A

The separation of insureds clause should not be confused with putting additional insureds on a general liability policy or with cross liability coverage.

An additional insured should be treated as a separate insured in keeping with the separation of insureds clause. However, additional insureds are given their status through the use of endorsements and the coverage afforded to them is governed by the wording on those endorsements. If an additional insured makes a claim against the named insured or vice versa, the question of the insurer providing defense and payment of the claim should be answered with an examination of the additional insured endorsement, and not just the separation of insureds clause.

Cross liability coverage usually comes into play when a manufacturer and its subsidiaries are insureds on the same liability policy and process the same basic product. The liability policy provides defense and coverage if, for some reason, the manufacturer sues a subsidiary and vice versa through the separation of insureds clause. However, the cross liability coverage can be excluded through the use of endorsement CG 21 41 11 85, exclusion—intercompany products suits.

This endorsement effectively quashes the applicability of the separation of insureds clause, albeit on a limited basis. The applicability is limited because CG 21 41 states that the liability insurance does not apply to any claim for damages by any named insured against another named insured because of bodily injury or property damage arising out of the named insured's products, and included within the products/completed operations hazard. So, the exclusion is limited to the named insured's products hazard; all other cross liability exposures are covered through the separation of insureds clause.