Unit 10 - Commercial Lines: Commercial General Liability, Businessowners, and Commercial Auto Flashcards
Commercial General Liability (CGL)
This policy can be written on a monoline basis, however, it is also the most common liability policy used in a commercial package policy (CPP).
What coverages are included in the CGL?
COVERAGE A… Bodily Injury (BI) and Property Damage (PD). This is very broad in nature and includes the the exposures of PREMISES and OPERATIONS and PRODUCTS AND COMPLETED OPERATIONS.
COVERAGE B… Personal Injury and Advertising Injury Liability
COVERAGE C… Medical payments (for others)
Under the CGL, PREMISES and OPERATIONS exposures are defined as…
PREMISES EXPOSURES… Covers BI and PD arising from the unsafe business premises of the insured
OPERATIONS EXPOSURES… Covers BI and PD arising from the operations of the insured business or their employees (i.e. employee is actively working and caused a loss).
Under the CGL, PRODUCTS and COMPLETED OPERATIONS exposures are defined as…
PRODUCT EXPOSURES… Covers BI and PD arising from the defective products manufactured, distributed, or sold by the insured business. (side note… Product is defined as property that is no longer under the custody of the business and is in the customers position, with the EXCEPTION of FOOD).
COMPLETED EXPOSURES… Covers BI and PD arising from the operations of the insured business or the employees of an insured that have been COMPLETED INCORRECTLY (i.e. the work was done wrong and causes the loss)
Under the CGL, what coverages does Coverage B provide for the business owner?
1) PERSONAL INJURY… Covers damage to another’s character or reputation (false arrest, malicious prosecution, wrongful entry or eviction, slander or libel, violation of right to privacy (snoopy landlord)
*** NOTE: Does NOT cover fraud committed by the insured (because criminal acts are protected)
2) ADVERTISING INJURY… Covers losses that arise from the written or spoken word while advertising the insured’s products or services.
Under the CGL, what coverages does Coverage C provide for the business owner?
MEDICAL PAYMENTS (for others)… Claim is paid to others REGARDLESS OF FAULT and within one year of accident.
What are key EXCLUSIONS of the CGL that require the purchase of a separate policy for additional coverage?
LIQUOR (DRAM SHOP) LIABILITY… must be purchased by any business that sells alcohol. If insured is NOT in the business of alcoholic beverages, it is not excluded; this exposure is therefore covered, and referred to as a HOST LIQUOR LIABILITY.
PROFESSIONAL LIABILITY… malpractice, errors, and omissions (typically purchased by doctors, accountants, insurance agents, etc.).
BAILEE LIABILITY… Covers damage to property in CARE, CUSTODY, or CONTROL.
INJURY TO AN EMPLOYEE… Covered under worker’s compensation.
CONTRACTUAL LIABILITY (aka HOLD HARMLESS AGREEMENT)
PRODUCT RECALL… Parts & labor to repair, notification/advertising expenses, shipping expenses (i.e. expenses incurred by business owner to process recall).
Aggregate Limit
The most the insurer will pay per policy period, regardless of the number of claims or losses under Coverages A, B, and C combined.
Conditions in the CGL are similar to other liability policies, EXCEPT…
… they do NOT voluntarily incur any EXPENSE or OBLIGATION except first aid.
Occurrence version form
Most comment type of coverage; used in all personal insurance policies.
Loss is paid by the insurer, whose coverage was in forced when loss occurred.
Claims-made version form
Used by skilled professional business owners (lawyers, doctors, insurance agents). Coverage is triggered by filing of the claim. If insured is now being sued for an incident that happened in the past, the insurer who has coverage now usually will be responsible for the claim.
A claims-made policy can be written to cover events occurring before policy goes into force using a RETROACTIVE DATE.
Retroactive Date
Used in a claims-made policy to cover events occurring before policy goes into force. Comes at an additional cost.
The purpose of the Businessowners Policy (BOP) is…
… to provide prepackaged property and liable coverage for SMALL and medium-sized “Mom and Pop” businesses.
Standard coverages include:
- Property coverage for buildings and business personal property.
- Business income and extra expense coverage; and
- General liability coverage
What does Section 1 of the Businessowner’s Policy (BOP) provide?
Property coverages.
Who is NOT eligible for BOP coverage?
Auto repair shops Schools and government entities Farms Bars Places of amusement Large restaurants ($3 million + in gross sales) Banks, financial institutions Manufacturing operations.
