Podcast
Questions and Answers
Which of the following are the categories that CGL insurance offers coverage for? (Select all that apply)
Which of the following are the categories that CGL insurance offers coverage for? (Select all that apply)
CGL covers damages arising out of which of the following? (Select all that apply)
CGL covers damages arising out of which of the following? (Select all that apply)
What does Professional Liability Insurance provide coverage for?
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?
What does Errors & Omissions (E&O) cover?
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What are wrongful acts in professional liability insurance?
What are wrongful acts in professional liability insurance?
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What is the main difference between CGL and Professional Liability Insurance?
What is the main difference between CGL and Professional Liability Insurance?
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What was significant about the 1st Standard General Liability Policy developed in 1940?
What was significant about the 1st Standard General Liability Policy developed in 1940?
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What legal and policy issues led to the development of the first Standard General Liability Policy? (Select all that apply)
What legal and policy issues led to the development of the first Standard General Liability Policy? (Select all that apply)
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What changes were made in the Comprehensive General Liability Form (1966)?
What changes were made in the Comprehensive General Liability Form (1966)?
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What is the liability crisis of 1985 attributed to?
What is the liability crisis of 1985 attributed to?
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What is the purpose of a retroactive date in a claims-made policy?
What is the purpose of a retroactive date in a claims-made policy?
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Under what circumstances might an Extended Reporting Period (ERP) be needed?
Under what circumstances might an Extended Reporting Period (ERP) be needed?
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Which of the following are key components of the Standard CGL Policy? (Select all that apply)
Which of the following are key components of the Standard CGL Policy? (Select all that apply)
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What is the right to investigate and settle claims?
What is the right to investigate and settle claims?
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What is a Reservation of Rights (ROR) Letter?
What is a Reservation of Rights (ROR) Letter?
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What is the Duty to Defend?
What is the Duty to Defend?
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What are the tests to determine if the insurer has a duty to defend?
What are the tests to determine if the insurer has a duty to defend?
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What does the Four Corners of Complaints Test consider?
What does the Four Corners of Complaints Test consider?
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What does the Extrinsic Facts Test consider?
What does the Extrinsic Facts Test consider?
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What is a Suit?
What is a Suit?
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What is Alternative Dispute Resolution (ADR)?
What is Alternative Dispute Resolution (ADR)?
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What is a Settlement?
What is a Settlement?
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In what case would an insurer typically settle a claim?
In what case would an insurer typically settle a claim?
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What is a Judgment?
What is a Judgment?
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How does an insurer pay for damages when an insured is found liable?
How does an insurer pay for damages when an insured is found liable?
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What is Exclusion B - Contractual Liability?
What is Exclusion B - Contractual Liability?
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What is an Insured Contract?
What is an Insured Contract?
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What is a Hold Harmless Agreement?
What is a Hold Harmless Agreement?
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What does 2013 ISO CGL Policy Revision to Exclusions involve?
What does 2013 ISO CGL Policy Revision to Exclusions involve?
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What protection does Coverage B - Personal and Advertising Injury Liability provide?
What protection does Coverage B - Personal and Advertising Injury Liability provide?
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How is Coverage A different from Coverage B?
How is Coverage A different from Coverage B?
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What is required for Coverage C of a CGL Policy?
What is required for Coverage C of a CGL Policy?
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Must negligence be proved for medical payments to be made under Coverage C?
Must negligence be proved for medical payments to be made under Coverage C?
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Will defense costs exhaust a CGL Policy's limits?
Will defense costs exhaust a CGL Policy's limits?
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What is required to trigger Coverage A of a CGL Policy?
What is required to trigger Coverage A of a CGL Policy?
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Why are architects, engineers & surveyors excluded from CGL coverage under an insured contract?
Why are architects, engineers & surveyors excluded from CGL coverage under an insured contract?
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What protection do supplementary payments provide to policyholders in a CGL Policy?
What protection do supplementary payments provide to policyholders in a CGL Policy?
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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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