RM Section 2 Quiz 1

What is the commercial general liability policy?

1. Standardized Commercial Liability POlicy issued by virtually all insurance companies

2. An ISO Drafted form

What does a CGL protect and who buys it?

1. Owners

   1. covers injury and damage to third party

   2. property of third parties

   3. Does not cover your personal property

2. Landlords

   1. Building owner needs to be covered

3. Tenants

   1. Resident of a building

      1. if you get a renter

What risk does the CGL cover?

1. Ownership

2. Maintenance

3. Use

of the named insured premsises

How is the CGL constructed?

1. Preamble

• outlines “you and “your” / “we/our”(insurer)

• Dice

2. Who is insured

3. Coverages (A/B/C Insuring A + Exclusions)

4. Supplementary Payments(only Cov A&B)

5. Limits of Insurance

6. Conditions

7. Definitions

Who is an insured?

In order for the CGL to apply needs to be action of the insured

1. Named Insured

2. Additional Insured

3. Automatic Insured

IN depth on each first type of insured CGL

1. Named Insured

• name is listed on dec page

• anyone who is not listed is not a named insured

• can have more than one / can be business

Rights of Named Insureds

• pay / receive / change / cancel / receive cancel notice

In depth on second type of insured CGL

Additional Insured

• can be added to the policy by endorsement, class or list of names

  • cover someone for the entire policy period / treated like first named insured

  • added by an endorsement (coverage for a limited scope/ time then you would add by endorsement)

in depth on third type of insured CGL

Automatic Insured

• often the most difficult to determine

• names do not appearon policy/dec/endorsements

• based on the relationship with the named insured

1. Employees

2. Volunteers

What types of businesses might be involved in a CGL?

1. Sole Proprietorships

2. Partnerships or Joint Ventures

3. Limited Liability Companies (LLC)

4. Corporations

5. Trusts

Sole Propietorship and partnership - spouses covered unlimited liability

IN depth on different types of business for a CGL

1. Sole Propietroships: One Individual

• named insured

• spouse is an automatic insured when they are engaged in the business

2. Partnerships / Joint Ventures

• All partners are owners = named insured

• employees and volunteers are insureds

• Spouses are insured when they are engaged in the businesses

3. Limited Liability Companies

• Owners are MEMBERS

• people that run the LLC are MANAGERS (employees)

• Volunteers

  • spouses are not included

4. Corporations

• Stock owners have to be engaged in business (stockholders)

• Board of Directors

• Executives

• Employees & Volunteers

5. Trust

• Trustess are considered insureds

What are the conditions of a newly acquired or formed business for insured status?

• coverage ends on the policy ending date or 90 days after acquisition or formation

• Excludes bodily injury and property damage that occurs before the acquisition/formation date

• Excludes personal and advertising injury that occurs before the acquistion/formation date

• Does NOT include newly acquired or formed partnerships, joint ventures or LLC (only covers SOLE PROPRIETORSHIPS, CORPORATIONS, TRUSTS, and others)

• if the ownership stays the same, and the corporation buys another company then have coverage for 90 days for the new company and the insurance company needs to reissue the policy. 90 only to corporation

• if not a corporation no grace period

What are other automatic insureds

• employees are considered insured regardless of how the business is organized

• volunteers are also considered insured (volunteers are subject an additional exclusion for bodily injury from liability as you might recall)

CGL also says any organization/person acting as a real estate manager for the named insured

What are the carved out exceptions for the insureds for the CGL Policy? THE CGL will not pay for

Bodily Injury or Personal and Advertising Injury too

1. Named Insured/Partners/Members/ Employees while in the course of performing their duties or to volunteer while performing their business duties (workers comp)

2. Spouse/child/brother/volunteer if they are claiming damages due to the employee or volunteer injury suffered while in performance of business duties (employer liability policy)

3. Anyone where there is any obligation to share damages with or repay someone else who must pay damages to employees or volunteer who are injured while performing duties(indemnify)

4. Anyone whose injury arises out of providing or failing to provide professional health care services

What is coverage A for the CGL?

Property Damage and Bodily Injury

• broadest of the three in terms of coverage

What are the risk areas for Cov A in CGL?

1. Premises Liability

2. Operations Liability

3. Products Liability

4. Completed Operation Liability

5. Contractual Liability

6. Contingent Liability

Open Peril / All risk policy

What are the promises made to the insured under Cov A?

1. The policy will pay the sum the insured becomes legally obligated to pay as damages to a third party because of bodily injury or property

2. The policy obligates the insurance company to defend against any lawsuit that results from the covers (once the insurance company pays the policy limits, the duty to defend ends)

What is bodily injury and property damage in the CGL?

• bodily injury, sickness or disease, includes death from any of those, includes loss of service of family members

  • Loss of Service: injured spouse

• property damage:

  • physical injury to tangible property including all resulting loss of use of that property

  • loss of use of tangible property is not physically injured

electronic data is not tangible property

Cov A includes any bodily injury or tangible property damage of use resulting by the actions of the named insured

What is the promise to defend

• no requirement that the insurance company gets the consent of the insured to settle a claim, and the duty to defend on the part of the insurance company ends when the limits of insurance have been exhausted 

• duty to defend is not dependent on the insured being liable for the loss

What are the three points involved about the duty to defend

1. If there is no coverage - no duty to defend

2. No consent to settle required

3. Duty to defend when the applicable policy limit is exhausted

What is a suit?

suit is defined as a legal proceeding, but also includes arbitration proceedings and alternative dispute resolutions such as mediation

What is the policy territory for Cov A in the CGL?

the injury or damage must occur within the policy territory

US, Puerto Rico, Canada, Possessions and Territories

1. Coverage A - goods/product solid in territory are covered anywhere or if a covered person is away temporarily or if a person/advertising injury takes place on the internent anywhere

Regardless of where the claim occurs suit has to be brought back to covered territory

(international water and airspace between locations)

What does Occurrence - Based mean?

Occurence: accident including continuous or repeated exposure to substantially the same general harmful conditions

• coverage on a per occurrence basis and that the injury or damage must occur within the policy period

• loss will still be covered if exposure was unknown and occurred before the policy period

Cov A is Occurence based

What does “knowledge” mean under the CGL?

when an insured has ‘knowledge’ of a bodily injury or property damage

• insured is deemed to have knowledge when any insured in the policy EXCEPt volunteers, real estate managers and newly acquired/formed organization or any employee authorized to give/receive notice of a claim

1. Reports the claim to the insurance company

2. Receives a written/verbal demand or claim for damages

3. Becomes aware by any other means that bodily injury or property damage has occurred

What is the first part of the insuring agreement? CovA

1. Premises Liability

CGL Provides coverage to the insured for any liability that airses out of ownership, maintenance an or use of the named insured premises. (listed on dec)

• applied by owners, landlords, or tenants

• premises liability does not cover employees

  • covered under state workers comp

  • excluded from coverage for injuries suffered within scope of employment

Negligence- encompasses carelessness, failed to exercise the care of a ‘reasonable person’

What is second part of the insuring agreement Cov A

2. Operations Liability

Arises from activities that involve the operation of the organization. Operation listed on theh premises as well as operations involving service or repair done on the premises of others

• only applies while the business activity is in process

• injury or damage must have occurred DURING normal operations of the business

What is the third part of the insuring agreement? Cov A

3. Products Liability

Import coverage for any business which sells products whether it manufactures those products or not. Coverage will protect the insured business from liability that arises out of the sale, distribution, or manufacture of products

• liability does not matter

What is the fourth part of the insuring Aggrement? Cov A

Completed Operations

Covers liability from activities involved in the opertation of an organization which involve service and repair activities after the service or repair is compelted

(if job is ongoing- operation, if completed - completed)

What is the fifth part of the insuring aggrement? Cov A

Contractual

covering contractual liability limit the payment to “insured contracts”

What is the sixth part of the insuring aggrement? Cov A

Contingent Liability

Airses out of work performed for the insured by someone else. general contractor can be held resonabile for loss by subcontractor

What is the list of Cov A exclusions? (17)

1. Expected or Intended Injury

2. Contractual Liability

3. Liquor Liability

4. Workers Compensation and Similar Laws

5. Employers Liability

6. Pollution

7. Aircraft, Auto or Watercraft

8. Mobile Equipment

9. War

10. Damage to Property

11. Damage to your product

12. Damage to your work

13. Damage to Impaired Property or Property not Physically injured

14. Recall of Products, Work or Impaired Property

15. Personal and Advertising Injury

16. Electronic Data

17. Recording and Distribution of Material of Information in Violation of Law

What is the first exclusion for CGL cov A?

1. Expected or Intended Injury

No coverage if the insured purposely intended or even expected injury or damage to occur

• from the perspective of the THE insured

• not include reasonable force to protect property

What is the second exclusion for CGL cov A?

2. Contractual Liability

• will provide coverage if the insured would have had liability in the absence of a contract: insured would be liable either way (if contract is an Insured contract(

• generally no coverage to pay damages to a third party due to a contrac

Insured Contract

1. Leases of Premises- commercial or residential

2. Sidetrack agreements for railroad sidings

3. Easement or License agreements

4. Obligations required by ordinance to indemnify a municipality

5. Elevator maintenance agreements

6. + is any other contract in which the named assumes the tort liability of another party to pay for BI/PD of third party

What are three situations that are NOT insured agreements?

1. Railroad indemnity agreements

2. Architect, engineer or surveyor indemnity agreements

3. An agreement in which the insured, if an architect, engineer or surveyor assumes liability for injury or damage arising out of the insureds rendering or failure to render professional services

What is third exclusion liquor liability for CGL?

Losses are not covered if the insured businesses is in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages

• allows business that provide liquor but are not in the businesses

exclusion includes

1. supervision

2. hiring

3. employment training

4. monitoring others

5. providing or failing to provide transportation to an intoxicated person

Endorsements avaliable

What is the fourth exclusion for CGL under Cov A? Workers Compensation and Similar Laws

4. Workers Compensation and Similar Laws

Exclude coverage for injuries that fall under workers compensation, employee injured wtihin the scope of employment

What is the fifth exclusion for CGL cov A, Employers liability?

Bodily injury to employees, spouses, children, parents or siblings of employees are excluded from coverage— under Employers Liability Policy

What is the sixth exclusion for CGL Cov A?

BI or PD arising out of the discharge, dispersal, seepage, mirgration, release or escape of pollutants

pollutant: any solid,liquid, gaseous or thermal waste

• pollution exclusion applies to any premises owner or occupied by, rented or loaned to ANYinsured

What are the three situations in which Pollution is covered for Cov A CGL?

1. BI sustained within a building and caused by smoke, fumes, vapor, or soot from the buildings heating equipment

2. BI or PD if the named insured is a contractor performing operations at a premises where the owner has been added as an additional insured to the named insureds contractor CGL Policy

3. BI or PD arising out of heat, smoke, or fumes from a hostile fire (uncontrollable fire)

What are additional pollution exclusion points for the CGl Cov A

excludes pollution liability at or from any premises while performing operations if the pollutants are brought on or to the premises in connection with the operations

Coverage is provided in 2 other cases

1. BI or PD from accidental release of fules, lubricants or other operating fluids relating to the operation of ‘mobile equipment’

2. BI or PD caused by the release of gases, fumes or vapors brought into the building in connection with operations being performed

no coverage for pollution liability that occurs during testing, monitoring, clean up, removal

no coverage for clean up mandated by government authority

ENDORSEMENTS

What is the seventh exclusion for CGL Cov A Aircraft, auto and watercraft?

excludes liability coverage for watercraft that are owned by the insured but DOES COVER liability caused by non-owned watercraft that are no more than 26 feet in length and does not require carring passengers for money

• coverage for watercraft while it is onshore and on the insured premises

What are the giveback coverages for aircraft, auto, and watercraft cgl excusion 7?

5 situations in which the coverage excluded in the Aircraft, auto or watercraft exclusion is then restored

1. Watercraft on shore on insured premises

2. Non owned watercraft less than 26 feet and not used to carry for a monetary charge

3. Parking of autos, such as valet parking operations

4. Liability assumed under an insured contract for aircraft or watercraft

5. BI or PD arising out of operation of machinery or equipment

What is the 8th exclusion CGL Cov A?

8. Mobile Equipment

Liability resulting from the operation of mobile equipment.

mobile equipment= self propelled, motorized equipment that is not subject to licensing and insurance requirements as autos are.

Earthmovers, tractors, farm equipment

What charactertics include mobile equipment for Cov A exclusion 8?

1. Designed for use principally off public roads

2. Maintained soley for use on or next to premises the named insured owns or rents

3. Maintained primarily to provide mobility to permanently mounted equipment such as air compressors, cherry pickers, pumps and generators

4. Not self propelled and are maintained primarily to provide mobility for permanently attached equipment such as air compresssors, pumps and generators

5. Maintained primarily for purpose other than the transportation of person or cargo

snow removal, road maintenance

There is NO coverage for liabilty relating to mobile equipment when it is being transported by an auto owned, rented, or loaned to any insured

NO coverage if used for racing, demolition or stunts

What is the 9th exclusion for CGL Cov A? War

no coverage for injuries and damages due to war

What is the tenth exclusion for Cov A of the CGL?

no coverage for damage to your own property or rented.

• Coverage for property damage, not caused by fire, to premises and contents, if the premises were rented to the named insured for seven or fewer days

• coverage for property damage for buildings that are the named insures work but were never occupied, rented, or held for rental by the named insured

What is the 11th exclusion for CGL under Cov A? Damage to your product

11. Damage to your product

any damage caused to your product is excluded. (uneer commercial)

What is the twelve exclusion of the CGL Cov A?

12. Damage to your work

excludes. “your work” damage. work or operations you perform in your business including materials and parts

What is the 13th exclusion for CGL Cov A? Damage to Impaired Property or Property not physically injured

impaired property to “your product” or “your work” that must be discoutned or discarded due to a defect or a change in circumstances

may be worth less due to a change in conditions or circumstances

What is the fourteenth exclusion for the CGL Cov A? Recall of products, work, or impaired property?

CGL will not pay for the expenses assocaited with a recall, voluntary or mandatory.

• will cover liability arising from a defective product even if the product is under a recall order

What is the fifteenth exclusion for the CGL Cov A? Personal and Advertising Injury

excludes coverage for Personal and Advertising Injuries

What is the sixteenth exclusion for CGL Cov A?

exclusion for electronic data but can be added by an endorsement

CGL excludes damages arising out of

1. Access or disclosure of condiential or personal information

2. loss of loss os use, corruption, inability to access, inability to manipulate electronic data

bodily injury due to electronic data loss are excluded unless the bodily injury is due to the access or disclosure of confidential or personal information

For the 16th exclusion for CGL Cov A, the CGL will not cover property damage in either

1. if someone accesses or discloses persoanl or confidential information

2. if data i lost, corrupted or otherwise made inaccessible

will only cover bodily injury if the injury was a result of the access to or disclosure of personal or confidential information

What is the 17th exclusion for CGL Cov A? Recording and Distribution of Material of Information in Violation of Law

no coverage under violation of various communication laws

1. Telephone Consumer Protection Act which regulates teleamarketing through voice calls, texts, and faxes

2. CAN -SPAM Act of 2003 which regulates unsolicited emails

3. Fair Credit Reporting Act which deals with the accuracy fairness and privacy of consumer credit information including on credit reports