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Exclusions

Amazingly claims adjusters still believe the commercial general liability’s (CGL’s) “absolute” pollution exclusion is, in fact, absolute. Bizarre stories abound of claim denials arising out of misapplications of the exclusion. Some accounts are myths and legends, but some are all too real. This article details the “howevers” in the CGL’s absolute pollution exclusion that makes it anything but absolute.
You insure a residential painting contractor. Many of his customers give him access to their homes when they are not around. What if he damages the premises while having sole access to the home? Does the ISO CGL policy’s “CCC” exclusion apply?
Many states have now passed open and/or concealed carry firearms laws. If a business owner or employee accidentally or in self-defense shoots someone, does the ISO CGL policy respond? This article answers this question and links to another article about HO policies.
Your insured has BAP Symbol 9 nonowned auto coverage which extends coverage to the named insured while employees use their autos on business. However, what if the named insured uses independent contractors who operate their own autos…is the named insured still covered? What if the named insured only has a CGL policy?
There is increasing interest in, and use of, drones for various business activities, from real estate agents to contractors. Unfortunately, there is little, if any, coverage under most CGL and other commercial liability policies. However, ISO has introduced a bevy of endorsements to clarify coverage (or lack thereof) or provide some degree of optional coverage. This article explores the ISO endorsements most likely to be used in the marketplace.
In response to the “Rise of the Drones” (not to be confused with the “Rise of the Planet of the Apes”), ISO has filed new and revised policy provisions for its CGL and Commercial Umbrella programs. This article was written by VU faculty member Mike Edwards for Louisiana Big “I” agents and he had graciously modified for national applicability.
One of the most litigated provisions in the ISO CGL policy is the pollution exclusion. But what we have found via our “Ask an Expert” service is that often claim denials are made without regard to the requirement that the BI or PD arise from the “irritant” or “contaminant” nature of the “pollutant.”
Your insured is a pool contractor. If he damages the pool's liner, causing a leak, does his CGL cover him? What if he needs to drain the pool for maintenance and it pops out of the ground overnight following a heavy rain...does his CGL cover him?
To determine whether a claim is covered, we usually start with the Insuring Agreement. If that’s triggered, we then look to the Exclusions to see if coverage for the claim is removed. However, sometimes that’s not enough. In this claim, after reviewing the exclusions, you have to visit the “Who Is An Insured” section of the CGL policy to discover that there really isn’t coverage. This illustrates an interpretive principle called “entirety of contract.”
A painter paints vinyl siding a darker color. When the newly painted vinyl siding is exposed to direct sunlight, the painted siding warps. Does the painter’s CGL policy respond to the resulting property damage claim from the homeowner? To answer the question of whether the homeowner’s HO policy might respond, check out this VU article.
While policy interpretation is not an exact science, sometimes adjusters reach conclusions that defy logic and reason. Below are two claims scenarios sent to our 'Ask an Expert' service just this past week. In each case, the adjuster reaches a conclusion that is puzzling, to say the least.
I've often said that it's inexcusable when a claim is denied for no other reason than 'It's not covered.' The insured is owed a reason for a claim denial, by contract or law. However, sometimes when I hear the reason, I think perhaps that it's better I didn't know because, to paraphrase Art Linkletter, 'Adjusters sometimes say the darnedest things!'
An insured that does metal heat treating has a manuscript CGL endorsement that provides $250,000 care, custody or control coverage. He treated parts for another fabricator and they cracked when being tested prior to final use, allegedly due to an excessive hardness level that arose from the treatment. Estimated damages are $800,000. Is this a 'CCC' or 'your work' claim?
One of the most debated provisions of the ISO Commercial General Liability policy is the 'care, custody and control' issue, which actually involves several exclusions in the CGL. While it appears that we'll never be able to resolve this dilemma, we will defend to the death our right to keep on debating it! Below is a recent 'Ask an Expert' question involving a property manager (actually more of a 'house sitter') who's agent is concerned about whether his CGL will respond to claims.
An insured owns a mini storage warehouse business. Customers rent space in which they store their personal property and have the right to add or remove their property as they wish. The insured only rents space but is concerned that, should he mistakenly remove or dispose of a renter's property, would he be covered under his general liability coverage form?
Many insurance policies exclude or limit coverage for damage to property in an insured's 'care, custody or control,' but what does that term really mean? While we'll probably be debating this issue for years to come, in this article, we'll take a look at an actual claim and discuss some of the critical issues that govern coverage.
During the past year, our 'Ask an Expert' service has averaged a question about every six weeks regarding CGL coverage when glass is scratched by a contractor. One claim involved $100,000 in damage to windows of a high value home. The insureds have varied from window cleaners to painters to brick masons that were either working directly on the window glass, the frame, or surrounding areas. If the glass is inadvertently scratched, is there any CGL coverage?
A contractor's employee had possession of master keys for several dorm buildings at a university. While at lunch, he accidentally left the keys on a ladder and they were gone when he returned. The university had to rekey all of the dorm buildings. The contractor's CGL carrier has denied the claim, citing exclusion j.(4) and the lack of direct damage to tangible property. Is this correct?
In response to an article we published called 'What Is(n't) 'Your Work' in the CGL?,' we got a response from a reader (see below) that resulted in a promise to further explore the CGL workmanship exclusions and the trend in some legal jurisdictions to deny coverage based, not on an exclusion, but the failure of the insuring agreement to be triggered because the claim does not involve an 'occurrence' and/or 'property damage.' So, here we go.....
In response to an article we published called 'What Is(n't) 'Your Work' in the CGL?,' we got a response from a reader (see below) that resulted in a promise to further explore the CGL workmanship exclusions and the trend in some legal jurisdictions to deny coverage based, not on an exclusion, but the failure of the insuring agreement to be triggered because the claim does not involve an 'occurrence' and/or 'property damage.' So, here we go.....
In response to an article we published called 'What Is(n't) 'Your Work' in the CGL?,' we got a response from a reader (see below) that resulted in a promise to further explore the CGL workmanship exclusions and the trend in some legal jurisdictions to deny coverage based, not on an exclusion, but the failure of the insuring agreement to be triggered because the claim does not involve an 'occurrence' and/or 'property damage.' So, here we go.....
In VUpoint Newsletter Vol. 7, No. 22, November 3, 2006, we featured two articles about insuring and risk managing the theft of customers' information. In this article, we'll look specifically at coverage under the CGL program. The CGL policy excludes 'electronic data,' for which there is something of a buy-back with the CG 04 37 endorsement, contingent on physical damage to tangible property. So, just what does the CG 04 37 cover and how?
Many businesses have extremely valuable information in electronic form. If your insureds have access to the information of others on their or a customer's premises, how can it be insured from loss, in particular, theft? What if your clients' own employees steal it? What if it's stolen by computer hackers or burglars? Is it a crime exposure, a liability exposure, or something else? Well, based on our investigation, it's 'something else' all right.
It seems that the saga of what is a pollutant will never end. From a Clorox bleach spill (and slip and fall) in a grocery store, to an overturned milk truck in a trout ranch pond, the pollution exclusion has often been used to deny claims... sometimes successfully (the milk spill) and sometimes unsuccessfully (the bleach spill). Check this one out....
A CGL endorsement excludes BI to anyone while involved in any sports or athletic contest sponsored by the insured. The insured sponsors a fishing tournament for kids. So the question is, does a fishing tournament constitute a sporting or athlethc contest?
Some private clubs allow patrons to bring their own liquor, perhaps providing set-ups. Some restaurants permit customers to bring their own wine for a corkage fee. Some spas provide complimentary wine. An amusement center allows liquor in private party rooms. A caterer serves alcohol provided by a client. Do these businesses need liquor liability coverage?
A contractor accidentally caused a sewer line to collapse, resulting in a backup into a nearby home. The CGL insurer denied the claim, citing the pollution exclusion. Is sewage a 'pollutant' under the CGL? Does the pollution exclusion apply? (Note: Even if the sewage is a 'pollutant,' that doesn't necessarily mean the exclusion applies...read more to find out why.)
Over the years, there have been numerous recommendations, rules and guidelines which attempted to deal with the problem of existing lead-based paint in homes and other structures. The EPA has usually played a key role in lead paint mitigation efforts. On April 22, 2010, an enhanced lead paint rule will take effect which will directly impact renovation and repair contractors.
A subcontractor installing a deck on a home under construction penetrated a foundation water barrier and rain water entered, damaging the basement ceiling, sheetrock, and carpeting. The general contractor's insurer has denied the claim under the CGL policy. Is the insurer right?
You insure a mini-storage warehouse owner. The rental/lease contract stipulates that the owner can sell any property stored by a renter/lessee if they fail to pay. Your insured sells the property of a delinquent tenant and is then sued. In addition, he mistakenly sells property of a tenant who had paid on time. Does the CGL cover these types of claims? If not, how do you insure them?
The insured is an exclusive private club where smoking is permitted in certain areas of the club. The insured has inquired about liability for patrons who could allege bodily injury as a result of exposure to second hand smoke, and he wanted to know if there was a coverage issue. At first, I indicated that this would be a GL claim and there shouldn't be any problem regarding coverage. Then I re-read the pollution exclusion and the definition of 'pollutant' which includes smoke, which led me to conclude that an insurance carrier is on strong ground to deny this type of claim. Is there any case law on this or a similar type of claim that allows coverage under the GL? If not covered by the GL, is a pollution policy the only recourse?
One of the most misunderstood provisions in the CGL policy is the 'your work' exclusion. In this article, we'll take a look at several actual claims and when the exclusion does and doesn't apply in a contracting situation. We'll also take a look at a couple of new ISO endorsements that make this exclusion absolute.
A carpenter built a garage building and, upon leaving, it burned down due to the improper extinguishing of a cigarette. Will the carpenter's CGL cover the loss? Not according to the adjuster. Keep reading to find out why we didn't think the reasoning on this claim denial was too hot....
You insure a homebuilder. Several years after selling a home, it burns down due to faulty installation of some electrical wiring and your insured is sued. Does he have any coverage under the CGL policy and, if so, under which one? Answer to both questions: It depends.