Summary: The commercial general liability (CGL) coverage forms, CG 00 01 04 13 and CG 00 02 04 13, offer the same coverages: bodily injury and property damage liability, personal and advertising injury liability, and medical payments. The supplementary payments offered by the two forms and the definitions that reside in the two forms are the same. But, there are differences: the trigger of coverage, some conditions, and the extended reporting periods found in the claims-made version of the CGL form. This article will highlight the differences, reproducing only those parts in the CGL form CG 00 02 that are unique to the claims-made version.
Topics covered:
Considerations in issuing claims-made policies
|Coverage A Trigger b. This insurance applies to “bodily injury” and “property damage” only if:
(1) The “bodily injury” or “property damage” is caused by an “occurrence” that takes place in the “coverage territory”;
(2) The “bodily injury” or “property damage” did not occur before the Retroactive Date, if any, shown in the Declarations or after the end of the policy period; and
(3) A claim for damages because of the “bodily injury” or “property damage” is first made against any insured, in accordance with paragraph c. below, during the policy period or any Extended Reporting Period we provide under Section V – EXTENDED REPORTING PERIODS.
c. A claim by a person or organization seeking damages will be deemed to have been made at the earlier of the following times:
(1) When notice of such claim is received and recorded by any insured or by us, whichever comes first; or
(2) When we make settlement in accordance with paragraph a. above.
All claims for damages because of “bodily injury” to the same person, including damages claimed by any person or organization for care, loss of services, or death resulting at any time from the “bodily injury”, will be deemed to have been made at the time the first of those claims is made against any insured.
All claims for damages because of “property damage” causing loss to the same person or organization will be deemed to have been made at the time the first of those claims is made against any insured.
b. This insurance applies to “bodily injury” and “property damage” only if:
(1) The “bodily injury” or “property damage” is caused by an “occurrence” that takes place in the “coverage territory”;
(2) The “bodily injury” or “property damage” did not occur before the Retroactive Date, if any, shown in the Declarations or after the end of the policy period; and
(3) A claim for damages because of the “bodily injury” or “property damage” is first made against any insured, in accordance with paragraph c. below, during the policy period or any Extended Reporting Period we provide under Section V – EXTENDED REPORTING PERIODS.
c. A claim by a person or organization seeking damages will be deemed to have been made at the earlier of the following times:
(1) When notice of such claim is received and recorded by any insured or by us, whichever comes first; or
(2) When we make settlement in accordance with paragraph a. above.
All claims for damages because of “bodily injury” to the same person, including damages claimed by any person or organization for care, loss of services, or death resulting at any time from the “bodily injury”, will be deemed to have been made at the time the first of those claims is made against any insured.
All claims for damages because of “property damage” causing loss to the same person or organization will be deemed to have been made at the time the first of those claims is made against any insured.
Analysis
There are some important points to consider here. Note that, even though this is a claims-made policy, the bodily injury and property damage must be caused by an “occurrence”. The claims-made trigger of coverage under CG 00 02 is that the injury or damage has to arise from an accident on the part of the insured.
Like many independently filed claims-made insurance policies, ISO's claims-made coverage form has a provision for imposing a retroactive date. The retroactive date is the date that defines the extent of coverage for claims resulting from prior acts, i.e., occurrences that happened prior to the inception of the policy in effect at the time the claim is made. The retroactive date provision of the current ISO claims-made form is located in the insuring agreements; it states that the insurance applies to bodily injury or property damage only if the injury or damage did not occur before the retroactive date, if any, shown in the declarations. Thus, if a claim is made for bodily injury or property damage that occurred before the retroactive date, the policy will not respond, even though all other requirements of the claims-made trigger have been met.
When issuing a policy to a new insured, the insurer is free to impose whatever retroactive date it deems appropriate, just as the insured may request (though not necessarily receive) whatever retroactive date it deems in its best interests. Once a retroactive date has been established, however, ISO rules permit the date to be advanced only with the written consent of the first named insured and then, only if there is a change in carrier; or, if there is a substantial change in the insured's operations which results in an increased exposure to loss; or, if the insured fails to provide the company with information the insured knew or should have known about the nature of the risk that would have been material to the insurer's acceptance of the risk; or if the insured fails to provide information requested by the insurer.
The coverage trigger under this claims-made form is a “claim for damages.” Although the named insured is required, by another provision in the policy, to notify the insurer as soon as practicable of any occurrence that may result in a claim, notification of an occurrence or offense alone does not trigger coverage. There must be an actual claim for damages; and, quite importantly, it is the first making of a claim for damages that activates the policy's coverage process.
Also, the language of the claims-made trigger does not require that notice of a claim be in writing. However, the ISO form states that notice of claim must be received and recorded. The provision in the claims-made form respecting duties of the insured in the event of a claim also requires the insured to “immediately record the specifics of the claim and the date received” and provide written notice of the claim to the insurer as soon as practicable.
There are other provisions to note in the claims-made insuring agreement. First, all claims for damages because of bodily injury to the same person, including damages claimed by any person or organization for care, loss of services, or death resulting at any time from the bodily injury, will be deemed to have been made at the time the first of those claims is made against any insured. Second, all claims for damages because of property damage causing loss to the same person or organization will be deemed to have been made at the time the first of those claims is made against any insured.
An example of how the first provision might apply is as follows: A person injured by the insured's product first makes claim for resulting medical expenses a few months after the injury occurs, and those expenses are payable under the policy in effect at the time the claim for damages is made. If, in a later policy period, the claimant dies from his earlier injuries and his estate makes claim against the insured for loss of services and funeral expenses, that claim will be deemed to have been made at the time the first claim was made. So, the second claim will be payable under the policy in effect at the time the first claim was made. It will not be payable under the policy in effect at the time the second claim was made, and the additional claim will be subject to the applicable limits of liability of the previous policy.
The second provision has much the same effect, with respect to property damage claims. If, for example, a person who has already made a claim for property damage makes a subsequent claim for property damage arising out of the same occurrence, the subsequent claim will be treated under the form as though it was made at the time of the first claim.
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