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Which of the following are the categories that CGL insurance offers coverage for? (Select all that apply)

Product Liability (correct)

Personal Injury

Premises and Operations (correct)

Contingent Liability (correct)

Complete Operations Liability (correct)

CGL covers damages arising out of which of the following? (Select all that apply)

Medical Expenses (correct)

Bodily Injury & Property Damage (correct)

Personal Injury & Advertising Injury (correct)

Contractual Liability

What does Professional Liability Insurance provide coverage for?

Liability claims arising from negligent acts in the performance of professional services.

What does Errors & Omissions (E&O) cover?

Financial losses resulting from alleged wrongful acts arising from professional activities. Signup and view all the answers

What are wrongful acts in professional liability insurance?

Error, omission, or negligent act committed during the provision of professional services. Signup and view all the answers

What is the main difference between CGL and Professional Liability Insurance?

CGL covers bodily injury and property damage related to business operations, while PLI covers economic damages from negligence in professional services. Signup and view all the answers

What was significant about the 1st Standard General Liability Policy developed in 1940?

It was the first set of standard policy provisions adopted by multiple insurers. Signup and view all the answers

What legal and policy issues led to the development of the first Standard General Liability Policy? (Select all that apply)

Forms independently written by insurers (B), Complex and confusing language (C), Need for standardization (D) Signup and view all the answers

What changes were made in the Comprehensive General Liability Form (1966)?

Improved policy format and simplified language; clarified ambiguities and consolidated several types of coverage. Signup and view all the answers

What is the liability crisis of 1985 attributed to?

Increased medical malpractice lawsuits, asbestos-related claims, and liability for environmental damages. Signup and view all the answers

What is the purpose of a retroactive date in a claims-made policy?

To exclude coverage for claims arising from incidents that took place before the retrodate. Signup and view all the answers

Under what circumstances might an Extended Reporting Period (ERP) be needed?

If a company has gone out of business, is acquired, if a professional retires, or if changing from claims-made to occurrence policy. Signup and view all the answers

Which of the following are key components of the Standard CGL Policy? (Select all that apply)

Coverage Form (A), Exclusion (B), Declarations (C) Signup and view all the answers

What is the right to investigate and settle claims?

The right to investigate any claim or lawsuit and may choose to settle or defend. Signup and view all the answers

What is a Reservation of Rights (ROR) Letter?

An agreement where the insurer defends the claim but reserves the right to affirm or deny coverage at a later date. Signup and view all the answers

What is the Duty to Defend?

The insurer has a duty to defend if there is potential for coverage. Signup and view all the answers

What are the tests to determine if the insurer has a duty to defend?

Extrinsic Facts Test (B), Four Corners of Complaints Test (D) Signup and view all the answers

What does the Four Corners of Complaints Test consider?

Only the information in the complaint. Signup and view all the answers

What does the Extrinsic Facts Test consider?

Information in the complaint and all facts known to the insurer from any source. Signup and view all the answers

What is a Suit?

A civil proceeding in which damages because of bodily injury or property damage are alleged. Signup and view all the answers

What is Alternative Dispute Resolution (ADR)?

Methods, including mediation and arbitration, of settling disputes by means other than court. Signup and view all the answers

What is a Settlement?

An agreement in which the parties resolve a dispute and determine each party's rights and obligations without court. Signup and view all the answers

In what case would an insurer typically settle a claim?

If the insurer determines the claim is covered and facts reveal the insured is legally liable. Signup and view all the answers

What is a Judgment?

An official decision or payment amount determined by the court to resolve a dispute. Signup and view all the answers

How does an insurer pay for damages when an insured is found liable?

Through a voluntary settlement or a court approved judgment. Signup and view all the answers

What is Exclusion B - Contractual Liability?

Liability assumed by contract is typically excluded. (B) Signup and view all the answers

What is an Insured Contract?

Agreements such as lease agreements, easements, or agreements required by law. Signup and view all the answers

What is a Hold Harmless Agreement?

A contract in which one party assumes the liability of another. Signup and view all the answers

What does 2013 ISO CGL Policy Revision to Exclusions involve?

Exclusion P - Electronic Data (B), Exclusion C - Liquor Liability (C) Signup and view all the answers

What protection does Coverage B - Personal and Advertising Injury Liability provide?

Protection is triggered by a personal or advertising injury caused by a covered offense. Signup and view all the answers

How is Coverage A different from Coverage B?

Coverage A is triggered by bodily injury or property damage, while Coverage B is for non-physical damages. Signup and view all the answers

What is required for Coverage C of a CGL Policy?

An accident on the insured's premises or leased property that results in bodily injury. Signup and view all the answers

Must negligence be proved for medical payments to be made under Coverage C?

No, medical payments under Coverage C are made without regard to negligence or fault. Signup and view all the answers

Will defense costs exhaust a CGL Policy's limits?

No, defense costs are not applied to and do not exhaust a CGL Policy's limit. Signup and view all the answers

What is required to trigger Coverage A of a CGL Policy?

Bodily injury or property damage arising out of an occurrence during the policy period. Signup and view all the answers

Why are architects, engineers & surveyors excluded from CGL coverage under an insured contract?

Their services create unique liabilities best insured under Professional Liability Insurance (PLI). Signup and view all the answers

What protection do supplementary payments provide to policyholders in a CGL Policy?

They cover additional expenses related to defense and are paid in addition to damages. Signup and view all the answers

Study Notes

Categories of CGL Insurance Coverage

CGL insurance encompasses five primary coverage categories: Premises and Operations, Product Liability, Complete Operations Liability, Contractual Liability, and Contingent Liability.

CGL Damage Coverage

CGL covers damages relating to Bodily Injury (BI) and Property Damage (PD), as well as Personal Injury and Advertising Injury, while also providing for Medical Expenses.

Professional Liability Insurance

Professional Liability Insurance offers protection against liability claims arising from negligent acts during professional services, including Errors and Omissions (E&O), focusing primarily on economic damages.

Errors & Omissions (E&O)

E&O coverage protects professionals and organizations from financial losses arising from alleged wrongful acts or negligence in their professional activities.

Understanding Wrongful Acts

Wrongful Acts include errors, omissions, or negligent acts committed by a professional during service delivery.

CGL vs. Professional Liability Insurance

Professional Liability Insurance targets economic damages from negligence, while CGL focuses on BI and PD linked to business operations.

Development of Standard General Liability Policy

The first Standard General Liability Policy emerged in 1940, establishing a standardized form adopted by various insurers.

Influences for Standardization

Confusion arose from independent insurers' complex, inconsistent forms; ambiguity in legal language complicated court interpretations.

Comprehensive General Liability Form

The 1966 Comprehensive General Liability Form improved clarity, unified various coverages, and defined occurrences related to BI and PD.

1973 Revision Insights

The 1973 revision addressed pollution liability issues and broadened coverage definitions, enhancing clarity on occurrences and regulatory effects.

Broad Form Comprehensive General Liability Endorsement

Introduced in 1976, this endorsement consolidated numerous endorsements into one, leading to significant cost savings and operational efficiency for insured parties.

Liability Crisis of 1985

Increased medical malpractice lawsuits and legal challenges from asbestos and environmental damage claims contributed to a serious liability crisis, leading insurers to reconsider risk management.

Concept of Long-Tail Losses

Long-tail losses involve claims from occurrences in expired policies that may be paid years later, exemplified by cases like asbestos exposure.

1986 Commercial General Liability Form

The 1986 form was a response to earlier liability crises, replacing complex legal language with simplified terms and offering both occurrence and claims-made coverage options.

Key Changes in CGL Since 1986

Changes have included the introduction of arbitration provisions, inclusion of leased workers, clarification of the duty to defend, and updates reflecting technological advancements such as Internet liability.

2013 ISO GCL Policy Modifications

This policy introduced new endorsements, revised existing coverage, and enhanced exclusions to better protect insurers from emerging risks.

Customized Coverage Solutions

Insurers have responded to new CGL exclusions by creating custom standalone policies, such as Employment Practices Liability Insurance (EPLI).

Employment Practices Liability Insurance (EPLI)

EPLI protects against claims related to wrongful acts in employment practices like discrimination or wrongful termination.

Purpose and Differences of CGL and PLI

CGL offers liability coverage for premises, operations, products, and contractual issues, while PLI focuses on professional service liability, covering economic damages linked to errors or negligence.

Significance of the 1966 CGL Form

The 1966 form’s simplified language and uniform provisions improved usability, interpretability, and reliability while reducing ambiguity.

Trends Leading to the 1986 CGL Development

Rising liability claims due to medical malpractice, environmental risks, and the asbestos crisis necessitated a reevaluation of existing insurance policies.

Coverage Trigger Defined

A coverage trigger activates a policy to respond to a claim, helping determine which policy applies to a specific loss.

Types of Coverage Triggers

Two main types exist: Occurrence Coverage Trigger and Claims-Made Coverage Trigger.

Occurrence Coverage Trigger Characteristics

This coverage activates when BI or PD occurs during the policy period, with most CGL policies written on this basis.

Understanding the Occurrence

Occurrences include accidents or continuous exposure to harmful conditions resulting in BI or PD.

Claims-Made Coverage Trigger Overview

This policy is triggered by reporting a claim during its effective period, often including a retroactive date for claims.

Types of Claims-Made Forms

Claims-Made policies can be either Claims-Made + Reported or Pure Claims-Made, with different reporting requirements.

Extended Reporting Period (ERP) Explained

ERP extends the claim reporting timeframe post-policy expiration for incidents that occurred within the policy coverage.

Retroactive Date Importance

The retroactive date restricts coverage to claims arising after its specified date, minimizing redundancies.

Laser Endorsements Purpose

Laser endorsements exclude specific high-risk exposures, allowing insured parties to focus on necessary coverages and manage premium costs.

Trigger Theories for Liability Coverage

Coverage determination methods include Exposure Trigger Theory, Manifestation Theory, Injury-in-Fact Theory, and Continuous or Triple Trigger Theory.

Overview of CGL Policy Components

The standard CGL policy consists of Declarations, Coverage Forms, Endorsements, Exclusions, and contains a Broad Form Nuclear Exclusion.

Detailed Breakdown of CGL Policy Components

Declarations include essential insured information, Coverage Forms detail coverage provisions, while Endorsements modify policy terms based on specific needs.

Insuring Agreement Role

The insuring agreement clarifies the insurer's obligations, detailing coverage specifics and rights.

Coverage A for BI and PD

Coverage A compensates for damages related to BI or PD occurring due to business operations, providing a defense for liability.

Scope of Bodily Injury and Property Damage

Bodily Injury encompasses physical injuries and sickness, while Property Damage involves tangible property injury and potential loss of use.

Insurer Rights in Claims Handling

Insurers possess rights for claim investigation and settlement, determining scope and coverage duties as per policy guidelines.

Reservation of Rights in Claims

This arrangement allows insurers to defend claims while preserving the right to deny coverage based on findings during investigation.

Duty to Defend Criteria

Insurers have an obligation to defend if a claim indicates potential coverage; this duty ceases when policy limits are exhausted.

Tests for Insurer Duty to Defend

Two main tests apply: the Four Corners of Complaints Test and the Extrinsic Facts Test.

Civil Proceedings and Insurance Claims

A suit refers to any civil litigation alleging damages due to BI, PD, or associated injuries, encompassing arbitration and other dispute resolution methods.

Alternative Dispute Resolution (ADR)

ADR provides cost-effective methods for resolving disputes outside of traditional court settings, including mediation or arbitration.

Settlement Agreements

Settlements establish resolutions to disputes, outlining monetary payments and party rights, often formalized via a Release of Liability.### Insurance Claim Coverage
Claim coverage occurs when an insurer determines it's covered and the insured is held legally liable.

Judgment

A judgment is an official court decision that resolves a dispute and defines the obligations of each involved party.

Insurer Payment for Liabilities

Insurers may pay for damages through voluntary settlements agreed by both parties or through court-approved judgments.

Exclusion B - Contractual Liability

Generally, liability from contracts is excluded unless:
- The insured would still be liable without the contract.
- Liability assumed falls under an 'insured contract'.

Insured Contract

Includes various agreements such as lease agreements, easements, and legally required contracts.
Does not cover professional services provided by architects, engineers, or surveyors.

Hold Harmless Agreement

A contract where one party accepts the liability of another entity, often found in commercial or municipal contracts.
Also known as an Indemnity Agreement.

2013 ISO CGL Policy Exclusion Revisions

Three key exclusions added:
- Exclusion C: Liquor Liability
- Exclusion P: Electronic Data
- Exclusion Q: Recording and distribution of unauthorized material.

Exclusion C - Liquor Liability

Clarified to include liabilities at 'Bring Your Own' establishments and is designed to broaden coverage based on judicial decisions regarding negligence.

Exclusion P - Electronic Data

Specifies that this exclusion does not apply to bodily injury claims.

Exclusion Q - Recording and Distribution Violations

Expands coverage to include violations of the Fair Credit Reporting Act (FCRA) and other related statutes, excluding certain federal acts.
Encourages insureds to consider cyber or media liability policies due to broader implications.

Coverage B - Personal and Advertising Injury Liability

Activated by specific personal or advertising injuries caused during business operations, covering damages and providing legal defense.

Coverage A vs. Coverage B

Coverage B is triggered by personal and advertising injuries, while Coverage A is activated by bodily injury or property damage events.

Personal and Advertising Injury Definition

Encompasses various offenses, including false arrest, malicious prosecution, wrongful eviction, defamatory publications, privacy violations, misappropriation of advertising, and copyright infringements.

Consequential Bodily Injury

Refers to bodily injury linked to personal or advertising injury incidents.

Coverage B Exclusions

Exclusions for Coverage B include:
- False information
- Criminal acts
- Contractual liability
- Pollution incidents
- Incorrect pricing
- Internet business activities

Coverage C - Medical Payments

Covers medical expenses for bodily injuries following accidents occurring on premises owned or rented by the insured, or due to operations.
Generally includes no-fault coverage for first aid, ambulance services, and X-rays.

New Conditions for Coverage C

Medical expenses must be reported within one year of the accident.
The injured party must undergo a medical examination at the insurer's request and expense.

Coverage C Exclusions

Exclusions include:
- Payments to insureds or their representatives.
- Injuries occurring during athletics participation.
- Situations covered under completed operations hazard or under Coverage A.

Supplementary Payments under Coverages A & B

Provides for additional expenses related to defending a claim or lawsuit, usually paid outside of policy limits, also covering legal costs, bail bonds, court costs, and interest.

Outside vs. Inside the Limits

"Outside the Limits": Defense costs do not reduce policy limits.
"Inside the Limits": Defense costs are subtracted from total limits, affecting the amount left for damages.

Defense Coverage for Indemnitees

CGL provides defense for indemnitees provided both are named in litigation, ensuring defense costs are supplementary.

Trigger for Coverage A

Requires occurrence of bodily injury or property damage within policy period and coverage territory, aligning with definitions of BI and PD.

Distinction of Coverage B from A

Coverage B engages for non-physical damages, unlike Coverage A which focuses on physical injury or property damage.

Requirements for Coverage C

An accident must occur on owned or leased property due to insured's operations, with incurred expenses reported within one year.

Exclusions for Architects, Engineers & Surveyors

Their services lead to unique liabilities best protected under Professional Liability Insurance (PLI), hence excluded from CGL coverage.

Negligence Under Coverage C

Medical payments under Coverage C are provided regardless of negligence or fault.

Defense Costs and Policy Limits

Legal defense costs do not exhaust CGL policy limits, only damages claimed do; defense for indemnitees who don’t comply with supplementary payments provisions may reduce coverage limits.

Value of Supplementary Payments

Supplementary payments support policyholders by covering additional defense costs without decreasing available limits for damages, facilitating fair claim resolution.

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