Recently, our 'Ask an Expert' service received a rash of 'cross liability' questions. The term 'cross liability' deals with whether or not one insured can sue another under a liability policy. Requests to provide this coverage under a CGL policy usually arise from ignorance on the part of people who have led someone to believe they know something about insurance.
How does a tenant protect himself against the building owner (or the owner's carrier) who is seeking to recoup the cost of reconstruction to the building, in excess of the tenant's CGL Fire Damage Legal limit, assuming the tenant was legally liable for damage caused by fire? Is there a better way to insure this exposure?
While there can be disagreement over the amount of recovery, the valuation of claims under most property and inland marine forms is a fairly straightforward process. In most cases, the insured has selected a valuation method...actual cash value, replacement cost, agreed amount, etc. However, when the insured has damaged someone else's property, how is the value of that property determined when the responding policy is a CGL or other liability form?
A third party files a claim demanding replacement of property negligently damaged by your insured. Does the CGL policy respond on a replacement cost (RC) basis or actual cash value (ACV)? What if there is a contract in place that requires replacement cost, not ACV, valuation for damage?
The ISO CLM specifies how a subcontractor exposure is to be charged, depending on whether the subcontractor is adequately insured or not. If adequately insured, premium is calculated on a 'total cost' basis that includes labor, materials and equipment furnished for the job. Sounds simple, but is it?
The CLM says, for a particular class code, that products and completed operations are subject to the general aggregate limit. On the declarations page, the insurer has shown 'NOT COVERED' under the P/CO aggregate limit. Is that appropriate?