CG 00 01 AND CG 00 02–COMMERCIAL GENERAL LIABILITY COVERAGE FORMS ANALYSIS

(May 2011)

This analysis is of the December 2007 edition of these coverage forms. Changes from the December 2004 editions are in bold print.

SECTION II–WHO IS AN INSURED

1. This section identifies insureds with respect to this insurance. This applies to the entity or entities on the declarations:

a. If the named insured is an individual, that individual is the named insured as well as the named insured's spouse. They are insureds only with respect to operations of the business the named insured solely owns.

Example: Mr. John, a sole proprietor, sells farm produce. Both he and Mrs. John are insureds. In addition, Mr. John is the sole proprietor in another venture where he makes wood kitchen cabinets. Here again, both he and Mrs. John are insureds. However, if he and his brother own the carpentry business as a partnership, coverage does not apply to the partnership.

b. If the named insured is a partnership or joint venture, that partnership or joint venture is an insured. In addition, the named insured's members and partners, as well as their spouses, are insureds. Their status as insureds is limited to operations of the named insured's business.

Example: Mr. John and Mr. Joe are partners in a carpentry business. Both partners and their spouses are insureds with respect to conduct of the carpentry business. However, none of them are insureds under this coverage form for any personal exposures or for any other business activities.

Related Court Case: 270_C109, Partnership Personal Conduct Is Distinguished From Business Activity

c. If the named insured is a limited liability company, the limited liability company is an insured. In addition, members of the company are insureds but only with respect to conduct of the named insured's business. The named insured's managers are also insureds but only to the extent of their specific duties as managers.

d. If the named insured is any other organization, it is an insured. In addition, the executive officers and directors are insureds but only to the extent of their duties as such. Stockholders are also insureds but their status is limited to the extent of their liability as stockholders.

e. If the named insured is a trust, the trust is an insured. In addition, the trustees are insureds with respect to their duties within the trust

Related Court Case: 270_C187, Insurer Not Notified Of Trust Beneficiary Change (Classic)

2. Each of the following is also an insured:

a. Volunteer workers but only when performing duties related to the named insured's business. Employees, excluding executive officers and managers of a limited liability company, are insureds within the narrow range of activities within the scope of their employment or while conducting the named insured's business.

(1) Volunteers and employees are not insureds for bodily injury or personal and advertising injury:

• To the named insured, its partners or members.
• To another employee but only while that employee is in the course of his or her employment or performing duties related to conduct of the named insured's business
• To a named insured's volunteer worker but only while he or she is performing duties related to conduct of the named insured's business
• To consequential loss a relative of any co-employee or volunteer sustains that results from excluded activities described in the preceding bullet items
• Where an obligation exists to share damages with or repay others for damages because of injury described in all of the preceding bullet items
• When an employee or volunteer provides or fails to provide professional health care services

Example: The Hometowne Daily Journal is insured under a CGL Coverage Form. Joe shares some candy with Ken, a visiting salesman. Ken starts to choke. Joe, a trained EMT, attempts the Heimlich Maneuver. Unfortunately, Joe's efforts are unsuccessful and Ken dies before a city emergency unit arrives. Ken's family sues Joe when it learns that he did not administer the Heimlich Maneuver properly. Hometowne's CGL Coverage Form does not respond to this lawsuit.

(2) Volunteers and employees are not insureds for property damage to property owned, occupied or used by, rented to, or in the named insured's physical custody.

Note: It is important to understand how coverage extends to volunteers and their duties. Their covered duties are not the same as employee duties. Volunteers are usually involved in non-work activities, such as special events and charitable functions. For this reason, their covered duties are those that the business establishes for them.

b. Any party (other than an employee or volunteer) who acts as the named insured's real estate manager

Related Court Case: 270_C120, Hotel Held Not Covered Under Tailhook Association's Policy As Its "Real Estate Manager"

c. Any party that has proper temporary legal custody of a deceased named insured's property but only with respect to liability that arises out of or is caused by maintenance or use of that property and then only until a legal representative is appointed

d. A properly appointed legal representative for a deceased named insured but only while carrying out its duties as the legal representative.

Note: The legal representative assumes all of the deceased named insured's rights and duties. This goes beyond the standard insured status and extends to rights to cancellation, conditions and other elements assigned only to named insureds.

3. Any newly formed or acquired organization qualifies as a named insured if there is no other similar coverage available to it. This does not include partnerships, joint ventures or limited liability companies the named insured has majority interest in or owns.

a. This provision applies for only 90 days after the organization is formed or acquired, or until the end of the policy period, whichever comes first.

b. Coverage A does not apply to bodily injury or property damage that occurred before the organization was acquired or formed.

c. Coverage B does not apply to personal and advertising injury that arises out of an offense committed before the organization was acquired or formed.

No party is an insured concerning conduct of any current or previous partnership, joint venture, or limited liability company that is not on the declarations as an insured.

Note: In addition to the parties included as insureds as outlined above, ISO has produced numerous endorsements used to add a variety of additional insureds under certain circumstances or limited to specific purposes.

Related Article: 270.4-3, ISO Commercial General Liability Coverage Forms Available Endorsements And Their Uses