The mounting losses of liability insurers in the 1980’s can be traced to:
Disproportionately high court awards in the USA.
- environmental disasters
- aviation disasters
- inadequate assessment of potentially dangerous risks
- latent bodily injury claims
The commercial general liability policy CGL
What’s are the four coverages?
- Bodily injury and property damage liability
- personal injury and advertising injury liability
- medical payments
- tenants’ legal liability
Coverage provided for bodily injury and property damage liability
Covers bodily injury, sickness or disease and death.
Under property
- physical injury to tangible property, including all resulting loss of use of that property or;
- loss of use of tangible property that is not physically injured.
Coverage provided for bodily injury and property extended
- Payment made only for those sums that the insured becomes legally obligated to pay, such as tort liability, certain contractual liabilities, statutory liability.
3) insurer liable for payment of compensatory damages - Coverage is provided only for losses which occur during the policy period.
5 injury or damage must be caused by an occurrence
- Loss or damage must take place in the coverage territory. ( only for those losses which occur in Canada and United States. Limited world wide coverage) regardless of where the claim originated the plaintiff must show the products were sold within Canada or USA
Does the insurer reserve the right and duty to defend any action ? Investigate? Settle any claim of action at is discretion?
Ya boiiiii
Exclusion on the cgl bodily injury and property coverage
- bodily injury or property expected by the insured unless reasonable force is used ( protecting persons or property.
- bodily injury or property damage where the insured is obligated to pay compensatory damages by reason of the assumption of liability for compensatory damages. ( any liability assumed by means of contract or agreement ) like when you hire contractors
- any obligation of the insured under a workers compensation, disability benefits or unemployment or employment compensation or any similar law.
- bodily injury to an employee of the insured or their spouse, child, brother sis, arising out of and in the course of employment by the insured.
Bodily injury exclusions continued
Bodily injury or property damage arising out of ownership maintenance use or operation by or on behalf of any insured of automobile, motorized snow vehicle / trailer, aircraft, air cushion, watercraft while ashore, watercraft under 8metres unowned. vehicle in speed or demolition contest or stunt, any vehicle which would be required to be under a contract evidenced by a motor vehicle liability policy.
Applies to non and non owned vehicles
Fork lifts graders caterpillars are not classified as automobiles and are covered
Property injury exclusions coverage 1 under CGL
Property you own rent or occupy, sell give away if damage arises out of those premises.
Property loaned to you, personal property in care custody control.
Property under operations of contractor or property that must be repaired or replaced because of incorrect work performed.
Property damage to your product
Property damage arising from defect deficiency or dangerous condition or a delay or failure by you or anyone acting your behalf to perform a contact or agreement in accordance with its terms.
Any loss incurred from the loss of use withdrawal recall of your product, work, or impaired property.
Coverage 2. Personal and advertising injury liability.
Injury including consequential bodily injury arising from false arrest, detention or imprisonment.
Or malicious prosecution.
- or wrongful entry into or eviction of a person from a room, dwelling or premises that the person occupies.
- or oral or written publication of material that slanders or libels a person or organization or disparages a persons good products or services or one that violates a persons right of privacy.
Personal and advertising coverage 2 exclusions
Any oral or written publication of material which is known to be false at the time it is made is not insured by the policy.
Coverage 3 under CGL medical payments
Includes immediate first aid, ambulance charges, x-rays, medical, surgical and dental services and funeral expenses.
Exclusions;
The insured or insurers employees
Other persons working on behalf of the insured or tenant of the insured
Any person who is practicing instructing or participating in athletics.
Coverage 4 tenants legal liability
Exposures are rental of hotel rooms, other facilities for the purpose of accommodation, seminars or trade shows. The extent of the tenants liability is a matter of tort or contractual liability. Because damage liability excludes premises which is rented or occupied this coverage fills the gap.
Exclusions
- asbestos
- fungi
- nuclear energy liability
- pollution liability ( on the insureds premesis, at any waste disposal site used for or by the insured or others, while being transported, at any work site when brought into the site by the insured.
- terrorism
- war risks
Supplementary payments coverages 1,2,4
The amount of insurance indicated on the declarations is therefore reserved for the payment of those damages
Additional claims that are covered by the policy are:
- insurers costs
- the cost of bonds to release attachments
- reasonable expenses incurred by the insured at the insurers request to assist in investigation and slide fence of the claim including actual loss earnings up to 250 a day because of time off work. ( basically loss of earnings )
- court costs
- interest on amount of the judgement
Determination of the premium for coverage 1
- Premesis and operations liability determined by square footage of the building or portion occupied by the insured. Occupancy. Payroll. Location.
Products liability determined by types of products sold. Sales volume. Territory in which products are sold.
Completed operations liability determined by type of work performed. Gross receipts.
Determination of the premium for coverages 2 3 4
- The limits provided are generally the same as coverage 1. Some insurers require a small percentage of basic premium as a charge.
- Generally does not exceed 2500 no additional premium charged for this coverage, some insurers stipulate an aggregate limit of 25,000.
- Normal charge is 35% of the building rate some insurers include as much as 100,000 of coverage at no cost and only limits higher than that are charged a premium.
Section 2 of CGL who is an insured ?
May be issued in the name of individuals, partnerships limited liability partnerships, joint ventures or limited liability companies. Organizations other than partnerships or joint ventures.
Generally all persons engaged in the business are also insureds, ( owners partners spouses directors and officers. Employees and volunteer workers. A non employee or organization acting as the insured real estate manager, those having temporary custody.)
Insuring businesses formed or acquired during policy period
When named insured purchases al or a majority interest in an existing corporation or forms a new one during the policy period coverage is automatically provided unless a separate policy exists,
Businesses which qualify for automatic coverage under the policy are insured for 90 days or until policy expiry.
Section 3 limits of insurance
1 aggregate limit
2 each occurance limit
3 other policy limit
Section 4 CGL conditions
Bankruptcy or insolvency of insured or the insureds estate.
Canadian currency clause.
Changes
Duties in the event of occurrance offence claim or action
Promptly notify the insured of any occurrence which may result in a claim,
Promptly provide written notice when claim or action has been filed,
Immediately provide insurer with copies of any demands notices summonses or legal papers.
CGL CONDITIONS CONTINUED
Examination of your books and records
Inspections and surveys
Legal action against us
Other insurance
Premium audit
Premiums
Representations
Separations of insureds cross liability
Termination
Transfer of rights of recovery against others to us
transfer of your rights and duties under this policy.
Important factors to consider in purchasing liability insurance
How much Is enough? Take into account extent of previous awards made by the court for similar types of businesses, inflation, existence of insurance, territory of operations, ability to absorb certain losses.
Effect of judgment for damages on business
Fraudulent claims ( defence costs included, provided with services of professional adjusters who are trained to detect fraudulent claims.
Miscellaneous forms CGL claims made form
Addresses running claims costs that the CGL does not.
Features of this policy include
Coverage triggered when claim for damages made.
Coverage limited by retroactive date.
Reporting period can be extended for additional premium.
Should be recommended when insured is; going out of business, changing from a claims made to an occurrence form policy, replacing a claims made policy with another insurer.
Professional liability form
Focus is to provide payment for damages arising out of the rendering or failure to render professional services.
Categories of professionals are;
Those who administer Healthcare or other professional medical services
Those who give advice and counselling
A claim for damages can be commenced in tort or in contractThere are three recognized levels of performance under action in contract 1. complete or satisfactory performance 2. substantial performance 3. material breach
Directors and officers liability
Can be purchased by boards of directors to protect against liability for losses arising out of the failure to properly exercise their legal duties
