(April 2016)
CG 00 01–COMMERCIAL GENERAL LIABILITY COVERAGE FORM
This coverage form begins by stating that certain of its
provisions restrict coverage. It encourages the named insured to carefully read
the coverage form in order to understand each party’s rights and duties and to
determine what is covered and not covered. It also points out that the terms
“you and your” refer to the named insured and that an insured is any person or
entity that qualifies as such under Section II–Who Is an Insured. The terms
“we, us, and our” refer to the insurance company that provides the coverage.
Reference is made to Section V–Definitions because understanding the
definitions is critical to understanding the coverage form.
SECTION I–COVERAGES
COVERAGE A–BODILY INJURY AND PROPERTY DAMAGE LIABILITY
1. Insuring Agreement
a. The insurance
company agrees to pay amounts the insured is legally obligated to pay as
damages for bodily injury and property damage that this insurance covers. It
also has the right and duty to defend the insured against any suit that seeks
those damages but only those suits that seek damages that this insurance
covers. The insurance company can investigate any loss and settle any claim or
suit that results at its discretion, but the amount it pays as damages is
limited as described under Section III–Limits of Insurance. Its right and, more
importantly, its duty to defend ends when the limit of insurance that applies
to pay judgments and settlements under Coverage A or Coverage B or medical
expenses under Coverage C has been exhausted. The insurance company has no
other obligation or liability to pay sums or perform acts or services except
for those specifically listed and described under Supplementary
Payments–Coverages A and B.
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Examples:
- The Road Runner sues Wiley Coyote for numerous attempts on his
life. The insurance company is not obligated to defend Wiley because the
CGL Coverage Form does not insure intentional acts.
- Feels Good Mutual insures Eric's Etchings under the CGL Coverage
Form with a $1,000,000 General Aggregate Limit. An explosion occurs as a
result of Eric's negligence and a number of persons are injured. In
addition, several adjacent properties are damaged. Each injured person
and property owner files a separate claim for its injuries and damages
and Feels Good begins to make settlements. Once the $1,000,000 General
Aggregate Limit is used up, Feels Good has no further obligation to pay
for injuries or damages or to defend against any lawsuits that might be
filed.
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Note: The
payments must actually be made or deposited with the court before the
obligation to defend ends.
Related Court Case: Defense Obligation Ended When Court Determined Insurer Did Not Have
Duty to Indemnify For Contamination
b. Coverage applies
to bodily injury and property damage subject to both of the following:
· Is caused by an occurrence that takes place in the
coverage territory
· Occurs during the policy period
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Example: Charlie's Custom
Machinery has an operation in Ireland that both manufactures and
distributes his products. There is no coverage for loss or injury in Ireland
because of the definition of coverage territory. However, Charlie
manufactures some products in the United States and sells them in Ireland.
Loss or injury from these products meets the definition of covered territory
as do loss or injury from products manufactured in Ireland that Charlie
distributes in the United States.
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Coverage applies only if, prior to the policy period, no
insured or employee authorized to give or receive notice of an occurrence or a
claim or knew that the bodily injury or property damage had occurred.
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Example: On 08/01/16, Keith’s
Excavating Company taps the gas line on Kingsley Drive. This results in gas
escaping from the line. Paul operated the backhoe at the time and was new on
the job. He knew that he caused some damage but did not notify anyone for
fear of losing his job. Keith’s policy period is 09/01/16 to 09/01/17. A gas
line explosion occurs on Kingsley Drive on 10/01/16. The investigation
reveals the damage to the gas line and Keith is sued for contributing to the
10/01/16 explosion. Because no one at Keith’s, in a position of
responsibility, knew about the prior year’s property damage, the current
policy period’s coverage responds to the 10/01/16 claim.
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If either an insured or an authorized employee knew
about any bodily injury or property damage, any continuation, change, or
resumption of such bodily injury or property damage during or after the policy
period, it is considered to have been known before the policy period.
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Example: Continuing the
example above, this time Paul tells Keith what he did. Keith notifies
the gas company to alert it to the problem. The gas company agrees to
investigate and adds it to the stack of items to check. When the explosion
occurs, Keith’s current policy does not respond because of the prior
incident. However, the policy that covered the prior period should respond.
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c. Bodily injury or
property damage that occurs during the policy period but that is unknown by any
insured or employee authorized to give or receive notices of claims prior to
the policy period to have occurred includes any continuation, change, or
resumption after the policy period ends.
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Example: Speedy Plumbing sends
Charlie to install a hot water heater in a vacant unit in the Golden Heights
Apartment building. Charlie does not close the faucet properly when he
leaves. Because the unit is vacant, nobody notices the constant drip that
occurs until the ceiling of the unit below it collapses. Speedy Plumbing’s
coverage runs from 10/01/16 to 10/01/17. Charlie installed the water heater
on 09/15/16 and the ceiling collapsed on 10/30/16. The policy that runs from
10/01/16 to 10/01/17 pays the loss. On 10/15/17, the tenant in the previously
vacant unit falls through the floor of his unit into the one below it. The
claims adjuster determines that the water leak weakened the floor joists and
Speedy Plumbing is sued again. While the injury occurs on 10/15/17, the
policy that ran from 10/01/16 to10/01/17 responds because this injury is a
continuation of the prior loss.
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d. Bodily injury or
property damage is considered known at the earliest date when any insured
defined in the paragraph 1. Of Section II–Who Is an Insured or an employee
authorized to give or receive notices of claims:
- Reports any part of any injury or damage to
the current insurance company or any other company
- Receives a written or verbal demand or claim
for damages
- First becomes aware in any other way that
bodily injury or property damage either has occurred or has begun to occur
Related Court Case: Known Injury or Damage Not Excluded In Continuous or Progressive Damage
Loss
e. Bodily injury
damages include damages that any person or organization claims for care, loss
of services, or death that results from the bodily injury at any time.
SECTION V–DEFINITIONS
Defined words are used throughout the coverage form. Some
of the definitions expand coverage while others restrict coverage but all are
designed to provide a clearer understanding of the coverage intention.
Twenty-two terms are defined.
13. Occurrence
This is an accident. It includes continuous or repeated
exposure to essentially the same harmful conditions.
