QQ, WDYT CGL. (Quick Question, What Do You Think) sponsored by

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1 QQ, WDYT (Quick Question, What Do You Think) CGL sponsored by

2 QQ WDYT CGL with Irene Morrill, CPCU, CIC, ARM, CRM, LIA, CRIS, CPIW Vice President of Technical Affairs Massachusetts Association of Insurance Agents AI status in landlord situation We have an Insured that owns a building under a trust. The building houses a restaurant (incorporated) owned and operated by the owner/trustee of the building. The carrier will not list the trust and the owner/trustee as a Named Insured as requested. However, the carrier has provided 2 forms they would use to add the trust and owner/trustee: CG2011 Additional Insured-Managers or Lessors of premises ; CG2026 Additional Insured-Designated Person or 1

3 AI status in landlord situation Would you please advise issues adding the trust and owner/trustee as Additional Insured under either Additional Insured Form vs listing as Named Insured. AI status in landlord situation ISO AI endorsements do not provide sole fault coverage... the entity named on CG2011 endorsement is ONLY an insured for that portion of the premises rented and only for liability arising out rental not necessarily sole fault of owner 2

4 AI status in landlord situation Landlords/owners have a right to ask for coverage But even though all the players seem to be the same It is best to have a separate CGL liability policy for pure lessor exposure AI status in landlord situation CG is really when there is no more specific endorsement and it has the more standard ISO AI language of limiting coverage for AI to only when YOU the named insured is at fault in whole or in part NO sole fault coverage for listed additional insured 3

5 AI status in landlord situation I think the CG Additional Insured Managers or Lessors is a better endorsement but I still believe there are nuances where being a named insured on one s own policy is best Please advise clarification on the following: I have an insured that has 2 different names in a business. The wife owns 100% of one business (office) and the husband owns 100% of the business. They have two different names. Who can be named insured Can they be combined on a CGL? (personally, I don t think that they can)please advise at your earliest. Thank you 4

6 Who can be named insured I wouldn t want additional insured I d want to be named insured but if it is TWO distinct businesses it is up to the company and remember now those two businesses share the aggregate limit. If the business are not similar if I were the underwriter I d say NO Irene, I have a commercial question. Who is an insured or not I recently quoted a real estate office that also does property management. Company T quoted the professional liability, but declined to write the premises and office exposure, due to the property management. I went to Company P, they quoted the premises, property and professional, but added an endorsement that excluded BI and PD at any location, that has to do with the management exposure. 5

7 Who is an insured or not I spoke to the underwriter and she said under the ISO form, who is an insured, real estate agents acting as property managers are insured s. That is true, but this is a business charging a fee for their services, and I m sure their clients do not want to submit a claim under their commercial liability policy for what a contractor caused. Who is an insured or not The other issue I have, not all carriers use the ISO form. Some voluntary writers use their own form, who knows what their forms say about, who is an insured. So to my questions, do you know if all versions of the ISO form read the same way about, who is an insured, and what would be your advice with this issue? 6

8 Who is an insured or not I agree with the underwriter from Penn America that an ISO CGL has stated as an insured under the Who is insured section of the CGL for many editions: b. Any person (other than your "employee" or "volunteer worker"), or any organization while acting as your real estate manager. But who in their RIGHT MIND wants to TRUST someone else to buy THEIR insurance. Ok, the company doesn t want to provide coverage Company T didn t. But Who is an insured or not A property owner s policy COULD revise ANY part of the CGL policy and merely state it uses copywritten material with permission which means what how is the wording actually stated? Also what limits are there in force at that location? Has policy premium been paid or is policy cancelled? 7

9 Who is an insured or not What does acting as your real estate manager mean or NOT mean Does it mean the same under Company P s policy that EXCLUDES it as it does under the CGL policy of property owner.. is exclusionary language broader than coverage language? Who is an insured or not And if they are property manager of buildings insured under a DP policy the property manager has NOT been added as an insured 8

10 Who is an insured or not There is a CGL class code and W/C also. I would want the real estate property management classified and paid for Someone must sell it Who can sue who under the CGL Question is as it relates to a non profit who has their CGL with Guard Insurance. No one at the company can answer my question so I ll ask you. As it relates to volunteers: I know the CGL will extend liability for vicarious liability claims that are brought due to the actions of a volunteer working within the scope of the organization. 9

11 Who can sue who under the CGL The question as it relates to BI is: Will the BI limit respond to a claim for injuries (apart from the med pay sub limit) if a volunteer were injured while working and had to file a loss for lost wages, etc.? Who can sue who under the CGL The CGL is a legal liability policy there is NO exclusion for injury TO volunteers as there is for injury to employees 10

12 Who can sue who under the CGL If an employee of non-profit injures a volunteer or one volunteer injures another volunteer the employee and volunteer is not an insured for this under the CGL but the employer/non-profit is. This language is in the who is insured section. Under an unendorsed CGL one insured can sue another insured so volunteer can sue non-profit and if nonprofit is negligent there will be compensation. There is no lost wages outside liability suit Who can sue who under the CGL If volunteer is injured by another volunteer or employee no insured status for negligent employee/volunteer but if employer/named insured IS legally responsible for negligent supervision or vicarious liability then CGL would respond 11

13 Who can sue who under the CGL See below, contract requirements from one of our client s customers, specifically the wording in red. We re waiting for a response from Company X regarding the GL, Umbrella and Auto policies to determine if our client is in compliance or would the policies need to be endorsed. I have a conference call with our client s General Counsel tomorrow to discuss the requirements including that wording. Who can sue who under the CGL Are you familiar with this language and it s intent? Client s policies shall include severability of interest or cross liability clause wording 12

14 Who can sue who under the CGL They want to make sure that the different insureds are treated singularly by the severability of interest clause The ISO CGL any edition calls it: 7. Separation Of Insureds Except with respect to the Limits of Insurance, and any rights or duties specifically assigned in this Coverage Part to the first Named Insured, this insurance applies: a. As if each Named Insured were the only Named Insured; and b. Separately to each insured against whom claim is made or "suit" is brought. Who can sue who under the CGL Unendorsed it is doing what the client wants unless company specific wording screws it up Bottom line only one limit of insurance per claim. Cross liability clause I think they want to make sure that one insured can sue another insured which the unendorsed CGL allows. Some companies add a cross liability exclusionary endorsement so watch out for that. 13

15 What does your client s business entail drones and CGL So we insure a photographer/videographer his CGL is with Hartford, and I am told that the 2 lb drone that he has and he sends up to take pics of me running in the road race, etc. is an aircraft and therefore excluded (personally I don t think a 2lb drone is an aircraft, but something much larger could be ) Do you have any thoughts on this I think this is a huge issue that no one is thinking about What does your client s business entail drones and CGL air craft [air-kraft, -krahft] Show IPA noun, plural air craft. any machine supported for flight in the air by buoyancy or by the dynamic action of air on its surfaces, especially powered airplanes, gliders, and helicopters. 14

16 What does your client s business entail drones and CGL The HO policy has an "exception for models and hobby"... due to a claim decades ago. But no exception for CGL and BOP. I ed Bill Wilson, IIABA...and he says that ISO is "aware" and as far as they are concerned...it's an aircraft... and I don't think they really care... :) What does your client s business entail drones and CGL The HO policy has an "exception for models and hobby"... due to a claim decades ago. But no exception for CGL and BOP. I ed Bill Wilson, IIABA...and he says that ISO is "aware" and as far as they are concerned...it's an aircraft... and I don't think they really care... :) 15

17 What does your client s business entail drones and CGL Could real estate agencies and other types of businesses that might want pictures be at risk??? Cyber issues and CGL exclusion I was wondering if someone to comment on the attached for me? Some at our agency think this is a huge implementation, and others feel we never relied on the CGL to cover Cyber Liab, so how would the exclusion affect us? I feel the exclusion could be a good thing as it forces the conversation about cyber liability with the insured, and we need to be offering cyber quotes with all PKG/BOP Policies. 16

18 Cyber issues and CGL exclusion But, that being said, an exclusion could open up coverage gaps as well as E&O issues to the agencies. Please let me know if there is someone I could discuss this with. Cyber issues and CGL exclusion 17

19 Cyber issues and CGL exclusion Cyber issues and CGL exclusion 18

20 Cyber issues and CGL exclusion Cyber issues and CGL exclusion 19

21 Cyber issues and CGL exclusion New endorsement deleting and rewriting the electronic data exclusion of past CGL editions including the 2013 Cyber issues and CGL exclusion Prior to this endorsement. some coverage for data breaches as a form of invasion of privacy had been acknowledged by most insurers. 20

22 Cyber issues and CGL exclusion The new language is "damages-based," like the current recall of products exclusion, rather than being directed to bodily injury and/or property damage. Cyber issues and CGL exclusion applicable to statutorily imposed damages and other mandated expenses in connection with laws governing data breaches. 21

23 Cyber issues and CGL exclusion paragraph (1) applies not only to a breach of electronic data security but to ANY information eliminating coverage for liability from allowing access to private information stored in any form. Cyber issues and CGL exclusion ease and convenience that large amounts of data can be stored electronically with the ease with which such data can be accessed in unauthorized fashion created the loss exposure that general liability insurers are no longer willing to insure automatically 22

24 Cyber issues and CGL exclusion Also excludes loss of use or data of course Cyber issues and CGL exclusion not exclusively target electronic data breach exposures, the exclusion does specifically name the types of stored data that have produced the most costly and widely publicized losses customer lists, financial information, and credit card information. 23

25 Cyber issues and CGL exclusion third paragraph of the exclusion addresses several categories of expense that have typically accompanied large-scale data breaches, especially those involving customers' or employees' credit account information. The exclusion will apply to "notification costs, credit monitoring expenses, forensic expenses, public relations expenses," and other expenses incurred by any party as a result of unauthorized access to information. Cyber issues and CGL exclusion Good news rewrite of exclusion STILL has exception for damages because of BI that had been added back into coverage under 2013 CGL edition! 24

26 Cyber issues and CGL exclusion Just additional reason to sell Cyber liability insurance AI and COI One of my larger accounts is a contractor that provides HVAC and generator maintenance services and I process hundreds of certificate of insurance requests per year. The GL policy includes broadening endorsements that include entities as AI on a primary/non-contributory basis including a waiver of subrogation all if agreed to in a written contract or agreement prior to loss. The issue that I am having is that nine times out of ten the entities that are requesting the certificate of insurance with the AI status requirement plus everything else under the sun are the building or property owners for the location where my client s direct client resides. 25

27 AI and COI In order for my client to gain access to the building to perform the services for their client they must present a certificate of insurance that meets the building owner s specific requirements. If my client can not then the building owner does not allow access to the property. I know there is no direct contract between my client and these building owners so I m thinking the only way I can issue the certificate indicating additional insured status is to endorse the building owner on as an additional insured. However, I ll be endorsing the policies almost on a daily basis. AI and COI At one point I was issuing certificates indicating additional insured status only if required in a written contract but I m thinking this implies additional insured status even though most likely there is none, which could be a problem for our agency. Do you agree that the only way to issue the COI that notes the AI status for the building owner is to endorse the policy especially if I know there is no direct contract with the building owner? I know there is that new GL endorsement that extends additional insured status to other parties but it still relates to a written contract. 26

28 AI and COI I ve discussed this at length with my manager and we would love any input you might provide, as we do not have too many contractor clients where this type of situation exists. AI and COI I think you do need the CG the new 2013 endorsement that creates automatic AI status for ANYONE...that a written contract requires. If your client is NOT involved in a written contract with the entity where they are doing work... then a specific endorsement would be necessary for that situation adding the building owner 27

29 AI and COI While we re here what is wrong with the CG in this case And while we are at it look at the 2004 v. the 2013 versions AI and COI CG Why this endorsement doesn t work in this question It DOES require agreement in WRITING 28

30 Review of ISO 2004 AI endorsements CG Blanket additional insured endorsement for prem/ops Like CG no sole fault coverage for additional insureds Review of ISO 2004 AI endorsements CG Requires written request Prem/op only 29

31 Review of ISO 2004 AI endorsements CG Took insured contract language that restricted broad contractual assumption of tort liability for a 3 rd party in the definition in CGL And MADE it an exclusion for AI Review of ISO 2004 AI endorsements Portion of insured contract definition CG The definition of insured contract states there is no assumption of liability for injury or damage arising from error or omission in the professional services provided to third parties by architects, engineers or surveyors 30

32 Review of ISO 2004 AI endorsements CG SO No contractual coverage And no Insured status coverage BI/PD/PIAI arising out of professional, engineering, or surveying services AI and COI 2013 version of AI endorsements Add language regarding state law Add language potentially restricting limit available to AI Add language potentially restricting coverage afforded by AI endorsement 31

33 AI (2013 version) and COI CG Owners, Lessees, Contractors Automatic AI Has same changes 1) Extent of law 2) Extent of coverage AI (2013 version) and COI CG Owners, Lessees, Contractors Automatic AI Even MORE language added To exclusion for Professional Liability of Architects, etc 32

34 AI (2013 version) and COI CG Owners, Lessees, Contractors Automatic AI Adds language regarding negligent Supervision, hiring, Training, monitoring, For claims involving BI/PD/PI&AI and rendering or failure to render professional services AI (2013 version) and COI CG Owners, Lessees, Contractors, Automatic AI Last part of automatic insured endorsement adds the 3 rd restriction of coverage to limits required in contract if less than policy limits 33

35 AI (2013 version) and COI 2013 changes to AI endorsement 1. Restrict AI coverage to that allowed by law 2. Restrict AI coverage limit to that required in contract 3. Limit of insurance provision also modified with these changes AI endorsements changed Endorsements changed 68 34

36 This HVAC client who had to prove AI status to building owners when doing work in tenant space. Was there a contract between the building owner and the tenant requiring all who do work for tenant provide additional insured status for building owner when working on the premises? We know that the CG won t work since HVAC client not direct contract with building owner what to do? Employer exclusion and AI status Once upon a time A general contractor (GC) wanted AI status. GC subcontracted out the steel fabrication and erection to a subcontractor (SC). SC subcontracted out the steel erection to a sub-subcontractor (SCC). GC s contract with SC required SC to obtain a CGL policy that would cover not only the SC and its employees, but also the GC 35

37 Employer exclusion and AI status Contract mandated that ANY sub-subcontractors that the subcontractor might further subcontract with are required to maintain the SAME limits of CGL insurance include GC as an additional insured (SCC contractually required to purchase insurance to cover itself, SC, and GC) SCC had the CG Automatic Additional insured endorsement attached to its CGL Employer exclusion and AI status An employee of SCC injured during operations. SCC employee sued GC and SC alleging breach of duties of care. (Yes this CAN happen 36

38 Employer exclusion and AI status SCC s CGL COULD respond if endorsed correctly since Coverage A exclusion for injury to employee would NOT apply Employer s liability exclusion only applies to THE employer of THE injured employee. If I injure YOUR employee and am AI on your CGL this exclusion only applies to YOU Employer exclusion and AI status Exclusion does NOT apply to liability assumed in contract 37

39 Employer exclusion and AI status This case was Westfield Insurance Co. v. FCL Builders, Inc. 948 N.E.2d 115(App. Ct., IL, 1 st Dist. 2d Div 2011) The SC was considered an automatic additional insured under SCC policy GC was NOT considered an automatic additional insured under SCC policy Also Brooklyn Hosp. Center v. One Beacon Ins (NY 2004) Same issue Employer exclusion and AI status Interesting to me how about YOU I wonder what agent stated on certificate??? I wonder when certificate was sent to GC by SCC if the column for AI status was designated??? 38

40 Employer exclusion and AI status We saw what Automatic AI Endorsement said FYI United Stationers Supply Co. v Zurich AM. Inc. CO., (Illinois 2008) Contract stated AI status required for W/C and EL, contractual liability insurance, auto liability guess what contractual liability insurance is NOT CGL Employer exclusion and AI status 2004 version OOOPS even the NAME of the endorsement is dangerous Required in construction agreement WITH YOU 39

41 Employer exclusion and AI status SCC might be performing operations for GC But SCC did NOT agree in writing WITH GC SCC agreed in writing with SC Employer exclusion and AI status 2004 version 1) Get AI status if contract in writing with NAMED Insured 2) prem/op only (ARE performing operations) 40

42 Employer exclusion and AI status 2004 version 3) AI only gets insured status if named insured at least PARTIALLY at fault no sole fault coverage Employer exclusion and AI status 2004 version Was there any way for SCC To meet contract requirement for GCC? 41

43 Employer exclusion and AI status New blanket AI endorsement in 2013 filing CG Title of endorsement Is different Automatic status for OTHER PARTIES when required IN A construction agreement Employer exclusion and AI status New blanket AI endorsement in 2013 filing CG Who become an Insured? 1) Anyone you are working for if YOU agreed in writing to provide insured status for THAT/SUCH person Same language as CG

44 Employer exclusion and AI status New blanket AI endorsement in 2013 filing CG Who become an Insured? 2) ANYONE or THING else that YOU are required to add as additional insured THIS language is what SCC needed in that court case Proper AI status when not directly contract CG Who become an Insured? New blanket AI endorsement in 2013 filing HURRAH!!!!! I would no longer Want the CG But ALWAYS ask for the CG for automatic AI status If the HVAC client had to sign a contract with tenant stating that building owner was granted AI status then this would be the automatic AI endorsement that agent needed! 43

45 Mopeds and cgl Insured is going to Bermuda and wants to rent a motorized oped/bicycle. Client has CGL in his name. I know that HO policy won t provide liability coverage because it s a motor vehicle and neither will MAP because it is not US but would CGL respond? Mopeds and cgl The CGL excludes BI/PD arising out of "autos" owned by, rented to, loaned to, used by an insured. CGL 2004/2007/2013 definition of auto: 2. "Auto" means: a. A land motor vehicle, trailer or semitrailer designed for travel on public roads, including any attached machinery or equipment; or b. Any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law in the state where it is licensed or principally garaged. However, "auto" does not include "mobile equipment". 44

46 Mopeds and cgl CGL considers motor vehicles designed for on road use to be autos and then there is the exclusion: Employer being sued We have been seeing the attached exclusion form on GLI policies. A few companies refuse to remove it from the policy and one decide to remove it for $ Have you seen this and what do you think about it? 45

47 Employer liability exclusion This endorsement is WAY beyond BI to one s employee It also excludes injury to Independent contractors Employer liability exclusion The unendorsed CGL WOULD entertain a suit by the independent contractor against the named insured. The CGL allows additional insureds to sue each other. This could be a dangerous endorsement!!!! 46

48 Employer liability exclusion A certificate holder wants proof of broad form contractual coverage is that covered under my insured s CGL or not? Employer liability exclusion Broad form contractual... is a "pre-simplified" term. Before simplification we had the "comprehensive general liability coverage".. WHICH WASN'T. Contract coverage was only the "incidental" and you needed a "broad form endorsement" which added broad from contractual, employees as insureds, fire legal... and a few other things that "escape" me know. 47

49 Employer liability exclusion The first "simplified" CGL was the "commercial general liability" policy...which was MORE comprehensive than the "comprehensive general liability policy"..its predecessor. "Broad form contractual" was "built in"... which we now know and love as the "insured contract" definition..which lists the incidentals..and then gives "best section" : Employer liability exclusion This doesn't SAY that it is broad form contractual... but it is. In fact there is a "contractual limitation" endorsement which revises the insured contract definition... removing the above and only giving the "incidental" contracts...leases, etc., 48

50 Employer liability exclusion Old terms "die hard"... businesses probably want us to say "broad form contractual"... and that IS what they have...but we don't say it.. just as the policy doesn't really discuss "fire legal liability"... like it did in the broad form endorsement... it merely states: Employer liability exclusion As long as the Contract limitation endorsement CG is NOT on the policy... and it IS a simplified ISO CGL... saying "broad form contractual" is not an "incorrect" thing but.. the words are not exactly in the policy as they WERE in the Broad Form endorsement that used to be added to the pre-simplified CGL. 49

51 Employer liability exclusion Employer liability exclusion Being an indemnitee doesn t guarantee defense Might be supplementary payment IF the Indemnitee follows ALL the requirements 50

52 Employer liability exclusion Being an indemnitee doesn t guarantee defense Or it reduces the Coverage A limit if it Meets this criteria If contract doesn t require defense then No coverage 51