Why can occurrence policies be difficult for insurers? - ️️open-ended nature of
claim reporting makes it difficult to estimate the ultimate losses that will be made against
the policy
What influences led to the development of the 1st Standard General Liability Policy -
️️Policy Issues
...
RPLU - Exam 1
Why can occurrence policies be difficult for insurers? - ✔️✔️open-ended nature of
claim reporting makes it difficult to estimate the ultimate losses that will be made against
the policy
What influences led to the development of the 1st Standard General Liability Policy -
✔️✔️Policy Issues
* Forms independently written by insurers
* Inconsistent, complex & confusing
* Ambiguous/complex legal language
* Difficult for courts to interpret
CGL covers damages arise out of - ✔️✔️1. Bodily Injury & Property Damage
2. Personal Injury & Advertising Injury
3. Medical Expenses
Professional Liability Insurance - ✔️✔️provides coverage to professional for liability
claims arising out of (or failure to provide) negligent acts in performance of professional
services
*includes E&O
* covers economic damages
Errors & Omissions (E&O) - ✔️✔️covers professional & organizations for financial
losses resulting from alleged, wrongful acts (errors, omissions or negligent acts) arising
from professional activities
Wrongful Acts - ✔️✔️Error, omission or negligent act that a professional commits
during the provision of professional services
CGL vs. PLI - ✔️✔️PLI - covers economic damages arising out of negligent acts
CGL - covers BI & PD arising out of negligence related to operating a business
1st Standard General Liability Policy - ✔️✔️First set of standard poicy provision
developed in 1940
* Adoption of standard form by multiple insurers
What influences led to the development of the Comprehensive General Liability Form -
✔️✔️Legal Environment
* Legal interpretations of language (multiple)
,Policy Issues
* Language and provisions not applicable to insured
* Difficult to understand - complex language
Comprehensive General Liability Form (1966) - ✔️✔️Predecessor of current CGL form
Format & Language Changes:
* Improved policy format & simplified language
* Clarified ambiguities
* Consolidated several types of coverage into a single policy
* Policy jacket added with specific policies applicable to insured
Changed basis on which coverage was written
* Occurrence - injurious exposure to condition resulting in BI or PD
* Occurrence Policy
Comprehensive General Liability Form 1973 Revision - ✔️✔️* Adapted & clarified
coverage issues regarding the effect of regulatory issues on pollution liability
* Definition of occurrence revised to include continuous or repeated exposure to
conditions
* Changes broadened general liability coverage
Broad Form Comprehensive General Liability (BFGL) Endorsement (1976) -
✔️✔️Combined many endorsements into one single, standard endorsement
*Allowed significant cost savings for insured resulting from the increased efficiency of
one consolidated endorsement
Forces that led to liability crisis in 1985 - ✔️✔️* Increased # of medical malpractice
lawsuits
* BI & PD claims arising out of asbestos crisis
* Liability for environmental damage, resulting in complex claims due to # of at-fault
parties + uncertainty about the trigger of coverage for pollution
* Other forms of liability - Agent Orange & DES
Liability Crisis (1985) - ✔️✔️Judicial rulings created the potential for long-tail losses
arising from asbestos, pollution & other latent exposures
Industry challenged by adverse court rulings & coverage interpretations
,Long-Tail Losses - ✔️✔️losses that are paid for claims on expired occurrence policies
& that are potentially paid years after expiration
i.e. asbestos & pollution cases
Commercial General Liability Form (1986) - ✔️✔️* Response to the liability crisis
* incorporates coverage provisions of 1973 form & the 1976 BFGL endt.
* Notable - replacement of legalistic language with simplified
* Offered 2 types of forms: occurrence or claims-made
Key issues addressed since 1986 in CGL form: - ✔️✔️1988: inclusion of arbitration
proceedings
1993: inclusion of leased workers under insured status provision (changes in
employment law)
1996: clarification of duty to defend a 3rd Party for whom insured is contractually
responsible
1999: clarification of known loss rule
2001: clarification of AI in areas of Internet liability & intellectual property
2007: clarification of supplementary payment + addition of exclusion for Do Not Call
laws
2013 ISO GCL Policy - ✔️✔️* Additional endorsements + adjustment of coverage to
protect insurers
* Revised 'Additional Insured' + Professional Services' endorsements
* Added 6 new endt's
* Modifications to policy exclusions:
How has the industry responded to the identification of new exposures excluded by
CGL? - ✔️✔️by providing customized coverage via new, standalone policies i.e. EPLI
Employment Practices Liability Insurance (EPLI) - ✔️✔️protects businesses against
damages & legal expenses resulting from wrongful acts from this employment practices
- discrimination, sexual harassment, wrongful termination etc.
, What is the purpose of CGL and how does it differ from PLI? - ✔️✔️CGL provides
protection for liability involving premises, operations, contractual liability, products &
completed operations typically associated with commercial business. Coverage is
provided for liability due to BI, PD & medical payments
PLI provides protection for liability that arises from the rendering of professional
services. Covers economic damage for liability arising from E&O or negligence a
professional commits
What is the significance of the 1966 Comprehensive Genera Liability form? - ✔️✔️*
Written in simplified language + customized to insured's needs
* Included common provisions to which specific policy provisions could be added
* Changed basis on which CGL was written + defined occurrence
* Improved ease of use + reliability because reduced ambiguity and confusion
* Made coverage more consistent + easier for courts to interpret
What trends led to the development of the CGL form of 1986? - ✔️✔️* 1970's + 80's
liability claims increased as a result of emerging trends - medical malpractice suits +
costs increasing, new environmental & pollution risks, asbestos crisis
* Insurers didn't anticipate degree of latency, suffered significant losses raising concerns
about future of occurrence policies
* Occurrence policy came under attack leading to the introduction of first claims-made
policy
Coverage Trigger - ✔️✔️event that activates a policy to respond to a claim and that
determines which policy covers a particular claim for loss
Two primary types of coverage triggers - ✔️✔️1. Occurrence Coverage Trigger
2. Claims-Made Coverage Trigger
Occurrence Coverage Trigger - ✔️✔️policy triggered by an occurrence in which PI or
PD occurs during the policy period
* Most CGL written on occurrence basis
Occurrence - ✔️✔️accident, including continuous or repeated exposure to substantially
the same general harmful conditions
Occurrence Policy - ✔️✔️policy that is triggered by the date an event occurs and that
provides coverage for the incident as long as it occurred during the policy period,
regardless of when the claim is reported
* Covers claims arising out of BI or PD that occurs during the policy period
* Date the PI or PD occurs triggers coverage
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