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)
B)
C)
D)
E)
Workers Compensation
Employers Liability
Expected or Intended Injury
Faulty Work
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:
1 If statement is known to be false
2 If first publication took place before policy period
3 Arising out of willful criminal act
4 Assumed by contract
Apply to advertising injury only:
1 Breach of contract
2 Failure of product to conform with advertised quality
3 Wrong description of price
4 Committed 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:
Insureds
Employees 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)
B)
C)
D)
E)
Premises and Operations
Contractual Liability
Products and Completed Operations
Personal and Advertising Injury
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