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Introduction to second edition.

The commercial general liability policy is the linchpin of business insurance programs. Virtually all companies carry liability insurance, under either businessowners (BOP), commercial package, or monoline forms. Whether mom 'n pop operations or multinational corporations, they cannot afford to operate without general liability insurance.

In the 1970s the form was called the comprehensive general liability policy, but that title seemed to imply that all third-party liability risks were insured. And so it was changed to commercial general liability coverage form with the 1986 Insurance Services Office (ISO) edition.

The CGL policy remains one of the broadest coverage forms in the industry. It promises to pay "those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies." It also pledges to defend suits against the insured as long as the coverage may apply to the allegations.

Despite the breadth and depth of this coverage and its long history, the application of coverage continues to be debated in agent, insurer, and risk manager offices--as well as in the courtroom. The editors of the FC&S Bulletins field their share of questions about how various types of coverage could be interpreted. Many of those questions involve the CGL form.

Related Publications

Both the FC&S Bulletins and the National Underwriter Company's Commercial General Liability (CGL) coverage guide (Malecki and Flittner 2005) dedicate hundreds of pages to the CGL coverage form. The CGL coverage guide, currently in its Eighth Edition, is one of the most consistently used CGL reference sources in the industry. This Problem Issues In CGL book was developed as a logical progression from the best-selling CGL coverage guide.

In addition, the cumulative experience of the FC&S staff in dealing with CGL coverage problems was called upon in designing this book. Four areas that stood out as particular problems are discussed. They are:

* additional insureds and their interrelationship with contractual liability coverage,

* advertising injury coverage,

* business risk exclusions, and

* the occurrence trigger's impact on coverage.

Legal specialists who have worked in the respective areas cover each topic in-depth.

Additional Insureds/Contractual Liability

Any business that has entered into a contract with a vendor, subcontractor, or other business owner has been asked to provide both contractual liability coverage and additional insured status for one or more of its contracting partners. This is so much a regular part of the business landscape that risk managers and insurance agents seldom blink an eye when asked to provide the coverage. In fact, questions from underwriters about the contractual relationship and need to provide the coverage often are seen as needless efforts to prevent business from being conducted.

In reality, many risk managers, business owners, and insurance practitioners are unaware of how the interplay of these contractual requirements may impact the named insured--the party that should be most concerned about its exposures and how they are being managed. The section written by Carol P. Keough, Esq., outlines and explains many of the intricacies of this interplay.

Advertising Injury

Personal and advertising injury often are considered to be secondary coverages with which risk managers and even insurance experts have had relatively limited experience. However, statutory and business practice changes, as well as changes in the CGL form, have made this coverage area more vital than ever. Now, more than ever, businesses are able to access advertising venues that previously were the domain of advertising agencies and specialists. Daniel J. Langin, Esq., discusses these changes and the importance of understanding how the coverage may be applied to various exposures, as well as when additional risk management or insurance techniques should be employed.

Business Risk Exclusions

Five exclusions provide some of the hottest fodder for debate for businesspeople and insurance practitioners. They are exclusions j., Damage to Property; k., Damage to Your Product; l., Damage to Your Work; m., Damage to Impaired Property or Property Not Physically Injured; and n., Recall of Products, Work, or Impaired Property. Collectively referred to as the business risk exclusions, they provide a road map of the difference between the uninsurable cost of doing business and insurable business liabilities.

Despite the long-standing history of these or similar exclusions, they remain some of the most controversial in their application. Shaun McParland Baldwin, Esq., explains how these exclusions define the coverage that is available to commercial insurance clients.

What Is an Occurrence?

One of the first premises that is drilled into insurance novices is that bodily injury and property damage coverage must be triggered by an occurrence: an accidental happening that results in injury to a third party. Although the concept seems simple enough, the way in which occurrences are counted can have profound effects on insureds and insurers alike.

This subject can affect how many self-insured retentions or deductibles an insured must exhaust before tapping into the insurer's limits, as well as how soon excess coverage will be pierced. It can have profound effects on how much an insurance company must pay and an insured may collect. Michael F. Aylward, Esq., explains these concepts in detail with substantial case law references.

Forms and Endorsements

The CGL form (the December 2004 and December 2007 editions) is reproduced, along with some of the most often used additional insured endorsements, for valued reference sake.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2008 Gale, Cengage Learning. All rights reserved.

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Publication:Problem Issues in CGL, 2nd ed.
Date:Jan 1, 2008
Next Article:Additional insured and contractual liabilities: risk shifting--a critical part of commercial business.

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