Mr. Tilden, an expert witness on insurance coverage issues, also discussed a new errors and omissions exclusion for Internet service providers and Internet access providers, as well as a professional liability exclusion for Web site designers. Both exclude coverage for bodily injury, property damage, and personal and advertising injury arising from errors and omissions.

As Mr. Tilden explained, a CGL policy cannot cover all specialty exposures. Therefore, the industry is “differentiating the marketplace and saying if you have heavy Internet or any Internet exposures other than something like e-mail, you need to have an e-commerce based policy.”

Another e-commerce related change to the CGL policy expands the territory for coverage of personal injury and advertising injury, Mr. Tilden said. There are now three options: worldwide coverage, additional scheduled countries, and worldwide coverage with specifically excepted countries.

The definition of an insured is also changing, Mr. Tilden indicated. Trusts and trustees are now to be included automatically as insureds

By also including volunteers as insureds, “basically we're doing away with the endorsement technique of making them insureds,” Mr. Tilden explained.

The property damage exclusion has also undergone “drastic” change due to litigation, he noted. In a 1996 Maryland case, Aetna Ins. Co. vs. Aaron, an appellate court found that the exclusion did not apply because a third party–a condominium association–and not the owner had initiated a lawsuit to recover the cost of repairing a unit owner's property that was harming other units. The new version broadens the scope of the exclusion to bar such lawsuits by both owner and third parties, Mr. Tilden said.

Another important change is to the limited contractual liability coverage for personal and advertising injury. The new version states that the exclusion for such injuries does not apply to liability for damages that the insured would have in the absence of a contract. As Mr. Tilden explained, this exception “gives back coverage for false arrest, detention and imprisonment” by security firms–exposures that are omnipresent since the Sept. 11 terrorist attacks, he added.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, October 22, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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