Who Is an Insured Coverage and Executive Officer

March 21, 2012

I have an insured who owns several large buildings in his name as an individual; he leases the buildings to a corporation that he owns. The CGL coverage is written in the name of the corporation. I have asked the CGL carrier to add the owner, as an individual, to the policy as an additional named insured so that he would have protection for a loss caused by his negligence as an individual (e.g. improper maintenance of electrical panel causes fire).

The underwriter responded saying that since he is an officer of the corporation, our insured would have automatic general liability coverage under the corporation's policy. I disagree with his response. My thought is that coverage as an officer will only help him if the policyholder (the corporation) is negligent. I think we still need separate coverage for Mr. Doe either as a named insured on the corporation's policy or, if necessary, a separate CGL policy?

Please advise your thoughts.

Colorado Subscriber

If the named insured is a corporation, its executive officers and directors are insureds but only with respect to their duties as officers or directors. So, while the coverage for an officer does not depend on the named insured being negligent, especially since the policy upholds the separation of insureds, the officer does have to be negligent while performing his duties as an officer. For example, if the officer does maintenance work as part of his official duties and causes PD, he is an insured. But, if this maintenance work is just a spur of the moment thing where the regular maintenance man is off duty, that is not going to be considered an official duty. So, you have to see just what the officer does here and what his official duties are before he can be considered an insured.

If there is a grey area as to his duties as an officer, you are right that he should have either coverage as a named insured or under a separate policy.

 

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