conditions
Define terrorism
Ideologically motivated unlawful acts or threats of violence committed to influence government or instill fear
Define volunteer worker
Person who donates his or her work and is not paid
Define insured’s product
The product manufactured by the insured and other trading in the insured’s name
Define insured’s work
Work done by the insured and others on the insured’s behalf
Under a CGL policy, when is an intentional injury inflicted by the insured covered?
If the insured is protecting persons or properties and only reasonable force
What coverage does the CGL policy provide for contractual liability?
None unless compensatory damages arise from liability the insured would have had whether there was a contract or not
Describe the exclusion for injury to the insured’s employees through Coverage A.
During the course of employment; they are not cover.
This exclusion does not apply to liability assumed under an insured contract brought by an employee who is denied coverage by works compensation plans
What types of activities related to vehicles are excluded?
- Ownership, maintenance, use or entrustment of automobile
- Speed or demolition contest, any stunt or preperation for such with snow vehicle
When is a watercraft covered under a CGL policy?
- On shore at premises insured owns or rents
- Non owned watercrafts 8 metres long and not being used to carry property or people for a fee
- Contingent employer’s liability with respect to employees contributions are required to board but board denies coverage
Why is property that is owned, rented or occupied by the insured not covered under the CGL policy?
This does not constitute a liability claim; it would be more appropriately claimed under a first party property claim
What kind of property in the insured’s care, custody or control is not covered?
Personal property
Describe the product recall exclusion
The cost of recalling any product/work of the insured is not covered.
Some insurers may assist the insured with the expense of recalls. It may sometimes be in the best interest of the insurer to get the product off the shelf.
Product recall insurance is required to cover this.
What is a sidetrack agreement?
The owner assumes liability.
ie. Between property owner and railroad, sidetrack agreement holds railroad harmless for any liability that may arise
What is an easement?
A right of one party to use the land of another.
What is a hold harmless agreement?
The insured agrees to assume negligence of another party.
Provide an example of product loss
Insured is a retailer who sells a dishwasher to a customer.
When customer uses the dishwasher at home, it leaks and damages the customer’s floor. The floor is a products liability loss.
Provide an example of operations loss
Dishwashers breaks down and Fix-it Repairs is called to repair it. While repairing, technician burns the floor. Burn to the floor is an operations loss under Fix-it’s CGL policy.
Provide an example of completed operations loss
After a dishwasher is repaired, water damage happens to floors due to faulty repairs a week later.
What is the purpose of the insuring agreement?
- Explains in broad terms what the policy intends to cover
- Defines the scope of coverage
- Used to determine whether a claim is covered
- Each of the insuring agreements carries its respective exclusion
What type of obligation must the insured incur to qualify for coverage?
Insured must be legally liable for insurer to pay for damages
What type of damages are recoverable?
Compensatory damages
What duty and right does the insurer have when an insured action is launched against the insured?
Insurer has duty to defend only if a claim falls within terms of coverage
What three conditions must exist for coverage to be available?
- Damage must occur during the policy period
- Must be caused by an occurrence
- And must take place in the coverage territory
Define occurrence
An accident including
- a continuous event
- or exposure
- to substantially the same general harmful conditions
