CGL coverage forms

Format of CGL coverage forms

Noteworthy coverage features

Other coverage forms

Rating and classification information

CGL Coverage Forms

 The principal coverage forms of the current program are commercial general liability coverage forms CG 00 01 (occurrence form) and CG 00 02 (claims-made form). Each of these forms is comparable to the 1973 comprehensive general liability policy accompanied by the broad form comprehensive general liability endorsement, although there are some coverage differences.

 The two coverage forms mainly differ from each other with respect to their triggers of coverage. Form CG 00 01, like the 1973 comprehensive general liability policy, has an “occurrence” trigger, meaning that coverage is triggered by bodily injury (BI) or property damage (PD) that occurs during the policy period, regardless of when a claim is reported. Form CG 00 02 has a “claims-made” trigger meaning that coverage is triggered by BI or PD that occurs after the retroactive date (if any shown on the policy) and before the end of the policy period, and if a claim for damages because of the BI or PD is first made during the policy period or any extended reporting periods.

 Format of CGL Coverage Forms

 Section I of both CGL coverage forms contains the insuring agreements and related provisions, such as exclusions, for three coverages: coverage A, bodily injury and property damage liability; coverage B, personal and advertising injury liability; and coverage C, medical payments. Section I also contains supplementary payments provisions applicable to coverages A and B.

 Section II of the CGL coverage forms defines who is an insured, section III describes how the various limits of insurance apply, and section IV contains commercial general liability conditions. The policy definitions are noted in section V of form CG 00 01, in section VI of form CG 00 02. Section V of form CG 00 02 discusses extended reporting period provisions, which are a feature of claims-made coverage only.

 When either of the CGL coverage forms is arranged with a declarations page, common policy conditions form IL 00 17, and any applicable endorsements, the result, in ISO's terminology, is a “coverage part.” A coverage part can be issued by itself as a monoline policy, or it can be issued together with one or more coverage parts for other commercial lines (for example, commercial property and crime) as a multi-line policy.

 Noteworthy Coverage Features

 Among the most noteworthy features of the CGL coverage forms are the known loss provisions, Internet liability provisions, coverage for volunteer workers, a nearly absolute pollution exclusion, a general aggregate limit of insurance, certain definitions, and discussion of an indemnitee's damages and defense costs.

 The known loss provisions are a result of the Montrose decision from California. The provisions state that if the insured, or an employee authorized to give or receive notice of an occurrence or claim, knew that BI or PD had occurred prior to the beginning of the policy period, then any continuation of that BI or PD is deemed to have been known before the policy began. This prior knowledge means that the CGL form will not apply to the BI or PD claims (due to the known occurrence) that arise during the policy period.

 The Internet liability provisions are mainly located in the coverage B section (personal and advertising injury liability) of the CGL forms. These provisions are actually exclusions that prevent personal and advertising injury liability coverage for such exposures as electronic chatrooms, Internet type businesses, or bulletin boards.

 Volunteer workers use to be covered as insureds under the CGL forms through endorsements. The CGL forms have now done away with the need for these endorsements by automatically including volunteer workers (a defined term) as insureds while they are performing duties related to the conduct of the named insured's business.

 The pollution exclusion is intended to eliminate coverage for virtually any pollution incident, even a sudden and accidental one, other than certain off-premises accidents and injuries or damages arising out of the insured's products and completed operations. However, note that this exclusion (other than the portion relating to cleanup costs) can be deleted by endorsement CG 04 22 if the insured's operations do not pose a substantial pollution liability exposure and both the insured and the insurer approve of the exclusion's deletion. If the insured is for whatever reason not eligible for this endorsement, it can purchase pollution liability coverage under either of two separate coverage forms that ISO has prepared for the program. Both forms are written with a claims-made trigger. One of the forms, designated CG 00 39, covers bodily injury and property damage arising out of pollution incidents, as well as clean up costs. The other form, designated limited form CG 00 40, does not include clean up costs coverage.

 The general aggregate limit of insurance on each of the CGL forms puts a cap on the amount that the insurer will pay in a policy year for all coverage A and coverage B damages (other than damages within the products-completed operations hazard) and coverage C medical expenses; damages within the products-completed operations hazard are subject to their own aggregate limit. Also, the aggregate limits are combined single limits; that is, the stated limits apply to damages for both bodily injury and property damage. Note that, in contrast, the 1973 general liability policy had no general aggregate limit on coverage A bodily injury claims; the limit was on an each occurrence basis. This means that the insurer was subject to paying the each occurrence limit again and again during the policy period, as long as the injuries were the result of separate occurrences; under a current CGL form with its general aggregate limit, this would not happen.

 To illustrate, say that an insured had a $100,000 per occurrence limit for bodily injury under the 1973 liability policy; if four separate bodily injury claims were made against the insured during the policy period, each claim, assuming it is not excluded for some other reason, would be payable in the amount of $100,000. On the other hand, if that same insured today has a $300,000 general aggregate limit under a current CGL form and if four separate bodily injury claims occur during the policy period for $100,000 each, that fourth claim would not be payable since the limit of liability has been exhausted. The insured should be made aware of the fact that exhaustion of the current CGL coverage form's limits because of claims during the policy period is now a possibility.

 There are some definitions in the CGL forms that make the forms more up to date and relevant to modern business conditions; for example, “employee”, “executive officer”, and “leased worker”. Also, the forms take into account the existence of limited liability companies, temporary workers, and volunteers.

 The CGL forms specifically discuss the payment of defense costs for an indemnitee of the insured who is named as a party to a lawsuit against the insured. There are certain conditions that must be met if the insurer is to defend the indemnitee, but the basic issue of defense costs for those involved in insured contracts with the insured is not really in question any more.

 The December, 2007 edition of the CGL form revised some items of interest to note.

 CG 00 67 was an endorsement that ISO introduced in 2005 meant to exclude bodily injury, property damage, and personal and advertising injury arising out of any action or omission that violates or is alleged to violate the Telephone Consumer Protection Act (TCPA), the CAN-SPAM Act of 2003, or any other similar statute, ordinance, or regulation that prohibits or limits the sending, transmitting, communicating, or distribution of material or information. This endorsement has been withdrawn from use and its components have been incorporated into the CGL form itself. The exclusion sections of both coverage A and coverage B now contain the wording of CG 00 67. Under coverage A, exclusion (q) applies to the distribution of material in violation of statutes and under coverage B, exclusion (p) does the same.

 Coverage B has an exclusion (i) pertaining to personal and advertising injury arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights. The exclusion has now been revised by adding the following sentence to the exclusionary language: under this exclusion, such other intellectual property rights do not include the use of another's advertising idea in the insured's advertisement. This sentence was added to the exclusion to clarify the fact that “the use of another's advertising idea in your advertisement” is still included in the definition of personal and advertising injury. Exclusion i. will not be used to deny personal and advertising injury coverage to an insured should a claim arise against him based on the use of another's idea in the named insured's advertisements.

 Paragraph e. of the supplementary payments section of the CGL form pertains to costs taxed against the insured. Previous CGL forms simply declared that supplementary payments included “all costs taxed against the insured in the suit”. This perhaps led to some confusion as to what costs were to be considered as supplementary payments, that is, payments that do not reduce the limits of insurance. The CGL form now states that “all court costs taxed against the insured in the suit” are considered supplementary payments. Moreover, the revised form declares that “these payments do not include attorneys' fees or attorneys' expenses taxed against the insured. So, for clarification purposes, all court costs taxed against the insured, and not all costs in general taxed against the insured are considered supplementary payments. And, these court costs do not include attorneys' fees or expenses since such fees and expenses are already included as items the insurer promises to pay in the general “all expenses we incur” paragraph (a) of the supplementary payments section of the CGL form.

 The April 2013 edition of the CGL forms has also revised some items.

 The liquor liability exclusion has been changed to apply even if the claims against any insured allege negligence in the supervision, hiring, or training of others by that insured, or negligence in providing or failing to provide transportation with respect to any person that may be under the influence of alcohol. The exclusion also addresses the situation where the insured permits a person to bring alcoholic beverages onto the insured premises for consumption on the premises.

 The aircraft, auto, or watercraft exclusion is changed by deleting the reference to “in the state” since the CGL program is available in jurisdictions that are not states, such as the District of Columbia, Puerto Rico, Guam, and the Virgin Islands.

 The electronic data exclusion is revised by introducing an exception to the exclusion to provide that the exclusion does not apply to liability for damages because of bodily injury.

The recording and distribution of material or information in violation of law exclusion is revised. It now incorporates the wording of CG 00 68 into the exclusion, and the endorsement is withdrawn from use.

 ISO has also revised the material published with knowledge of falsity and material published prior to policy period exclusions for consistency with the definition of personal and advertising injury.

 Other Coverage Forms

 There are a number of other coverage forms in the CGL program in addition to forms CG 00 01 and CG 00 02. The pollution liability coverage form and its limited form counterpart were discussed earlier in these pages in connection with the pollution exclusion. There are also the following forms:

 CG 00 09: owners and contractors protective liability;

CG 00 33: liquor liability coverage form, occurrence coverage;

[IDL:CG 0034 04 13^CG 00 34^CG 00 34], liquor liability coverage, claims-made;

[IDL:CG 00 35 04 13.pdf^CG 00 35^CG 00 35] railroad protective liability coverage;

[IDL: These forms are all discussed in other articles throughout this section.

 Note that the CGL program of today does not offer counterparts to the owners, landlords, and tenants; manufacturers and contractors; or storekeepers liability forms. CGL coverage forms CG 00 01 and CG 00 02 are to be used in all cases where the insured desires, at the least, premises and operations liability coverage. If the insurer does not wish to provide, or the insured does not wish to purchase, products and completed operations coverage, such coverage can be excluded by endorsement, as can the personal and advertising injury, medical payments, and fire legal liability coverages that are otherwise automatically included. Similarly, the blanket contractual coverage can be reduced by endorsement to approximate the incidental contracts coverage found in the 1973 comprehensive general liability policy. These endorsements come from a portfolio of endorsements that ISO has prepared for the CGL program. For more information on the CGL endorsements, see [IDL:CGL Endts - Listing and Description.xml^CGL Endorsements, Casualty & Surety, Public Liability section, B.1 pages^CGL Endorsements]. .

 Rating and Classification Information

 In general, the CGL program is aimed at making the rating and classification processes easier to perform and more suitable for automation.

 ISO consolidated the various sublines of the previous general liability program into two sublines: premises-operations and products-completed operations. Moreover, the current program involves a single classification and a single exposure base for each risk or operation. So, the same exposure base and the same classification are used in determining both the premises-operations and products-completed operations premiums for a CGL coverage form.

 The exposure bases for the more common risks are : mercantile – gross sales; manufacturers – gross sales; contractors – payroll; subcontracted work – total cost; apartments – units; offices – area; lessor's risk – area. The exposure bases shown apply per 1,000 units of exposure, e.g., per 1,000 square feet of area or $1,000 of payroll, with the exception of the apartment units base. Information on rating procedures and advisory loss costs can be found in the commercial lines manual distributed by ISO; see division six, general liability.

 ISO's classifications are divided into five business groups, as indicated by the first digit in each code. These codes and their corresponding groups are as follows: 10000-19999: mercantile; 40000-49999: miscellaneous; 50000-59999: manufacturing or processing; 60000-69999: buildings or premises; 90000-99999: contracting or servicing. These five main business groups each have their own sets of classification and rating instructions in the current rules. For more information on classification, see the commercial lines manual distributed by ISO; see the classification table, explanatory rules.