General Liability

Agenda

• Introduction
• Types of General Liability Coverage
• Different Sections of Occurrence basis policy
• Claims made policy.
• Important terms
 Introduction

refers to legal liability arising out of business operations other than auto or
General Liability aviation accidents and employee injuries

To help individuals limit financial loss by transferring the financial risk to

Purpose Insurance company

Some important exposures include:

Premises and operations liability

• arising out of the ownership and maintenance of the premises where the firm does business

Products liability

•arising out of the manufacturing and sale of products

Completed operations liability

•arising out of faulty work performed away from the premises after the work or operation is
completed

Contractual liability

•arising out of the assumption of legal liability through a written or oral contract

Contingent liability

•arising out of work done by independent contractors

 Commercial General Liability Policy

The commercial general

liability policy (CGL) is widely used by firms to cover their general liability loss exposures

•An occurrence policy

•covers liability claims arising out of occurrences that take
place during the policy period, regardless of when the claim is
made
The policy comes in
two forms: •A claims-made policy
•covers only claims that are first reported during the policy
period or extended reporting period, provided that the event
occurred after the retroactive date, if any, stated in the
policy

The CGL policy can be written alone or included in a commercial package policy
Commercial General Liability – Sec 1
Section I of the CGL contains three major parts of coverage and supplementary payments
Coverage A: Bodily Injury and Property
Damage Liability
• The insurer agrees to pay on behalf of
the insured all sums up to the policy
limits that the insured is legally
obligated to pay because of bodily
injury or property damage
• The bodily injury or property
damage must be caused by an
occurrence, I.e., an accident,
including continuous or repeated
exposure to substantially the same
general harmful conditions
• Coverage does not apply when a loss
is known or is apparent before the
policy’s inception date
• Coverage includes defense costs,
and the insurer has the right to
investigate a claim or suit and settle
it at its discretion
Coverage B: Personal and Advertising
Liability
• The insurer agrees to pay those sums
that the insured is legally liable to pay
as damages because of personal and
advertising injury
• The policy covers legal liability
resulting from:
• false arrest
• malicious prosecution
• wrongful eviction or entry
• slander
• violation of privacy
• copyright infringement
Coverage C: Medical Payments
• The insurer will cover the medical
expenses of persons who are injured
in an accident on the premises or on
ways next to the premises, or as a
result of the insured’s operations
• Expenses must be incurred within
one year of the accident
• Payments are made without regard
to legal liability
 Commercial General Liability – Sec 1

Coverage A contains: Supplementary Payments:

A lengthy list of Exclusions, including: Coverage for Fire Legal Liability
Coverage A and B
•Expected or intended injuries or • Covers fire damage to
damages
premises rented to the In addition to the policy limits, coverage
•Contractual liability, with some
exceptions named insured or includes:
•Liquor liability temporarily occupied by
•Workers compensation and employers the named insured with the
liability
•Pollution, with some exceptions
permission of the owner Up to
• A separate limit of coverage Up to $250 $250/day for
•Aircraft, auto, and watercraft, with All expenses
for the cost actual loss Prejudgment
some exceptions applies incurred by
of a bail of earnings interest
•Mobile equipment the insurer
• Other damage to property bond by the
•War insured
•Damage to property owned, rented, or
rented by the insured is
occupied by the insured NOT covered
•Property damage to the insured’s
product or work
•Damage to impaired property that is
not physically damaged
•Recall of products
•Personal and advertising injury
•Electronic data
 Commercial General Liability Policy
Section II of the CGL indicates the individuals and organizations Section III of the CGL contains the coverage limits
that are considered “insured's”

If designated in the declarations, insureds include:

General aggregate limit
Maximum amount that the insurer will pay for the sum of the
•Owner and spouse if a sole proprietorship following:
• Damages under Coverage A (except for amounts paid for products-
•Partners, members, and their spouses if a partnership or joint venture completed operations hazard),
•Members and managers if a limited liability company (LLC) • D
•Officers, directors, and stockholders if a corporation • Damages under Coverage B,
•A trust and trustees, but only with respect to their duties as trustees • medical payments under Coverage C

Insureds also include persons not named in the policy: Each-occurrence limit
maximum amount paid for arising out of any one occurrence, the sum of
•Volunteer workers acting for the organization damages under
•Employees acting within the scope of employment
• Coverage A
•Any person or organization acting as a real estate manager
•A legal representative if the named insured should die • Medical expenses under Coverage C
•Any newly acquired or formed organization, other than a partnership, joint
venture or LLC Products-completed operations hazard aggregate limit

Personal and advertising injury limit : Maximum paid under Coverage B

Damage to rented premises limit

Medical expense limit

Illustration of the CGL Limits of Insurance
 Commercial General Liability Policy

Section IV of the CGL states the various conditions •For example, this section contains provisions for dealing with bankruptcy, and the duties in the event of
that apply to the coverage form an occurrence

Section V of the CGL contains the definitions of various •Some terms defined in the policy include “advertisement”, “hostile fire”, and “volunteer worker”
terms used in the policy

Claims-Made policy
The ISO claims-made policy is similar to the occurrence policy with the major exceptions of:
 Payment of claims is on a claims-made basis
 The policy covers only those claims that are first reported during the policy period-
 The event must occur after any stated retroactive date

 It contains an extended reporting period provision

The purpose is to provide coverage under an expired claims-made policy for claims first reported after the policy expires

The basic extended reporting period, with two separate reporting “tails” is automatically provided in certain circumstances (e.g.,
cancellation of coverage)
 The first tail is a five-year period after the policy expires. Covers events that occur during the policy period, and are reported to the
insurer, but a claim may not yet be made
 The second tail is a 60-day period after the expiration date. Covers events that occur during the policy period that the insured may
not be aware
Thanks