Chapter Eight

CGL Part II
 Commercial General Liability
Insurance Part II
• Who is insured
• Limit of Insurance
• CGL Conditions
• Claims-made Provisions
• CGL Endorsements
• Rating CGL Coverage
 I Who is insured
• Persons who receives insured status
through the named insured
– An individual
– A partnership or a joint venture
– A limited company
• Employee of the named insured
– Temporary workers
– Co-employee and related exclusions
• Other persons and organizations
 II Limits of Insurance
• General Aggregate Limit (Premises and
Operation Coverage)
– Personal and advertising Injury( coverage B)
– Each occurrence (coverage A and C)
• Damage to PRTU limit
• Medical Expenses (coverage C)
• Products-completed operations Aggregate Limit
– Each occurrence
• Page 192
 III CGL Conditions
• Duties in the event of occurrence, offence, claim
or suit
– Notice of an occurrence
– Details of claims of suit
– Cooperation with insurer
• Other insurance
– When CGL is excess
– Method of sharing
• Separation of insureds
• Right of Subrogation
 Cont’d
• Bankruptcy
• Legal action against us
• Premium audit
• Representation
• When we do not renew
IV Claims-made Coverage Form
• The occurrence coverage form
– Long-tail claims
• Claims-made coverage form
– Claims-made trigger
– Retroactive date
– Extended reporting period
• Claims-made trigger
– Claim first made against any insured during policy
period or extended reporting period
• Retroactive date (injury)
– No retroactive date
– Same as inception date of policy
– Earlier than inception date of policy
• Extended reporting period (claims)
– Basic tail
– Supplemental tail
 V CGL Endorsements
• State endorsements
• Exclusion endorsements
• Classification endorsements
• Other endorsements
 VI Rating CGL Coverage
• Premium = rate x rate exposure
– Rate– nature
• Premise-operation rate
• Products-completed work rate
– Rate exposure – size
• Premium Base– measuring rate exposure
– Gross sales—stores
– Payrolls – contractors
– Areas or number of building – hotels
– Number of admission – exhibition, concerts
• Other rating factors
– Limit, coverage, deductible, occurrence or claims-made
 VII Miscellaneous Liability
Coverage Forms other than CGL
• Liquor liability coverage form
• Products/completed operations liability
coverage form
• Owners and contractors protective liability
coverage form
• Railroad protective liability coverage form
• Pollution liability coverage form
 Applications -- 1
• S&S is a bar located in a leased building and insured under a
CGL policy that contains no endorsement. Explain whether each
of the following liability claims against S& S would be covered
under S&S CGL policy.
– S&S provides its customers with valet parking in a lot on S&S
premises. While one of S&S employee was parking a
customer’s car, he negligently struck and injured a pedestrian.
Claim were made against S&S by the following persons.
• the pedestrian, for bodily injury
• the customer for damage to her car
• the employee, for injuries he sustained in the accident
– while loading an S&S truck, an S&S employee negligently
dropped a box of frozen fish and broke the foot of a passerby.
– An S&S bartender served liquor to a patron who was obviously
intoxicated. After the patron left S&S, he attempted to drive
home and injured another motorist. The injured motorist sued
S&S.
 Applications -- 2
• Explain whether each of the following liability losses
incurred by AA company, a manufacturer, would be
covered by its CGL coverage form.
– AA sold one of its factories without revealing to the buyer a
latent fire hazard of which AA was aware. As a result of the
latent hazard, the building caught fire several months after the
buyer occupied the factory, and the buyer won a judgment
against AA.
– AA sold a heating system, made by AA in the United States, to
a customer in Sweden. Following installation, the system
exploded during operational testing by the buyer, killing
workers whose survivors won a judgment against AA in a US
court.
– AA sold a steam boiler to a shopping mall in New Jersey. In its
first winter of operation, the boiler suddenly cracked because
of a manufacturing defect. The shopping mall had to be closed
for one weekend until heat could be restored. The mall
merchants won a judgment against AA for loss of income due
to the shutdown.
 Applications -- 3✓
• Indicate whether each of the following would fall within
the “products-completed operations hazard” as defined
in the CGL policy.
– while inside a home improvement store, a woman was injured
by a box that fell off a storage rack and struck her on the head.
– A three-year-old boy that was shopping with his parents in
Tina’s Toy Store choked on a small plastic figurine that was the
store’s merchandise. The accident occurred while the family
was waiting in the checkout line to buy the figurine.
– Bill bought an electric drill at independent Hardware Store.
When Bill was using the drill to build a bookcase in his home,
he received a serious electrical shock that resulted from a
manufacturing defect in the drill. The electrical shock caused
Bill to suffer permanent physical impairment.
 Application 4✓
• Beta Pharmaceutical Company replaced its prior claims-
made CGL policy with an occurrence basis CGL policy.
Beta chose not to purchase the supplemental extended
reporting period from the claims-made insurer, believing
that the basic extended reporting period would meet its
needs. State whether each of the following claims would
be covered under Beta’s prior claims-made CGL policy
including its basic extended reporting period. If a loss is
not covered under the prior policy, explain why.
– Two years after the claims-made policy period expired, claim
was first made for an injury that occurred five months after the
claims-made policy expired. (not covered. Injury occurred after policy expired)
– Three years after the claims-made policy period expired, claims
was first made for an injury that occurred and was reported to
the insurer two weeks before the claims-made policy expired.
(covered. Occurred and reported before policy expired; within 5 years after expiration, that is basic extended reporting period)
 Cont’d
• Two years after the claims-made policy
period expired, claim was first made for an
injury that occurred five months after the
claims-made policy expired.
• Three years after the claims-made policy
period expired, claims was first made for
an injury that occurred and was reported
to the insurer two weeks before the
claims-made policy expired.
• 第六十五条 保险人对责任保险的被保险人给第三者造成的损害，可以依照
法律的规定或者合同的约定，直接向该第三者赔偿保险金。
责任保险的被保险人给第三者造成损害，被保险人对第三者应负的赔偿
责任确定的，根据被保险人的请求，保险人应当直接向该第三者赔偿保险金。
被保险人怠于请求的，第三者有权就其应获赔偿部分直接向保险人请求赔偿
保险金。
责任保险的被保险人给第三者造成损害，被保险人未向该第三者赔偿的，
保险人不得向被保险人赔偿保险金。
责任保险是指以被保险人对第三者依法应负的赔偿责任为保险标的的保
险。
第六十六条 责任保险的被保险人因给第三者造成损害的保险事故而被
提起仲裁或者诉讼的，被保险人支付的仲裁或者诉讼费用以及其他必要的、
合理的费用，除合同另有约定外，由保险人承担。