FL Adjuster Claim Professional Exam: Commercial General Liability (CGL) Policy

Fast Facts

Overview

The CGL policy is a business’s primary liability coverage, protecting against general liability exposures (not auto or professional liability). It includes Coverage A (bodily injury/property damage), Coverage B (personal/advertising injury), and Coverage C (medical payments).

General Liability Exposures

• Premises and Operations: Liability from conditions or activities on/off premises.
• Products and Completed Operations: Liability from products or completed work.
• Contractual Liability: Obligations assumed via contract.
• Independent Contractor Liability: Liability for contractors’ actions.

CGL Policy Components

• Common Policy Declarations
• CGL Declarations
• CGL Coverage Form (core insuring agreements)
• Broad Form Nuclear Exclusion
• Common Policy Conditions

Coverage A: Bodily Injury and Property Damage Liability

Insurer pays damages for bodily injury or property damage the insured is legally obligated to pay. Includes defense costs until policy limits are exhausted.

• Bodily Injury: Physical injury, sickness, disease, or death.
• Property Damage: Physical injury to tangible property or loss of use. Excludes electronic data.
• Defense Coverage: Covers lawsuits, arbitration, or ADR for covered claims.
• Coverage Territory: U.S., territories, Puerto Rico, Canada; includes products sold in territory but injured elsewhere if sued in territory.

Occurrence vs. Claims-Made Triggers

• Occurrence Policy: Covers injury/damage during policy period, even if claim is filed later. Key Point: Covers regardless of policy expiration.
• Claims-Made Policy: Covers claims filed during policy period, after retroactive date. Key Point: No coverage for injury/damage before retroactive date.
• Retroactive Date: Excludes coverage for incidents before this date or known potential claims.
• Extended Reporting Period (ERP): Allows claims after policy ends (claims-made only). Basic ERP (5 years, no cost) or Supplemental ERP (indefinite, with premium).

Supplementary Payments

• All insurer-incurred expenses (e.g., attorneys, investigators).
• Bail bonds up to $250 (vehicle-related).
• Bond costs up to policy limit.
• Reasonable expenses (e.g., $250/day for loss of earnings).
• Court costs and judgment interest.
• Key Point: Paid outside policy limits, no effect on coverage limits.

Who Is an Insured

• Named Insureds: Sole proprietors, partnerships, LLCs, corporations (including officers/directors for duties).
• Employees/Volunteers: Covered for business duties, excludes temporary employees.
• Others: Real estate managers, legal representatives, newly acquired organizations (90 days).

Coverage A Exclusions

• Expected/Intended Injury: No coverage for intentional harm (except reasonable force to protect).
• Contractual Liability: Excludes assumed liability unless liable without contract or via insured contract (e.g., lease, sidetrack agreements).
• Liquor Liability: Excludes alcohol-related businesses; covers host liquor liability.
• Workers Compensation/Employers Liability: Excludes employee injuries covered by workers comp.
• Pollution: Excludes most pollution claims, except limited cases (e.g., hostile fire, off-site work).
• Aircraft/Auto/Watercraft: Excludes owned vehicles, except non-owned watercraft <26ft, valet parking, or certain equipment.
• Mobile Equipment: Excludes autos subject to motor vehicle laws (covered by BAP).
• War: Excludes war-related losses.
• Damage to Property: Excludes owned/rented property (except fire damage to rented premises or short-term rentals).
• Damage to Your Product/Work: Excludes damage to insured’s product/work, except subcontractor-related damage.
• Impaired Property: Excludes loss of use from defective components.
• Recall of Products: Excludes recall expenses.
• Electronic Data: Excludes loss of electronic data.

Coverage B: Personal and Advertising Injury

Covers liability for:

• False arrest, detention, imprisonment.
• Malicious prosecution.
• Wrongful eviction/entry.
• Slander, libel, or disparagement.
• Privacy violations.
• Advertising idea misuse or copyright infringement in ads.

Coverage B Exclusions

• Knowing violations or false publications.
• Pre-policy publications.
• Criminal acts, contractual liability, breach of contract.
• Product quality/performance or price misdescription.
• Media/Internet businesses, chat rooms, or unauthorized name use.
• Pollution or war-related injuries.
• Illegal recording/distribution of information.

Coverage C: Medical Payments

Pays medical expenses (e.g., first aid, hospital, ambulance) for injuries on insured’s premises or from operations, regardless of fault. Must be reported within 1 year.

Coverage C Exclusions

• Insureds, employees, tenants, or those entitled to workers comp.
• Athletic activities or off-premises product/work injuries.

Limits of Insurance

• General Aggregate: Max for all claims (except products-completed operations).
• Products-Completed Operations Aggregate: Max for product/work claims.
• Each-Occurrence: Max per incident for Coverage A and C.
• Personal/Advertising Injury: Max per person/organization, equals each-occurrence.
• Damage to Premises Rented: $100,000 for fire/short-term rental damage.
• Medical Expense: $5,000 per person, subject to each-occurrence.

Policy Conditions

• Bankruptcy: Insurer’s duties remain despite insured’s bankruptcy.
• Duties After Loss: Notify insurer of occurrence/claim, cooperate, send legal papers.
• Other Insurance: Primary, excess, or shared coverage based on other policies.
• Subrogation: Insurer recovers from liable party after paying claim.
• Non-Renewal: Insurer notifies insured 30+ days before non-renewal.

Selected Endorsements

• Limited Fungi/Bacteria (CG 24 25): Covers mold-related claims with separate aggregate limit.
• Limited Pollution Liability (CG 24 15): Covers pollution from non-environmental operations, subject to separate aggregate limit.
• Pollution Liability Forms (CG 00 39/40): CG 00 39 covers pollution incidents and cleanup; CG 00 40 covers incidents only.