Rplu 02 Commercial General Liability Overview

Front 1

Purpose of CGL and how it differs from PLI

Back 1

CGL provides protection from liability exposures involved with operating a business (premises, operations, products, contractual liability, and completed operations). Coverage is provided for liability due to bodily injury, property damage, and medical payments. PLI provides protection for liability that arises from rendering of professional services or activities.

CGL involved with operations of business. PLI arises from rendering professional services.

Front 2

Significance of 1966 Comprehensive General Liability Form

Back 2

written in simplified language and provided a policy document specific to the insured. It used a policy jacket with common provisions to which specific policy provisions (applicable to the insured) were then added. Introduced the occurrence as the basis for the CGL Policy. Reduce ambiguity and confusion

• simplified language
• policy jacket with provisions
• introduced occurrence
• reduced ambiguity and confusion

Front 3

Influences that led to the CGL form of 1986

Back 3

During the 70's and 80's, liability claims increased in areas (regulatory influences included environmental and pollution issues, medical malpractice was increase). Asbestos cases where insurers were being found liable for claims on polices that had been written decades earlier. Concern arose about the profitability of occurrence based policies. These concerns led to the first claims-made policy and the CGL policy in 1986

Front 4

Fundamental Difference between an occurrence and claims-made policy trigger

Back 4

Occurrence trigger activates the policy that is in effect at the time of an incident that causes injury or damage. Coverage is triggered by the date of the incident, regardless of when it is reported to the insurer. A claims-made trigger actives the policy that is in effect at the time the claim is made. Coverage is triggered by the making of a claim, regardless of when the incident happened

• occurrence, when the claim occurred, regardless of when it's reported to insured
• claims-made, when the claim was reported to the insurer, regardless of when it occurred.

Front 5

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

Back 5

A retroactive date excludes coverage for claims arising from incidents that happened before the retroactive date.

Front 6

How can a laser endorsement help an insured obtain insurance

Back 6

By using the laser endorsement, an underwriter can exclude specific exposures that may be present due to high claims experience or that the insured may simply not need. This allows the insured to cover the necessary exposures and potentially minimized the premium for its insurance. Excluding Specific Loss Exposures - exclusion of specific accidents, products, work or location endorsement. very helpful for underwriters and insurers to help remove obstacles that make it difficult to underwrite or obtain insurance by allowing an insurance policy to be customized to the insured's needs.

Front 7

Purpose of an extended reporting period in a claims-made policy

Back 7

an ERP period allows additional time for a claim to be filed after a claims-made policy ends. It only covers claims based on any incident that happened after any applicable retro date and before the end of the policy period. It does not cover claims arising from incidents that happen during the ERP.

Front 8

Is an extended reporting period needed for an occurrence policy? Why or why not?

Back 8

it is not needed for an occurrence policy because the incident is covered by the policy in effected at the time of injury, regardless of when it is reported to the insurer.

Front 9

Four Major Trigger Theories

Back 9

1. Exposure - first exposure to harmful conditions
2. Manifestation - first become aware of the injury/damage. when the condition manifests itself or becomes diagnosable
3. Injury/damage-in-fact - date that injury or damage actually occurs regardless of the length of exposure or whether the condition has become evident
4. Triple Trigger or Continuous - recognizes that injury/damage can occur continuously throughout the entire period of harmful exposure and is often seen as progressive or latent injury or damage (asbestos exposure)

Front 10

Determine trigger theory: A painter uses toxic paint in painting a home for a homeowner. The homeowner's child ingests bits of paint over several years before diagnosed with a disease caused by the toxic paint.

Back 10

Triple Trigger - The child is exposed to a harmful condition immediately upon exposure (exposure), during continuous exposure (manifestation), and at the time of diagnoses (injury/damage-in-fact). Each policy is in effect during the times of exposure could potentially respond to the claim.

Front 11

Determine trigger theory: A construction company installs a defective plumbing pump at a business. A year later the pump suddenly breaks causing water damage to a commercial building.

Back 11

Injury-in-fact - The pump does not cause a harmful condition until it suddenly breaks, then causes damage to the building. The policy is effect on the date the damage occurred will most likely respond to the claim.

Front 12

Determine trigger theory: After enjoying a meal at a local restaurant, a customer becomes ill. The customer receives medical treatment and is diagnosed with food poisoning caused by the meal. The customer recovers satisfactorily, suffering no further injury, and then files a claim with the restaurant

Back 12

Exposure - The customer was exposed to a meal that caused an immediate injury, which was treated and resolved.

Front 13

Determine trigger theory: A new electrical component is installed in a hospital's generator. Over the next 6 months, the generator performs inconsistently causing extensive operational problems and patient care concerns. Finally an electrician discovers that the new electrical component is defective.

Back 13

Manifestation or Triple Trigger -

Manifestation: the defect in the electrical component caused damage over several months, but the defect was not discovered until the 6th month.

Triple Trigger: The electrical component was defective when it was installed and caused continuous damage to the hospital's operation, up until it was identified as defective. all or some of the policies in effect at the time of installation, during the 6 months of damage, and at the time of discover could apply.

Front 14

CGL Policy: Supplementary Payments

Back 14

Additional payments made by an insurer for various costs and expenses associated with Coverages A and B

Front 15

CGL Policy: Coverage Form

Back 15

Heart of the CGL Policy, which includes coverage insuring agreements, definitions, limits, and exclusions that define policy coverage.

Front 16

CGL Policy: Personal/Advertising Injury

Back 16

Coverage B of CGL Policy

Front 17

CGL Policy: Occurrence or Claims-Made

Back 17

Type of coverage forms available for CGL Insurance

Front 18

CGL Policy: Insuring Agreement

Back 18

Part of the CGL coverage form that describes Coverages A, B and C.

Front 19

CGL Policy: Policy Conditions

Back 19

Section IV of CGL Policy, which describes the insurer's and insured's rights, duties, and responsibilities, including what must be done in the event of a covered loss or if and insured wants to cancel a policy

Front 20

CGL Policy: Who is an Insured

Back 20

Section II of a CGL coverage form that identifies who is covered under the policy

Front 21

CGL Policy: CGL Policy Components

Back 21

Declarations page, coverage form, endorsements, amendments, additional exclusions, and broad form nuclear exclusion

Front 22

CGL Policy: Medical Payments

Back 22

Coverage C of the CGL coverage form

Front 23

CGL Policy: Endorsements, Amendments, Additional Exclusions

Back 23

Methods of adding, excluding, or modifying policy coverage or terms.

Front 24

CGL Coverage Form Components

Back 24

• CG 00 01 - Occurence
• CG 00 02 - Claims-Made
• Section I: Insuring Agreements and Supplementary Payments (Coverage A- BI/PD; Coverage B - Personal and Advertising Injury; Coverage C- Medical Payments)
• Section II: Who is an insured?
• Section III: Limits of Insurance
• Section IV: CGL Conditions
• Section V: Definitions
• Endorsements, Amendments, Additional Exclusions
• Broad Form Nuclear Exclusion

Front 25

What is the purpose of the insuring agreement?

Back 25

The insuring agreement explains the insurer's promises and obligations, including what is covered

Front 26

What are two requirements for coverage of bodily injury and property damage?

Back 26

The bodily injury or property damage must meet the definitions found in the CGL Policy. In addition, the bodily injury or property damage must be the result of an occurrence, which much have happened during the policy period (assuming that it is a occurrence policy)

Front 27

What is covered under property damage?

Back 27

Includes physical damage or injury to tangible property and/or the loss of use of that property

Front 28

Bodily Injury

Back 28

considered to include injury, sickness, or disease. It includes death, if it results from the injury, sickness or disease. harm suffered by the human body resulting in pain and suffering, sickness, disease or death. The definition of bodily injury is open to court interpretation and may include emotional distress or mental injuries. CGL coverage generally pays for the cost of medical care.

Front 29

Property Damage

Back 29

includes physical damage to tangible property as well as the loss of use of that property. Losses can include the value of property, the cost to replace or repair it, and the loss of income related to an incident or occurrence.

Front 30

How does an insurer pay damages when an insured is found to be legally obligated for bodily injury or property damage?

Back 30

An insurer pays for damages when an insured is legally obligated for bodily injury or property damage in the form of a judgment, which is a monetary amount awarded by a court in the form of a settlement, which is a monetary agreed to by both parties

Front 31

What is the extrinsic fact test?

Back 31

The extrinsic facts test is used to determine if an insurer has a duty to defend an insurer. It examines the complaint and all additional information known to the insurer

Front 32

Tests to Determine a Duty to Defend

Back 32

• Four Corners of Complaint Test - based on the information provided in the complaint or claim
• Extrinsic Facts Test - In addition to the complain, the courts examine the policy and all facts known to the insurer from any source. - the court performs the four corners of the complaint test first and then examines any additional information

Front 33

What must first be determined before an insurer decides to provide a defense?

Back 33

Before the insurer provides a defense, the insurer typically determines if the bodily injury or property damage is covered under the policy and whether the insured is legally obligated for damages. If the injury or damage may be covered, then the insurer is required to defend the insured

Front 34

Reservation of Rights

Back 34

an insurer may choose to defend an insured under a reservation of rights, in which it agrees to defend the claim but reserves the right to affirm or deny coverage until a later date.

Front 35

Does a CGL Policy pay for damages alleged by an injured party?

Back 35

A CGL Policy does not pay for damages alleged by an injured party. It pays for damages for which the insured is legally obligated or legally responsible to pay.

Front 36

CGL Policy: Coverage Territory

Back 36

• USA (including territories and possessions), Puerto Rico and Canada
• International waters or airspace, but only if the injury/damage occurs in travel or transportation between any place above
• all other parts of the world if the injury or damage arise out of - goods or products made or sold by you in the territory above, activities of a person whose home is in the USA etc but is away for a short time on your business, or "Personal and advertising injury" offenses that take place through the internet or similar electronic means of communication.

Front 37

Describe the Purpose of Coverage A

Back 37

To insure any claim against bodily injury or property damage

Front 38

Describe two duties of the first named insured

Back 38

1. Pays premium when due
2. Provides/receives written notice of cancellation

Front 39

Describe how changes are made to coverage

Back 39

Insured's request to change coverage after it has become effective must be made with insurer's approval by attaching an endorsement to the policy

Front 40

Describe the insured's duties in the event of an occurrence, claim or lawsuit

Back 40

• Notify insurer of occurrence or offense
• Document and notify insurer of any lawsuit
• Deliver documents, authorize records, cooperate with, and assist the insurer regarding a claim or a lawsuit.
• Do not make payments, assumed obligations or incur any expense without the insurer's consent, with the exception of rendering first aid

Front 41

Describe how the CGL Policy could respond when other insurance covers the same loss

Back 41

CGL insurance may be primary and pay first or be excess over other insurance, paying after other insurance pays up to the applicable limits. If a CGL Policy and other policies are primary, and all agree to pay for the loss by contribution by equal shares, then each policy pays an equal dollar amount of the loss

If any insurers do not agree to contribution by equal shares, then the loss is paid by contribution by limits. Under this method, each policy pays pro-rata share of the loss based on the ratio of applicable limit to the total applicable limit of all policies

Front 42

Describe conditions for canceling a policy

Back 42

Either party can cancel a policy. States regulate insurer rights and require prior written notice that may vary by state.

• Insurers typically provides 30 day written notice, unless the insured has failed to pay premiums when due, in which case the insurer typically must give only 10 days prior written notice
• The first named insured may also cancel a policy by providing advance written notice of cancellation