COMPARE: CG 00 01–COMMERCIAL GENERAL LIABILITY COVERAGE FORM 04 13 EDITION TO THE 12 07 EDITION

(April 2022)

INTRODUCTION

The Insurance Services Office (ISO) introduced the 04 13 general revision to the Commercial General Liability coverage forms and endorsements which was the third such change since 2001. The major changes the April 2013 edition makes compared to the December 2007 edition primarily involve the following:

There are several other primarily editorial or minor changes that are highlighted in the coverage form analysis and in the list of endorsements. The impact of the change will vary based on the type of operation.

Related Articles:

CG 00 01 and CG 00 02–Commercial General Liability Coverage Forms Analysis

ISO Commercial General Liability Coverage Forms Available Endorsements and Their Uses

CHANGES IN CG 00 01 AND CG 00 02

Coverage A–Bodily Injury and Property Damage Liability

Exclusion c. Liquor Liability

The 04 13 edition incorporates the following changes into this exclusion.

1. The liquor exclusion applies when either of the following is alleged:

Note: This could be a significant reduction of coverage for certain operations. The liquor liability policy should be examined to verify that it picks up this additional exposure.

2. The exclusion recognizes that some businesses allow alcohol on its premises but do not actually serve or sell alcohol. This revision specifically states that permitting a person to bring alcoholic beverages on the named insured’s premises for the purpose of consuming them does not, “by itself,” result in the operation being considered “in the business of selling, serving, or furnishing alcoholic beverages.” This applies regardless of whether or not a license is required or a fee for that activity is charged.

Note: Carefully consider the phrase “by itself.” This phrase adds uncertainty to this fairly clear statement. It is stating that there must be additional tests to determine if the operation is in the liquor-related business but does not provide any guidance as to the further testing.

Exclusion g. Aircraft, Auto, or Watercraft (5)(a)

The words “in the state” with respect to auto licensing or garaging locations are removed.

Exclusion p. Electronic Data

Coverage is expanded because the exclusion is changed to a property damage only exclusion.

Exclusion q. Recording and Distribution of Material in Violation of Statutes

The name has been changed because violations of the Fair Credit Reporting Act are added to the list of items not covered under this exclusion. This replaces CG 00 68–Recording And Distribution of Material or Information in Violation of Law Exclusion that had been a mandatory endorsement.


Coverage B–Personal and Advertising Injury Liability

Exclusion b. Material Published With Knowledge of Falsity

The words “in any manner” are added to emphasize that publishing of material includes any type of publication.

Exclusion c. Material Published Prior to Policy Period

The words “in any manner” are added to emphasize that publishing of material includes any type of publication.

Exclusion p. Recording and Distribution of Material in Violation of Statutes

The name is changed because violations of the Fair Credit Reporting Act are added to the list of items to which this exclusion applies. This replaces CG 00 68–Recording And Distribution of Material or Information in Violation of Law Exclusion that had been a mandatory endorsement.

SECTION IV–COMMERCIAL GENERAL LIABILITY CONDITIONS

4. Other Insurance b. Excess Insurance (1) (b)

The words “by attachment of an endorsement” are removed from the end of the sentence. This means that this coverage is excess any time that the named insured is an additional insured under another coverage form, regardless of whether or not the additional insured is specifically endorsed to that other coverage form.

SECTION V–DEFINITIONS

2. Auto b.

The words “in the state” with respect to auto licensing or garaging locations are removed.

12. Mobile equipment

The words “in the state” with respect to auto licensing or garaging locations at the end of paragraph f. are removed.

CHANGES IN THE ADDITIONAL INSURED ENDORSEMENTS

The following changes are added to a number of additional insured endorsements.

1. The insurance the endorsement provides applies only to the extent that it does not conflict with the law. This means that an anti-indemnification statute may be in place that prohibits the additional insured from passing on any or all its liability obligations to the named insured (or any other party). In that case, the additional insured endorsement applies to the extent that the statute permits.

 

Example: General Contractor, Inc. contractually requires all subcontractors to add it as an additional insured for any activities it is engaged. The contract is very broad. Heavy Lifting Subcontractor signs the contract and adds General Contractor to its policy as an additional insured. A loss occurs, and General Contractor contacts Heavy Lifting’s insurance carrier for defense. Before any defense can begin, Heavy Lifting’s carrier must review the anti-indemnification statutes and determine if it can proceed and to what extent.

 

2. The additional insured added may be added because of a contract that requires the named insured to add the additional insured to its policy. In that case, the coverage provided is limited to the insurance the contract requires. It is no broader than what that specific contract requires.

 

Example: General Contractor, Inc. has used its contract for many years. It requires that Heavy Lifting provide bodily injury and property damage coverage for General Contractor, Inc. Coverage under Heavy Lifting’s policy is denied when a personal injury suit is brought against General Contractor, Inc. because the contract did not require that Heavy Lifting provide personal injury coverage.

 

Note: Any risk that currently uses contracts to restrict its liability should carefully review them to ensure that they use current coverage terms. Many risks carry older insurance language forward into new contracts that could now be very detrimental to their protection as additional insureds.

3. The limits of insurance the additional insured endorsement provides are no higher than the contract requires. However, that limit is subject to the policy limit. Any and all limits provided to the additional insured do not increase the policy limits of insurance.

 

Example: General Contractor, Inc. requires its subcontractors to protect it for up to $500,000. Heavy Lifting, Inc. has limits of $1,000,000/$1,000,000/$1,000,000. A loss occurs, and General Contractor must pay $750,000. Heavy Lifting’s policy pays only up to $500,000 because that is the limit the contract requires. However, that is further restricted because Heavy Lifting’s policy previously paid out $600,000 of its aggregate in prior losses. This means only $400,000 is available to pay for General Contractor’s losses.

CHANGES TO THE PROFESSIONAL LIABILITY EXCLUSIONS

Wording is added to most professional exclusion endorsement to exclude claims for negligence on an insured’s part in hiring, employing, training, supervising, and monitoring others who provide the professional services the endorsement excludes.

 

Example: Kendra hires Patricia as a cosmetologist. Patricia provides references and promises to bring her license but never does. Kendra is thrilled with Patricia until a client sues Patricia because she applied wax in an unapproved and unsafe way. Kendra is very surprised when she is sued because of her negligence in hiring Patricia, who did not actually have a license! Kendra’s policy does not provide coverage because of this added restriction.

Note: Kendra also does not have coverage under her professional liability coverage because only licensed professionals are covered.