Insurance Services Office’s (ISO’s) four major filings in commercial property, business auto, businessowners coverage, and commercial general liability (CGL) make 2013 a big year for insurance professionals. These articles focus on the changes that begin taking effect this year in the commercial general liability forms and endorsements. (View Part One)
ISO’s 2013 CGL filing revises 12 individual endorsements while making mass changes to 24 additional insured endorsements and 34 professional service endorsements. Additionally, six new CGL endorsements are introduced in this filing. At least one of the new endorsements may create issues the industry may not be as ready to address as ISO may believe. This section is divided into two parts, revised endorsements are presented first and the newly introduced endorsements conclude this article.
Limited Product Withdrawal Expense Endorsement – CG 04 36. ISO revises this endorsement by removal of the phrase, “to effect the settlement of any claim or ‘suit’” in Paragraph B.3.a. According to ISO, this phrase is unnecessary because the endorsement provides coverage for product withdrawal expense, not for claims or suits. Because the phrase had nothing to do with the coverage provided by the endorsement, there is no impact on coverage.
Paragraph B.3.b. contains the second revision to this endorsement. ISO revised the wording to reinforce that the Participation Percentage (the insured’s portion of the costs) is found in the endorsement’s Schedule rather than in the Declarations. The new wording also reinforces that the insured agrees to bear its cost of participation in the withdrawal and will not obtain other insurance to cover this participatory portion. Lastly, ISO removes the term “loss” and replaces it with “product withdrawal.” These changes do not impact coverage.
Electronic Data Liability Endorsement – CG 04 37. ISO is broadening the coverage by narrowing the application of this exclusionary endorsement by an exception to the exclusion. ISO is excepting the insured’s liability for damages because of “bodily injury” from the exclusion. This makes the endorsement consistent with the underlying liability policy wording.
Changes to Various Additional Insured Endorsements. Twenty-four of the 31 additional insured endorsements are amended in this filing. These changes limit the coverage extended by these endorsements to the amount of transfer allowed by the various state anti-indemnification statutes; additionally, the new wording limits the breadth of coverage extended to the endorsed AI to that required by the contract between the parties. All additional insured endorsements common to construction are altered by these changes. Key features of these changes include:
- Endorsement language now states that the coverage afforded to the additional insured is limited to the amount permitted by law in the subject state.
- New wording specifying that the coverage afforded the additional insured will not be broader than the contract or agreement requires.
- A limitation on the amount of coverage extended to the additional insured. ISO’s AI endorsements now state that the coverage limit extended to the additional insured is the greater of: 1) the amount required by the contract; or 2) the limit of coverage.
Several editorial changes were made to make some additional insured endorsements consistent with other form and endorsement changes reported elsewhere in this article.
Additional Insured – Users of Golfmobiles – CG 20 08. ISO introduced a new definition to clarify what qualifies as a golfmobile; because this is a new definition, the change may be considered a restriction of coverage. For purposes of the endorsement, a golfmobile is now defined as a motorized land conveyance designed to carry up to four persons on a golf course (to play golf), and not built or modified to exceed 25 miles per hour on level ground.
Liquor Liability Exclusion Endorsements – CG 21 50, CG 21 51, CG 29 52, CG 29 53. ISO made three changes to these endorsements (which can be combined into two). The goal: to make these endorsements consistent with and applicable to the newly worded liquor liability exclusion in the various general liability forms presented in the first article. The alterations to these endorsements are:
- These endorsements exclude the bring-your-own (BYO) exposure when any person brings his own alcohol onto the premises for consumption on the insured’s premises. The underlying general liability forms were revised to state that BYO exposures are not in the business of selling, serving…. The revised exclusions remove this protection and results in a reduction of coverage.
- For consistency with changes made to the underlying coverage forms, these endorsements are amended to state that coverage is excluded even when claims against an insured allege negligence or wrongdoing in supervising, hiring, employment, training, monitoring, or failure to provide transportation. As in the underlying form, this is a clarification of coverage but may be seen as a reduction in coverage in those states where court decisions have allowed coverage for such claims in the past.
Revisions to Various Professional Services Exclusions. Thirty-four “professional services” exclusion endorsements are revised in this filing. The impetus for these changes is an unpublished Fourth Circuit Court of Appeals case from 1999, Liberty Life Ins. Co. v. Travelers Indem. Co. of Illinois. The court held that the exclusion in the CGL form that barred coverage for the claim against an employee did not apply to Liberty Life in its oversight role as the agent’s principal (in essence, for its vicarious liability).
In response to this finding, ISO enhanced the exclusionary wording to specifically address and exclude claims alleging insured negligence or other wrongdoing in the hiring, employment, training, supervision or monitoring of others. ISO views this as a reinforcement of coverage intent and not a reduction in coverage; however, these changes may be viewed as a reduction in states where courts have ruled that the professional services exclusion does not apply to these types of vicarious liability claims.
Exclusion – Failure to Supply – CG 22 50. In a 2010 rules filing, ISO introduced the Biofuel Distributor classification. Within the rules pertaining to this new classification, ISO instructed that the CG 22 50 was to be attached to any policy covering biofuel distribution risks. The wording of this exclusionary endorsement is altered by this filing to expressly state that it applies biofuel distributers. Effectively there is no change in coverage, only an extension to include this type of operation.
Pesticide or Herbicide Applicator Endorsements (CG 22 64 & CG 28 12) and Lawn Care Services Coverage Endorsement (CG 22 93). The titles of these endorsements are altered by this filing. According to ISO, this change is made to better reflect the coverage provided (or excluded) by the endorsement. Obviously, since this is just a name change, there is no impact on the coverage provided or limited by these exclusionary endorsements.
Druggist – CG 22 69. ISO effectively broadens the coverage provided to druggist operations by this endorsement by adding an exception to the exclusion relating to bodily injury or property damage arising out of professional health care services provided by a pharmacist. Bodily injury or property damage arising out of specified services are excluded in the current endorsement. In the new version, an exception is inserted for the administration of vaccinations in accordance with state or federal law.
Real Estate Property Managed – CG 22 70. ISO updated the wording on this endorsement to reinforce the provision that the insurance provided by the coverage written for real estate managers is excess over any other available insurance, regardless if the other insurance is primary or excess. There is no change in coverage, just a reinforcement of the current provisions (and intent).
College or Schools (Limited Form) (CG 22 71) and College or Schools (CG 22 72). Exclusion “g. Aircraft, Auto or Watercraft,” is revised in both endorsements to make the wording more consistent with the same exclusion found in the CGL. This is a rewording with no impact on the coverage.
Waiver of Governmental Immunity – CG 24 14. There is no change in the wording of the endorsement, just new uses for the endorsement. ISO is making this endorsement available for use with the Owners and Contractors Protective Liability Coverage Part (CG 00 09) and the Railroad Protective Liability Coverage Part (CG 00 35).
Coverage Territory Endorsements (CG 24 22, CG 24 23 and CG 24 24). The alpha numeric paragraph designators related to Other Insurance are changed for consistency with the CGL form. The section of the newly worded endorsement refers to 4.b.(1)(c). Previously, the endorsement referred to 4.b.(3).
Amendment of Insurance Contract Definition (CG 24 26) and Limited Contractual Liability – Railroads (CG 24 27). Paragraph “f.” within the definition of an “insured contract” is amended in both endorsements to specifically state that coverage is limited to the level of tort liability that can be assumed in according to the laws of a particular jurisdiction. The newly worded endorsement ties the level of protection available to the transferor (“indemnitee,” the upper tier) to the applicable state law. However, the named insured must still be somehow involved in causing the bodily injury or property damage (does not cover extend to sole negligence of the transferor/indemnitee).
Check Back Thursday 2/21 for ISO’s Newly Introduced CGL Endorsements
Christopher Boggs is the director of education for the Insurance Journal Academy