Finance 431: Property-Liability Insurance Lecture 13: Commercial Liability Insurance - 2

Commercial General Liability (CGL) History Coverage A - Bodily Injury and Property Damage Liability Coverage B - Personal and Advertising Injury Liability Coverage C - Medical Payments Limits Triggers - Occurrence vs. Claims Made

Historical Development Comprehensive General Liability Introduced in 1941 Combined coverages and multiple locations Problems Only limit was per occurrence What is an occurrence in prolonged exposure situation? Long tailed claims Coverage for pollution claims Initially any occurrence Revised to sudden and accidental

Insuring Agreement for Coverage A Insurer’s duty to pay damages Legal obligation Bodily injury or property damage To which the insurance applies Caused by an “Occurrence” Coverage territory Occurring during the policy period Insurer’s duty to defend Suits in equity Supplementary payments Limits of insurance

Another View of Coverage A Premises and Operations Liability Coverage Contractual Liability Coverage Fire Legal Liability Coverage Products and Completed Operations Coverage

Premises and Operations Liability Coverage Accidents on premises owned, rented or used by insured Accidents away from premises resulting from ongoing operations

Premises and Operations Liability Coverage – Exclusions (1) Workers Compensation Employers Liability Claims by relatives Dual capacity doctrine Third-party-over actions Aircraft, auto or watercraft Negligent entrustment Loading or unloading Mobile equipment

Premises and Operations Liability Coverage –Exclusions (2) Damage to property Named insured’s own property Premises sold, given away or abandoned Loaned property Property in care, custody or control Property being worked on Faulty work Pollution Liquor liability Expected or intended injury Nuclear energy liability

Which exclusion to the Premises and Operations coverage would apply in the case of an employee who is injured while at work? A)Workers Compensation B)Employers Liability C)Expected or Intended Injury D)Faulty Work E)None of the above

Contractual Liability Coverage Contractual liability is excluded except for “insured contracts” Insured contracts are: Lease of premises Sidetrack agreements Easement or license agreements Obligations to indemnify a municipality Elevator maintenance agreements Other contracts (hold harmless agreements)

Fire Legal Liability Coverage Covers property insured occupies

Products and Completed Operations Coverage Products hazard Arising out of your product Occurring away from premises Not in possession of insured when damage occurs Completed operations hazard Exclusions Damage to your product Damage to your work Damage to impaired property or property not physically injured Recall of products Pollution

Coverage B - Personal and Advertising Injury Liability Personal Injury False arrest Malicious prosecution Wrongful eviction or entry Slander and libel Violation of right of privacy Advertising Injury Slander or libel Violation of right of privacy Misappropriation of ideas Infringement of copyright, title or slogan

Coverage B Exclusions Apply to personal injury and advertising injury: 1If statement is known to be false 2If first publication took place before policy period 3Arising out of willful criminal act 4Assumed by contract Apply to advertising injury only: 1Breach of contract 2Failure of product to conform with advertised quality 3Wrong description of price 4Committed by insured whose business is advertising, broadcasting, publication or telecasting

Coverage C - Medical Payments Pays medical expenses of anyone injured on or on ways next to premises or off premises if caused by insured’s operations Liability not required Exclusions: InsuredsEmployees or contractors Anyone in part of premises they normally occupy Anyone entitled to collect workers compensation A person injured while taking part in athletics

A customer in a clothing store slips on a coat hanger lying on the floor. If the customer won a liability claim against the store owner, which CGL coverage would apply? A)Premises and Operations B)Contractual Liability C)Products and Completed Operations D)Personal and Advertising Injury E)None of the above

A customer of a roofing contractor is injured when a shingle from a roof the contractor had installed fell off. If the customer won a liability claim against the contractor, which CGL coverage would apply? A)Premises and Operations B)Contractual Liability C)Products and Completed Operations D)Personal and Advertising Injury E)None of the above

A soft drink company uses a trademark that closely resembles one that belongs to another company. If the competitor won a liability claim against the soft drink company, which CGL coverage would apply? A)Premises and Operations B)Contractual Liability C)Products and Completed Operations D)Personal and Advertising Injury E)None of the above

Who is an Insured in the CGL Policy? Named insured Family members, partners, officers and directors Employees of named insured Acting within scope of employment Co-employee exclusion Medical professional liability exclusion Property owned, occupied or used exclusion Real estate managers Legal representatives Operators of mobile equipment Newly acquired or formed organizations Unnamed partnerships or joint ventures not covered