Food Poisoning Claims and the BOP

Q

The definition of products/completed operations hazard on the 1997 ISO BOP liability form (BP 00 06 01 97) differs from that of the standard CGL coverage form. The BOP includes a paragraph at the end of the definition stating that BI and PD must occur away from the insured's premises unless the business involves selling, handling, or distribution of the insured's product for consumption on the premises. The CGL does not incorporate this wording.

I'm dealing with a claim now that involves food poisoning at a restaurant and need to determine which aggregate will be eroded. The account is written on a 1997 BOP form.

California Subscriber

A

The added language on the BOP form makes it clear that claims arising from food consumed on the premises fall within the products/completed operations hazard. Therefore, in the case you mention, the aggregate that is affected is the products/completed operations aggregate, which is the liability and medical expenses limit.

The CGL classification table for the restaurant codes includes similar language: “Coverage applies to bodily injury or property damage arising out of the products hazard whether such bodily injury or property damage occurs on the insured's premises or elsewhere.” The manual states that endorsement CG 24 07 01 96, products/completed operations hazard redefined, should be attached to policies using these restaurant codes. This endorsement redefines the products/completed operations hazard to include products consumed on the premises where they are sold, which results in the same situation as that provided by the BOP form. (If the endorsement were not attached, these claims payments would erode the general aggregate and not the CGL products/completed operations aggregate.)

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