March 19, 2013
ISO Form Changes Commercial General Liability
In this article, we will highlight changes that have any significant impact and new endorsements to the form series. It goes without saying that any form that narrows coverage requires that we notify our insureds to avoid any gap in coverage as they renew on the new CGL edition date.
In April of 2013 the ISO modified the Commercial Property Forms. It was one of the biggest changes in forms that we have seen in years with the majority of forms taking on some type of change.
Effective April 2013, many of the Commercial General Liability forms also have a new edition date. Some of the changes are minor but carry new edition dates of existing form numbers, and there are some forms that are first being introduced. It is a multistate revision and some of the specific state forms have also taken a change or introduced new forms. Some of the ISO changes have already been adopted in insurance company forms while other changes represent clarification of the “intent” of the form.
There are new multistate endorsements that are being introduced:
- Primary And noncontributory — Other Insurance Condition Endorsement
- Additional Insured — Owners, Lessees or Contractors — Automatic Status for Other Parties When Required in Written Construction Agreement
- Total Pollution Exclusion For Designated Products Or Work Endorsement
- Liquor Liability — Bring Your Own Alcohol Establishments Endorsement
- Amendment of Personal and Advertising Injury Definition Endorsement
- Designated Location(s) Aggregate Limit Endorsement
Specifically we will highlight those changes that have any significant impact and new endorsements to the form series. It goes without saying that any form that narrows coverage requires that we notify our insureds to avoid any gap in coverage as they renew on the new CGL edition date. All of these changes will be discussed in more detail in the Insurance Community class on March 19th.
Liquor Liability Form Revisions
One of the areas that has taken on a significant change is in the area of Liquor Liability. There are several forms that have taken the new edition date including:
|Liquor Liability Coverage Form||CG 00 33 04 13|
|Liquor Liability Coverage Form||CG 00 34 04 13|
|Amendment Of Liquor Liability Exclusion||CG 21 50 04 13|
|Amendment Of Liquor Liability Exclusion — Exception For Scheduled Premises Or Activities||CG 21 51 04 13|
|Liquor Liability — Bring Your Own Alcohol Establishments||
CG 24 06 04 13
|Amendment Of Liquor Liability Exclusion||CG 29 52 04 13|
|Amendment Of Liquor Liability Exclusion — Exception For Scheduled Premises Or Activities||CG 29 53 04 13|
As with most liability changes there is case law that gives rise to the need for clarification and form revision. Some of the specific court cases relating to this change are:
- PENN-AMERICA INS.CO. v. PECADILLOS, INC. (27A.3d259 (2011) Superior Court of Pennsylvania;
- McGuire v. Curry and Park Jefferson Speedway, Inc., a South Dakota Corporation (766 N. W. 2d 501 (2009);
- SIMMONS V. HOMATAS (925 n. e. 2D 1089 (2010; 236 ill. 2D 459) Supreme Court of Illinois., to name a few.
In the case of PENN-AMERICA INS.CO. v. PECADILLOS, INC. (27A.3d259 (2011) Superior Court of Pennsylvania, two customers entered the bar after visiting several other drinking establishment where they drank in excess. They continued to drink at Pecadillos, became further intoxicated, and were asked to leave even though they were in no condition to drive. The patrons left, caused an accident, killed two individuals and injured two others. The insured argued that the allegations in the underlying action against them fell outside the related CGL policy's liquor liability exclusion. The court ruled that a “duty to defend” was triggered when an insured was alleged to have continued to serve intoxicated patrons and then ejected them in a dangerously inebriated condition.
In the case of McGuire v. Curry and Park Jefferson Speedway, Inc., a South Dakota Corporation (766 N. W. 2d 501 (2009), a racetrack employer allowed an unsupervised, underage employee access to alcoholic beverages. The employee was a runner hired to deliver alcohol and other supplies to the racetrack's concession stands and bars. One day after the employee's shift ended, he drove his vehicle off the racetrack's premises while intoxicated and injured a passenger on a motorcycle. The plaintiff's suit filed against the racetrack alleged negligent hiring, retention and supervision of an underage employee. The court concluded that the racetrack did have a duty to supervise the employee and to disallow access to alcoholic beverages.
In the last case, SIMMONS V. HOMATAS (et al On Stage Productions, Inc.,) (925 n. e. 2D 1089 (2010; 236 ill. 2D 459) Supreme Court of Illinois, the Illinois court had to rule on whether a business that does not serve alcoholic beverages but allows patrons to bring in alcohol is considered in the business of selling alcoholic beverages. In this case the club, operated by Stage Productions, is a nude strip club that does not serve alcohol but allows its patrons to bring their own alcohol and sells them set ups — providing glasses, mixers, ice, etc. Homatas and his companion brought in a fifth of rum and vodka and became intoxicated. They left the club and retrieved their car from valet parking. The valet parker opened the driver's door and told Homatas to leave the premises. Fifteen minutes later, Homatas collided with another vehicle, resulting in the death of four individuals.
The case had to deal with whether the business can be liable for injuries that arise, not as a result of serving alcohol, but as a result of actions in connection with allowing patrons to consume alcohol that they brought on the premises. The court concluded that the plaintiff's common law claims were not preempted by the state's Dram Shop laws. The court went on to state that the business was not in the business of selling liquor even though they provided the set ups for the liquor that was brought in by the patrons.
Due to these cases and others, the ISO has revised the Liquor Liability exclusion in the various GL coverage forms to clearly state that the Liquor Liability exclusion applies even if the claims against any insured allege the negligence or other wrongdoing in:
- The supervision, hiring, employment, training or monitoring of others; or,
- Providing or failing to provide transportation with respect to any person that may be under the influence of alcohol;
if the “occurrence” which caused the “bodily injury” or “property damage” involved that which is described in Paragraph (1), (2) or (3) of the exclusion.
There is further clarity that a Bring Your Own Alcohol Establishment (BYO) is not considered in the business of selling, serving or furnishing alcoholic beverages. There is a new endorsement available in the series that specifically deals with the BYO exposure titled: Liquor Liability Bring Your Own Alcohol Establishment.
Pollution Form Revisions
There are a couple of forms relating to Pollution that have been modified with the 4/13 change including:
|Pollution Liability Coverage Form Designated Sites||Cg 00 39 04 13|
|Pollution Liability Limited Coverage Form Designated Sites||Cg 00 40 04 13|
|Total Pollution Exclusion For Designated Products Or Work||Cg 21 99 04 13|
|Pesticide Or Herbicide Applicator — Limited Pollution Coverage||Cg 28 12 04 13|
In the Pollution Liability Coverage Forms CG 00 39 and CG 00 40 the “Aircraft, Auto, Rolling Stock or Watercraft” exclusion is revised to clarify coverage as relates claims for negligence in the “supervision, hiring, employment, training or monitoring of others” when the claim involves injury or damage arising out of the use of an automobile. This exclusion has been reviewed in prior form series including in 2000 and 2003. There is a new exclusionary endorsement introduced titled: Total Pollution Exclusion for Designated Products or Work CG 21 99. This new endorsement is similar to the CG 21 98 except that it limits the applicability of the exclusion to the specific product or work described in the schedule on the endorsement. Caution when reviewing the endorsement — it is broadening if the CG 21 99 replaces the CG 21 98. However, addition of the endorsement to a policy that does not contain the CG 21 98 would result in a reduction in coverage.
Additional Insured Endorsements
There are approximately 24 Additional Insured Endorsements that have taken the new edition date. These changes are due, in part, to the various state laws that have “anti-indemnification” laws that prohibit provisions in construction contracts which require one party to indemnify another against liability for the other party's own negligence or fault. Also, there are some states that prohibit providing insurance to an additional insured for the party's own negligence.
One of the clarifications in the new Additional Insured Endorsements is to add new language that will provide insurance to an additional insured “only to the extent provided by law.” Further clarification is that the coverage provided under the Additional Insured Endorsement cannot be broader coverage than that provided to the named insured. There is a new Additional Insured endorsement introduced in this form series titled: Additional Insured-Owners, Lessees or Contractors — Automatic Status for Other Parties When Required in Written Construction Contract Agreement (CG 20 38). This endorsement provides additional insured status to parties to whom the named insured has become obligated due to written contract or agreement to name an additional insured under their policy.
Primary and Non-Contributory — Other Insurance Endorsement CG 20 01 04 13 — New Form
A new form has been introduced to clarify that coverage is made available to an additional insured on a “primary and non-contributory” basis. This change is particularly important for the construction client because construction contracts oftentimes require that the additional insured is provided coverage on a “primary and noncontributory” basis. The provisions require that:
- The additional insured is a named insured on other insurance available to them; and
- A written contract or agreement has been entered into by the insured stating that the insured's policy will be primary and wound not seek contribution from any other insurance available to the additional insured.
There are several other forms that have taken a change in edition date that we will be discussing in our upcoming New Commercial General Liability Form class taught on March 19th. The class is being taught by Marjorie Segale, AFIS, CISC, CIC, RPLU, CRIS, ACSR, CISR. Marjorie is the Vice President and Director of Education for the Insurance Community Center and President of Segale Consulting Services, LLC.
This is a listing of the forms that have changed. If it form is marked in “red” it is a new form to the series.
|Commercial General Liability Coverage Form (Occurrence)||CG 00 01 04 13|
|Commercial General Liability Coverage Form (Claims Made)||CG 00 02 04 13|
|Owners And Contractors Protective Liability Coverage Form Coverage For Operations Of Designated Contracto||CG 00 09 04 13|
|Liquor Liability Coverage Form (Occurrence)||CG 00 33 04 13|
|Liquor Liability Coverage Form (Claims Made)||CG 00 34 04 13|
|Railroad Protective Liability Coverage Form||CG 00 35 04 13|
|Products/Completed Operations Liability Coverage Form (Occurrence)||CG 00 37 04 13|
|Products/Completed Operations Liability Coverage Form (Claims Made)||CG 00 38 04 13|
|Pollution Liability Coverage Form Designated Sites||CG 00 39 04 13|
|Pollution Liability Limited Coverage Form Designated Sites||CG 00 40 04 13|
|Underground Storage Tank Policy Designated Tanks||CG 00 42 04 13|
|Electronic Data Liability Coverage Form||CG 00 65 04 13|
|Product Withdrawal Coverage Form||CG 00 66 04 13|
|Limited Product Withdrawal Expense Endorsement||CG 04 36 04 13|
|Electronic Data Liability||CG 04 37 04 13|
|Primary And Non-Contributory — Other Insurance Endorsement||CG 20 01 04 13|
|Additional Insured Concessionaires Trading Under Your Name||CG 20 03 04 13|
|Additional Insured Controlling Interest||CG 20 05 04 13|
|Additional Insured Engineers Architects Or Surveyors||CG 20 07 04 13|
|Additional Insured User Of Golfmobiles||CG 20 08 04 13|
|Additional Insured Owners, Lessees Or Contractors Scheduled Person Or Organization||CG 20 10 04 13|
|Additional Insured Managers Or Lessors Of Premises||CG 20 11 04 13|
|Additional Insured State Or Governmental Agency Or Subdivision Or Political Subdivision — Permits Or Authorizations||CG 20 12 04 13|
|Additional Insured State Or Governmental Agency Or Subdivision Or Political Subdivision — Permits Or Authorizations Relating To Premises||CG 20 13 04 13|
|Additional Insured Vendors||CG 20 15 04 13|
|Additional Insured Mortgagee, Assignee Or Receiver||CG 20 18 04 13|
|Additional Insured Executors, Administrators, Trustees Or Beneficiaries||CG 20 23 04 13|
|Additional Insured Owners Or Other Interests From Whom Labor Has Been Leased||CG 20 24 04 13|
|Additional Insured Designated Person Or Organization||CG 20 26 04 13|
|Additional Insured Co-Owner Of Insured Premises||CG 20 27 04 13|
|Additional Insured Lessor Of Leased Equipment||CG 20 28 04 13|
|Additional Insured Grantor Of Franchise||CG 20 29 04 13|
|Oil Or Gas Operations Non-Operating, Working Interests||CG 20 30 04 13|
|Additional Insured Engineers, Architects Or Surveyors||CG 20 31 04 13|
|Additional Insured Engineers, Architects Or Surveyors Not Engaged By The Named Insured||CG 20 32 04 13|
|Additional Insured Owners, Lessees Or Contractors — Automatic Status When Required In Construction Agreement With You||CG 20 33 04 13|
|Additional Insured Lessor Of Leased Equipment Automatic Status When Required In Lease Agreement With You||CG 20 34 04 13|
|Additional Insured — Grantor Of Licenses — Automatic Status When Required By Licensor||CG 20 35 04 13|
|Additional Insured — Grantor Of Licenses||CG 20 36 04 13|
|Additional Insured — Owners, Lessees Or Contractors — Completed Operations||CG 20 37 04 13|
|Additional Insured — Owners, Lessees Or Contractors — Automatic Status For Other Parties When Required In Written Construction Agreement||CG 20 38 04 13|
|Exclusion — Designated Professional Services||CG 21 16 04 13|
|Amendment Of Liquor Liability Exclusion||CG 21 50 04 13|
|Amendment Of Liquor Liability Exclusion — Exception For Scheduled Premises Or Activities||CG 21 51 04 13|
|Exclusion — Financial Services||CG 21 52 04 13|
|Exclusion — Funeral Services||CG 21 56 04 13|
|Exclusion — Counseling Services||CG 21 57 04 13|
|Exclusion — Professional Veterinarian Services||CG 21 58 04 13|
|Exclusion — Diagnostic Testing Laboratories||CG 21 59 04 13|
|Total Pollution Exclusion For Designated Products Or Work||CG 21 99 04 13|
|Exclusion — Inspection, Appraisal And Survey Companies||CG 22 24 04 13|
|Exclusion — Professional Services — Blood Banks||CG 22 32 04 13|
|Exclusion — Testing Or Consulting Errors And Omissions||CG 22 33 04 13|
|Exclusion — Construction Management Errors And Omissions||CG 22 34 04 13|
|Exclusion — Products And Professional Services (Druggists)||CG 22 36 04 13|
|Exclusion — Products And Professional Services (Optical And Hearing Aid Establishments)||CG 22 37 04 13|
|Exclusion — Camps Or Campgrounds||CG 22 39 04 13|
|Exclusion — Engineers, Architects Or Surveyors Professional Liability||CG 22 43 04 13|
|Exclusion — Services Furnished By Health Care Providers||CG 22 44 04 13|
|Exclusion — Specified Therapeutic Or Cosmetic Services||CG 22 45 04 13|
|Exclusion — Insurance And Related Operations||CG 22 48 04 13|
|Exclusion — Failure To Supply||CG 22 50 04 13|
|Pesticide Or Herbicide Applicator — Limited Pollution Coverage||CG 22 64 04 13|
|Druggists||CG 22 69 04 13|
|Real Estate Property Managed||CG 22 70 04 13|
|Colleges Or Schools (Limited Form)||CG 22 71 04 13|
|Colleges Or Schools||CG 22 72 04 13|
|Professional Liability Exclusion — Computer Software||CG 22 75 04 13|
|Professional Liability Exclusion — Health Or Exercise Clubs Or Commercially Operated Health Or Exercise Facilities||G 22 76 04 13|
|Professional Liability Exclusion — Computer Data Processing||22 77 04 13|
|Exclusion — Contractors — Professional Liability||22 79 04 13|
|Limited Exclusion — Contractors — Professional Liability||22 80 04 13|
|Exclusion — Adult Day Care Centers||22 87 04 13|
|Professional Liability Exclusion — Electronic Data Processing Services And Computer Consulting Or Programming Services||22 88 04 13|
|Professional Liability Exclusion — Spas Or Personal Enhancement Facilities||CG22 90 04 13|
|Exclusion — Telecommunication Equipment Or Service Providers Errors And Omissions||CG22 91 04 13|
|Lawn Care Services — Limited Pollution Coverage||CG22 93 04 13|
|Limited Exclusion — Personal And Advertising Injury — Lawyers||CG22 96 04 13|
|Exclusion — Internet Service Providers And Internet Access Providers Errors And Omissions||CG22 98 04 13|
|Professional Liability Exclusion — Web Site Designers||CG22 99 04 13|
|Exclusion — Real Estate Agents Or Brokers Errors Or Omissions||CG23 01 04 13|
|Liquor Liability — Bring Your Own Alcohol Establishments||CG24 06 04 13|
|Amendment Of Personal And Advertising Injury Definition||CG24 13 04 13|
|Waiver Of Governmental Immunity||CG24 14 04 13|
|Amendment Of Coverage Territory — Worldwide Coverage||CG24 22 04 13|
|Amendment of Coverage Territory — Additional Scheduled Countries||CG24 23 04 13|
|Amendment Of Coverage Territory — Worldwide Coverage With Specified Exceptions||CG24 24 04 13|
|Amendment Of Insured Contract Definition||CG24 26 04 13|
|Limited Contractual Liability — Railroads||CG242 7 04 13|
|Designated Location(S) Aggregate Limit||CG25 14 04 13|
|Pesticide Or Herbicide Applicator — Limited Pollution Coverage||CG28 12 04 13|
|AMENDMENT OF LIQUOR LIABILITY EXCLUSION||CG29 52 04 13|
|AMENDMENT OF LIQUOR LIABILITY EXCLUSION — EXCEPTION FOR SCHEDULED PREMISES OR ACTIVITIES||CG29 53 04 13|
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