Summary: The American Association of Insurance Services (AAIS) has revised its businessowners program. Because the program now allows for new businesses, such as small restaurants, to be written, the coverages and exclusions have been appropriately updated. Additionally, many of the earlier definitions have been changed to reflect the use of the Internet in business.

Although there are two forms, the BP 0100, which provides standard coverage, and the BP 0200, which provides special coverage, the liability coverages are the same in both. For convenience, references are to the BP 0200. Following is a discussion of the liability coverages, with differences from the earlier form (BP-200) noted.

Topics covered:

Additional definitions

Coverage L–insuring agreement

Exclusions applying to liability coverage

Additional Definitions

The definitions in this section are used with the liability coverages. Unlike the ISO businessowners form, which sometimes incorporates definitions into a coverage grant or into an exclusion, the AAIS program places them into the common policy definitions (see AAIS Businessowners—Property) or into this section. For the most, the definitions given here are those used solely in conjunction with the liability coverages and exclusions discussed in this article; however, some, such as “advertisement” (definition 1.) and “personal and advertising injury” (definition 16.) will be discussed in another article. See AAIS Businessowners—Coverages M, N, O, and P.

Because many of the definitions are close to those of either the ISO BOP or the CGL, we will not review all of them here. For more information, on the CGL, see Commercial General Liability Definitions.

2.”Auto” means a land motor vehicle, a trailer, or a semi-trailer which is designed for travel on public roads. “Auto” includes attached machinery and equipment.

However, “auto” does not include “mobile equipment”.

3.”Bodily injury” means bodily harm, sickness, or disease sustained by a person. “Bodily injury” includes death that results at any time from bodily harm, sickness, or disease.

However, “bodily injury” does not include mental or emotional injury, suffering, or distress that does not result from a physical injury.

Analysis

The definition of “auto” has replaced the word use with travel. This change clarifies that, although a bulldozer may be used on a public road, it certainly is not designed for travel. The definition adds that “mobile equipment”—another defined term—should not be included within the definition. Attached machinery and equipment, however, is considered part of the “auto.” A cherry picker attached to the bed of a truck is a common example.

Finally, note that the definition of bodily injury does not encompass mental injury that does not result from a physical injury. Because of the way the definition is worded, however, it leaves the door open for someone claiming mental distress as the result of a covered physical injury occurring to another person. If the intent was to preclude this type of claim, the wording should perhaps state that the mental injury must arise from covered physical injury to the person claiming mental injury.

The form contains a definition of “coverage territory” which includes the “basic territory” as used for the property coverages (the United States, its territories and possessions, Canada, and Puerto Rico). Of necessity, the coverage territory for liability is greater than for the property coverages, since it is possible the insured's products may be made in the United States , but sold abroad. The activities of a person temporarily out of the “basic territory” on the named insured's business are covered. As is common with coverage for bodily injury, property damage, or personal or advertising injury that occurs overseas, the insured's liability must be determined in a suit on its merits in the “basic territory,” or the insurer must agree to a settlement.

The AAIS form's definition of “covered contract” is similar to ISO'S “insured contract” found in both the businessowners and CGL forms. For more information on this definition, see Commercial General Liability Definitions.

The AAIS businessowners form, unlike the ISO businessowners form, defines “damages”: “compensation in the form of money for a person who claims to have suffered an injury.” The earlier form had money in quotation marks, which could have led to confusion, since “money” as defined includes traveler's checks and money orders held for sale—not the usual intended compensation resulting from a suit.

Following are several definitions having to do with persons (employees, insureds, etc.), so for that reason they are grouped together.