(April 2019)
The Insurance
Services Office (ISO) introduced the 04 13 general revision to the Commercial
General Liability coverage forms and endorsements which was the third such
change since 2001. The major changes the April 2013 edition makes compared to
the December 2007 edition primarily involve the following:
There are several
other primarily editorial or minor changes that are highlighted in the coverage
form analysis and in the list of endorsements. The impact of the change will
vary based on the type of operation.
Related
Articles:
CG 00
01 and CG 00 02–Commercial General Liability Coverage Forms Analysis
ISO
Commercial General Liability Coverage Forms Available Endorsements and Their
Uses
Exclusion c. Liquor Liability
The 04 13
edition incorporates the following changes into this exclusion.
1. The liquor exclusion applies when either of the following
is alleged:
Note: This could be a significant reduction
of coverage for certain operations. The liquor liability policy should be examined
to verify that it picks up this additional exposure.
2. The exclusion recognizes that some businesses allow alcohol
on its premises but do not actually serve or sell alcohol. This revision specifically
states that permitting a person to bring alcoholic beverages on the named
insured’s premises for the purpose of consuming them does not, “by itself,” result
in the operation being considered “in the business of selling, serving, or
furnishing alcoholic beverages.” This applies regardless of whether or not a
license is required or a fee for that activity is charged.
Note: Carefully consider the phrase “by itself.” This phrase
adds uncertainty to this fairly clear statement. It is stating that there must
be additional tests to determine if the operation is in the liquor-related
business but does not provide any guidance as to the further testing.
Exclusion g. Aircraft, Auto, or
Watercraft (5)(a)
The words “in
the state” with respect to auto licensing or garaging locations are removed.
Exclusion p. Electronic Data
Coverage is
expanded because the exclusion is changed to a
property damage only exclusion.
Exclusion q. Recording and Distribution
of Material in Violation of Statutes
The name has
been changed because violations of the Fair Credit Reporting Act are added to
the list of items not covered under this exclusion. This replaces CG 00 68–Recording And
Distribution of Material or Information in Violation of Law Exclusion that had been a mandatory endorsement.
Exclusion b. Material Published With
Knowledge of Falsity
The words “in
any manner” are added to emphasize that publishing of material includes any type
of publication.
Exclusion c. Material Published Prior to
Policy Period
The words “in
any manner” are added to emphasize that publishing of material includes any
type of publication.
Exclusion p. Recording and Distribution
of Material in Violation of Statutes
The name is
changed because violations of the Fair Credit Reporting Act are added to the
list of items to which this exclusion applies. This replaces CG 00 68–Recording And
Distribution of Material or Information in Violation of Law Exclusion that had been a mandatory endorsement.
4. Other Insurance b. Excess Insurance
(1) (b)
The words “by
attachment of an endorsement” are removed from the end of the sentence. This
means that this coverage is excess any time that the named insured is an
additional insured under another coverage form, regardless of whether or not
the additional insured is specifically endorsed to that other coverage form.
SECTION
V–DEFINITIONS
2. Auto b.
The words “in
the state” with respect to auto licensing or garaging locations are removed.
12. Mobile equipment
The words “in
the state” with respect to auto licensing or garaging locations at the end of
paragraph f. are removed.
CHANGES
IN THE ADDITIONAL INSURED ENDORSEMENTS
The following changes are added to a number of additional
insured endorsements.
1.
The insurance the endorsement provides applies only to the
extent that it does not conflict with the law. This means that an anti-indemnification
statute may be in place that prohibits the additional insured from passing on
any or all its liability obligations to the named insured (or any other party).
In that case, the additional insured endorsement applies to the extent that the
statute permits.
|
Example:
General Contractor, Inc. contractually requires all
subcontractors to add it as an additional insured for any activities for
which it is engaged. The contract is very broad. Heavy Lifting Subcontractor
signs the contract and adds General Contractor to its policy as an additional
insured. A loss occurs and General Contractor contacts Heavy Lifting’s
insurance carrier for defense. Before any defense can begin, Heavy Lifting’s
carrier must review the anti-indemnification statutes and determine if it can
proceed and to what extent. |
2.
The additional insured added may be added because of a
contract that requires the named insured to add the additional insured to its
policy. In that case, the coverage provided is limited to the insurance the
contract requires. It is no broader than what that specific contract requires.
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Example:
General Contractor, Inc. has used its contract for many
years. It requires that Heavy Lifting provide bodily injury and property
damage coverage for General Contractor, Inc. Coverage under Heavy Lifting’s
policy is denied when a personal injury suit is brought against General
Contractor, Inc. because the contract did not require that Heavy Lifting
provide personal injury coverage. |
Note:
Any risk that currently uses contracts to restrict its
liability should carefully review them to ensure that they use current coverage
terms. Many risks carry older insurance language forward into new contracts
that could now be very detrimental to their protection as additional insureds.
3.
The limits of insurance the additional insured endorsement provides
are no higher than the contract requires. However, that limit is subject to the
policy limit. Any and all limits provided to the additional insured do not
increase the policy limits of insurance.
|
Example:
General Contractor, Inc. requires its subcontractors to
protect it for up to $500,000. Heavy Lifting, Inc. has limits of
$1,000,000/$1,000,000/$1,000,000. A loss occurs and General Contractor must
pay $750,000. Heavy Lifting’s policy pays only up to $500,000 because that is
the limit the contract requires. However, that is further restricted because
Heavy Lifting’s policy previously paid out $600,000 of its aggregate in prior
losses. This means only $400,000 is available to pay for General Contractor’s
losses. |
Wording is added to most professional exclusion endorsement
to exclude claims for negligence on an insured’s part in
hiring, employing, training, supervising, and monitoring others who provide the
professional services the endorsement excludes.
|
Example:
Kendra hires Patricia as a cosmetologist. Patricia
provides references and promises to bring her license but never does. Kendra
is thrilled with Patricia until a client sues Patricia because she applied
wax in an unapproved and unsafe way. Kendra is very surprised when she is sued because of her negligence in hiring Patricia
who did not actually have a license! Kendra’s policy does not provide
coverage because of this added restriction. Note:
Kendra also does not have coverage under her professional liability
coverage because only licensed professionals are covered. |