Comparison Of The 2007 ISO-CGL Forms With The 2013 ISO-CGL Forms

Introduction

Revisions to the occurrence and claims-made versions of the 2007 ISO-CGL policy form were made in 2013. Most of the revisions were editorial in nature. A couple of the revisions, however, have an impact on coverage or clarify how the ISO intends coverage to apply. The significant coverage changes and clarifications are first summarized, then discussed in detail below.

Like its 1986, 1989/90, 1993, 1996, 1998, 2001, 2004 and 2007 counterparts, the 2013 ISO-CGL claims-made policy form contains features and provisions unique to claims-made coverage. These claims-made features will not be discussed in the following text, as all of the 2013 ISO-CGL form revisions apply to both the occurrence and claims-made policy formats.

Both the occurrence version (CG 00 01) and the claims-made version (CG 00 02) of the 2013 ISO-CGL form bear an edition date of April, 2013.

Summary of 2013 ISO-CGL Coverage Form Changes

The most significant coverage changes resulting from the 2013 ISO-CGL form revisions are summarized below:

·The liquor liability exclusion has been clarified to preclude coverage even when claims allege the insured was negligent in hiring, supervising or training employees or that the insured provided or failed to provide transportation to inebriated persons. The exclusion wording has also been revised to clarify that insureds who permit alcoholic beverages to be brought on premises (whether or not a fee or license is required) are not considered to be in the business of selling, serving, or furnishing such beverages;

·“Bodily injury” is now excepted from the electronic data exclusion; and

· Wording of the other insurance condition has been revised to clarify that coverage is excess over any other primary insurance to which the named insured has been added, regardless of the manner in which the additional insured status has been obtained.

Each of the above revisions is discussed in more detail below.

 

As with any change to underlying coverage, implementation of the 2013 ISO-CGL form creates a potential for coverage gaps. Some umbrella policies have been revised to conform to the prior CGL revisions, but have not yet been revised to conform to the 2013 ISO-CGL revisions. As always, the wording of umbrella policies should be compared with the wording of any underlying policies to identify potential coverage problems. The wording of endorsements should also be considered when evaluating the adequacy of coverage layers.

 

How To Use This Comparison

The coverage comparison below contains a brief summary of each section of the 2007 ISO-CGL policy form that was revised with the 2013 form revision. Following the summary is a concise discussion comparing the coverage provided by the 2013 ISO-CGL form revision with that of the 2007 version.

Coverage A – Exclusions

Liquor Liability

The liquor liability exclusion precludes coverage for bodily injury or property damage for which any insured under the policy may be held liable under liquor liability laws. Such laws generally include causing or contributing to the intoxication of any person, the furnishing of alcoholic beverages to a person under the drinking age or under the influence of alcohol, or any statute, ordinance or regulation relating to the sale, gift, distribution or use of alcoholic beverages.

Prior to introduction of the 2013 ISO-CGL policy form, it was unclear if the liquor liability exclusion would apply if a claim alleged that the insured was negligent in the hiring, training or supervision of employees who allowed others to become inebriated and subsequently cause injury to themselves or others. It was also unclear if the exclusion precluded coverage for claims alleging that the insured was negligent in providing or failing to provide transportation for persons under the influence of alcohol.

With the 2013 ISO-CGL form revision, and following several adverse court decisions that held insurers responsible for at least defending claims containing the above allegations, the liquor liability exclusion wording was revised to specifically state that the exclusion applies even if a claim contains allegations of wrongdoing or negligence in the supervision, hiring, employment, training or monitoring of others by the insured. It also applies if a claim contains allegations that the insured was negligent in the providing or failing to provide transportation to a person that may be under the influence of alcohol. As an example, if the insured hires a bartender that is negligent in his duties about serving minors or a bartender that the insured has failed to properly train when it comes to serving obviously intoxicated patrons, and this results in some injury or damage to an innocent third party, the liquor liability exclusion will still apply. In addition, if any insured fails to provide transportation to an intoxicated patron, and lets that person drive away, any resulting claim is going to be excluded. This added language effectively restricts coverage by broadening the application of the exclusion to situations where coverage was previously ambiguous.

Wording of the exclusion was also revised to clarify that, for the purposes of the exclusion, a business that permits a person to bring alcoholic beverages for consumption onto the premises (BYO) is not by itself considered to be one in the business of selling, serving or furnishing alcoholic beverages, even if a fee (such as a “corkage fee”) is charged or if the business is required to have a liquor license. This change is considered by ISO to be a broadening in coverage, since it now expressly states an exception to the exclusion.

It should be noted that if the insured owns or leases property where alcoholic beverages are manufactured, distributed, sold or served, and the law imposes liability on the insured if such operations are conducted illegally, the liquor liability exclusion may not apply. Coverage may depend on the circumstances and the insured's role in such unlawful operation. Special endorsements that provide coverage for liquor liability are available for insureds in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages.

Electronic Data

The 2007 ISO-CGL form excludes coverage for damages arising out of the loss of, loss of use of, damage to, corruption of, inability to access, or inability to manipulate electronic data.

While some court decisions have blurred the distinction between tangible property and intangible property (for example, computer hardware and computer software respectively), the fact remains that the CGL form was not meant to apply to damage to other than tangible property. The definition of “property damage” was revised in an earlier version of the CGL form to note that electronic data is not tangible property for the purposes of general liability insurance; this exclusion will complement that definition.

With the 2013 ISO-CGL form revision, bodily injury is now excepted from the exclusion, should damage from such injury result. This narrowing of the exclusion can be viewed as a broadening of coverage.

Conditions – Other Insurance

The “Other Insurance” condition in the 2007 ISO-CGL form states that coverage is excess over any primary insurance covering the insured's premises and operations to which the named insured has been added as an additional insured by attachment of an endorsement. Since some insurers provide the additional insured status in their policy form rather than by endorsement, the 2013 ISO-CGL has eliminated the restrictive “by attachment of an endorsement” wording. The new CGL policy's coverage will thus be excess over any other primary insurance to which the named insured has been added as an additional insured, whether by endorsement or by other means.