2013 CGL CHANGES - PART 1 SPONSORED BY

Transcription

1 2013 CGL CHANGES - PART 1 SPONSORED BY

2 2013 ISO CGL...friend or foe Overall changes with Irene Morrill, CPCU, CIC, ARM, CRM, LIA, CRIS, CPIW Vice President of Technical Affairs Massachusetts Association of Insurance Agents This program is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. With special thanks to the Insurance Services Office, Inc. for advance information, continued support, and permission to use their forms and information. 1 contents Liquor liability and the CGL changes to policy MA mandatory endorsement old and new BYOB endorsement Some broadening changes Electronic data exclusion Other insurance condition 2 1

3 contents New endorsements CG Total Pollution Exclusion for designated products v. Total pollution exclusion CG Amendment to AI/PI definition 3 contents Pollution Liability Coverage Form changes Expanded exclusion including negligent supervision/hiring Primary and non-contributory endorsement How it applies Potential problems Miscellaneous 4 2

4 Liquor and the CGL policy 2007/2004 CGL language Only exclude in the BUSINESS 5 Liquor and the CGL policy Still have host liquor Could have open house and serve liquor 6 3

5 Liquor and the CGL policy Even though exclude in the business was still Tested in court Penn-America Ins. CO v. Peccadillos (PA 2011) Sell alcohol served intoxicated patron who got in fight insured asks them to leave but does NOT call taxi or police. Intoxicated patron drove away caused auto accident where driver of other vehicle died 7 Liquor and the CGL policy Penn-America Ins. CO v. Peccadillos (PA 2011) Insured wants CGL to respond as incident not part of liquor exclusion! Claim for negligence of ejecting patrons rather than summoning the policy when insured KNEW patrons would drive (the old negligent supervision issue). So company HAD to defend! 8 4

6 Liquor and the CGL policy McGuire v. Curry S.D Employer provided underage employee with unsupervised and unrestricted access to alcohol storage facility. Employee drank then drove after shift ended causing accident with motorcycle. Employer sued for negligent hiring and negligent supervision of the employee. Court found employer had duty to supervise 9 Liquor and the CGL policy Essex Ins. Co v. Cafe Dupont LLC, D.D.C 2009 Nightclub (whose liquor liability coverage had been canceled) sued for failing to prevent a patron from becoming intoxicated and for failing to detain the patron or arranging alternative transportation 10 5

7 Liquor and the CGL policy Just as a few editions ago the auto exclusion was expanded to include Negligent supervision Negligent hiring So too is NEW language needed to add to the liquor exclusion to make sure that those IN the BUSINESS of alcohol do not find ANY coverage regardless of what happened to liquor liability policy 11 Liquor and the CGL policy 2013 language added to CGL liquor exclusion 12 6

8 Liquor and the CGL policy Add language: Exclusion APPLIES for Allegations of insured s negligence in hiring training supervising 13 Liquor and the CGL policy Add language: Exclusion APPLIES for Allegations of insured s negligence in Providing or Failure to provide transportation to intoxicated people 14 7

9 Liquor and the CGL policy 2013 language added to CGL liquor exclusion Can t count on negligent supervision or failure to do something if PROXIMATE CAUSE was the BUSINESS of ALCOHOL 15 Liquor and the CGL policy 2013 language added to CGL liquor exclusion As always exclusion only applies if in the business said again This statement was in previous language but without new language didn t have the bite necessary 16 8

10 Liquor and the CGL policy and BYOB Going back to previous exclusion what about BYOB places??? Various court cases with CGL and BYOB establishments 17 Liquor and the CGL policy and BYOB Simmons v. Homatas, Ill 2010 An establishment that allows patrons to bring their own can be liability for alcoholrelated injuries Liability imposed on BYOB club for negligent conduct independent of the alcohol the patrons brought with them and drank on premises. Court found business liability for giving substantial assistance or encouragement to another s tortious conduct 18 9

11 Liquor and the CGL policy 2013 language added to CGL liquor exclusion 2013 language states BYOB is not IN ITSELF..considered the business of selling, servicing or furnishing alcoholic beverages. 19 Liquor and the CGL policy 2013 language added to CGL liquor exclusion This does NOT say BYOB is NOT a liquor business it says BY ITSELF won t be considered I wish this were a LITTLE stronger 20 10

12 Liquor and the CGL policy 2013 language added to CGL liquor exclusion Old and new language I worry about corking fees and pouring and even mixers if they let guests let them buy and do everything FOR the drinking of it 21 Liquor and the CGL policy and MA mandatory endorsement CG Per VFW Post 54 in the business of CGL allowed VFW to have liquor liability under CGL this endorsement removes coverage 22 11

13 Liquor and the CGL policy and MA mandatory endorsement CG language modifies CGL exclusion Not in the business - It applies IF you Manufacture, sell, distribute Can schedule activities so not have to worry Serve or furnish for charge whether or not a license is required Serve w/o charge if license needed 23 Liquor and the CGL policy and MA mandatory endorsement CG language modifies CGL exclusion Can schedule activities so not have to worry Can BYOB be covered? 1) If not serve/distribut 2) If no license required 3) If no corking or serving fee 24 12

14 Liquor and the CGL policy and MA mandatory endorsement 2013 revised endorsement is dangerous for BYOB New anti-byob language added 25 Liquor and the CGL policy and MA mandatory endorsement 2013 revised endorsement is dangerous for BYOB As previously rewrites exclusion but ADDS. INCLUDING causing or Contributing to intoxication by LETTING them BRING alcohol on premises 26 13

15 Liquor and the CGL policy and MA mandatory endorsement 2013 revised endorsement Adds the same language as in 2013 CGL language re: Supervision and failure to provide transportation If incident really arises out of serving, selling, etc., of alcohol 27 Liquor and the CGL policy and MA mandatory endorsement 2013 revised endorsement Adds language to previous exclusion Re: BYOB permitting alcoholic beverages on premises 28 14

16 Liquor and the CGL policy and MA mandatory endorsement 2013 revised endorsement Still allows scheduling incidents whether BYOB or serving/charging/etc. If not scheduled problem with exclusion 29 Liquor Coverage form and BYOB Should a liquor coverage form be sold to a BYOB establishment Does coverage actually work for them?? 30 15

17 Liquor Coverage form and BYOB IF BYOB should one buy liquor liability coverage form?? Is one in the business with this endorsement it won t matter 31 Some 2013 filing broadenings electronic data exclusion Electronic Data exclusion changed only applies to PD NOT BI 32 16

18 Some 2013 filing broadenings electronic data exclusion Still VERY dangerous any damage one does to intellectual property is excluded virus to , software - and even contractor s causing power Outages or power surges and resulting damage to intellectual information 33 Some 2013 filing broadenings Other Insurance condition Other insurance provision stating policy own policy is EXCESS when added to another entity s policy as additional insured Removes words when gain AI status by attachment of an endorsement 34 17

19 Some 2013 filing broadenings Other Insurance condition Graphic Arts Mutual Ins. Co v. Essex Insurance Co. GA 2006 Some companies write their own and add additional insured status or insured status within the policy This was the case above. Crossroads Apartment complex insured by Essex Ins. Co. contracted with Woodriff Property Management Company. Crossroads to add Woodriff as additional insured. Woodriff had own policy through Graphics Arts Mutual 35 Some 2013 filing broadenings Other Insurance condition Graphic Arts Mutual Ins. Co v. Essex Insurance Co. GA 2006 Injury at apartment complex. Both Crossroads and Woodriff sued. Graphics defended Woodriff and Essex defended Crossroads. There was a mediated settlement assigning fault and participation in award. Graphics wanted reimbursement by Essex as it states it was excess by virtue of AI status by endorsement attached to Crossroads policy through Essex

20 Some 2013 filing broadenings Other Insurance condition Graphic Arts Mutual Ins. Co v. Essex Insurance Co. GA 2006 Essex cited Who is insured section of CGL where property manager is automatically an insured under policy language.not attachment by endorsement. 37 Some 2013 filing broadenings Other Insurance condition Graphic Arts Mutual Ins. Co v. Essex Insurance Co. GA 2006 Therefore court agreed with Essex if Woodriff NOT an insured under Crossroads policy by attachment of endorsement then Essex policy and Graphics policy are BOTH primary and Graphics does NOT get reimbursed as excess 38 19

21 Some 2013 filing broadenings Other Insurance condition Graphic Arts Mutual Ins. Co v. Essex Insurance Co. GA 2006 Interesting how ALL the words are important not just the ones we want to read. What ASSUMPTIONS do WE make If agent had indicated AI status on the certificate could that be. misrepresentation? 39 Some 2013 filing broadenings Other Insurance condition Graphic Arts Mutual Ins. Co v. Essex Insurance Co. GA 2006 We will have an issue with assumption regarding coverage and what actual endorsement states in CGL part 2 and the automatic additional insured endorsement 40 20

22 Some 2013 endorsement restrictions Amendment of Personal and Advertising injury definition endorsement CG First what IS the definition of Personal and advertising injury? 7 types of Covered injuries 41 Some 2013 endorsement restrictions Amendment of Personal and Advertising injury definition endorsement CG Definition had 7 types of covered injuries One is removed 42 21

23 Some 2013 endorsement restrictions Amendment of Personal and Advertising injury definition endorsement CG Remove oral/written publication violating privacy 43 CGL pollution coverage first The CGL provides limited pollution coverage Coverage A removes: No pollutants that emanate from premises or Pollutants you bring to jobsite Clean up is separately excluded Covers pollutants that disperse from mobile equipment (from operational parts of mobile equipment) BI/PD arising out of products/completed operations hazard 44 22

24 Total pollution exclusionary endorsement first This endorsement is NOT your client s friend!!! 45 Total pollution exclusionary endorsement first Eliminates virtually all coverage for pollution incidents, including those covered despite the basic policy's pollution exclusion. Applies to Coverage A with respect to BI or PD that "would not have occurred in whole or part but for" an escape or release of "pollutants." No exceptions to this exclusionary language. Like policy cleanup costs excluded separately 46 23

25 Total pollution exclusion designated work or product CG New endorsement for products/ completed operations policy 47 Changes to ISO pollution coverage forms CG and CG Negligent supervision and autos added to CGL in 2004 now added to pollution coverage forms (consistency is king!) 48 24

26 Changes to ISO pollution coverage forms CG and CG Adding language to auto exclusion regarding mobile equipment which becomes auto per state financial responsibility law when on road other CG forms did this in Primary and non-contributory final exists in ISOland Contracts have required it certificate holders have wanted it Has ISO finally come through???? 50 25

27 Primary and non-contributory final exists in ISOland Refresher. CGL provides either PRIMARY coverage or Excess Coverage 51 Primary and non-contributory final exists in ISOland Primary coverage for those who qualify as insureds under Section II. Who is Insured 52 26

28 Primary and non-contributory final exists in ISOland Indemnitees of valid insured contract also receive primary coverage 53 Primary and non-contributory final exists in ISOland Entities YOU add to your policy by additional insured endorsement receive primary coverage from your policy 54 27

29 Primary and non-contributory final exists in ISOland Your insurance is EXCESS for you when You buy certain other types of coverage And You have been added to ANOTHER policy as insured 55 Primary and non-contributory final exists in ISOland Unendorsed the ISO CGL regardless of edition only talks about PRIMARY EXCESS. YOU should make YOUR policy excess When I add YOU to my policy YOU are ALWAYS primary 56 28

30 Primary and non-contributory final exists in ISOland Historically if YOU couldn t fix YOUR policy and YOUR policy stayed primary Then YOUR policy has to share with MY policy and you just don t like to share 57 Primary and non-contributory final exists in ISOland CG Instead of adding language TO the AI endorsements or policy ISO made it a SEPARATE endorsement 58 29

31 Primary and non-contributory final exists in ISOland CG It revises the Other insurance condition Your policy won t require sharing of an ADDITIONAL insured 59 Primary and non-contributory final exists in ISOland CG Remember that Graphics Ins Co v. Essex Ins. Co. And the property manager that is an insured under Section II that is NOT an additional insured but contract wanted primary and non-contributory...hmmmmm 60 30

32 Primary and non-contributory final exists in ISOland What about directors, officers, employees of the entity that is added as additional insured but policy obviously doesn t name these entities hmmmmmmmmm 61 Primary and non-contributory final exists in ISOland CG And you (the named insured under THIS policy) have a WRITTEN contract requiring primary status and NO contribution. The contract might require MORE entities receiving Primary/non-contributory status than are NAMED insureds on a policy

33 Exclusions Recording /Distribution of Material Or Information in Violation of Law Previously mandatory CG Recording and distribution of Material or Information in Violation of Law exclusion - Added to 2013 CGL 63 Exclusions Material Published with Knowledge of Falsity and Material Published Prior to Policy Certain Coverage B exclusions modified to identify ANY manner of publication social media, Internet, , etc 64 32

34 Professional liability exclusionary endorsements modified for negligent supervision 65 Professional liability exclusionary endorsements modified for negligent supervision 66 33

35 Professional liability exclusionary endorsements modified for negligent supervision 67 Professional liability exclusionary endorsements modified for negligent supervision Language added to all the endorsements: Negligent hiring, supervision, training, monitoring, etc as added in Auto/liquor/pollution 68 34

36 Amendment to insured contract definition endorsement First We DON T want to add this endorsement as it messes with f which we incorrectly call broad form contractual 69 Amendment to insured contract definition endorsement normal wording you could assume BI/PD to others even if YOU are not negligent Endorsement wording of 07/04 edition - like AI you can only assume if you are IN WHOLE OR IN PART liable 70 35

37 Amendment to insured contract definition endorsement New endorsement.. Makes changes like we ll see in AI endorsements... To extent allowed by law 71 Thank you for attending 2013 CGL friend or foe Overall changes 72 36