First, a brief history lesson on forms and endorsements.
The Insurance Services Office, Inc. (ISO) is an insurance advisory organization that provides actuarial, statistical, and policy language services for insurers. Commercial and Personal lines forms and endorsements drafted by ISO are considered by many to be the standard forms of the industry. Many insurers elect to use the ISO forms verbatim for at least some of the policies that they issue, and most insurers base their own company forms on the language of ISO forms.
There are 23 ISO lines of business and accompanying forms. These range from AG forms (Agricultural Capital Assets - Output Policy) to PR forms (Professional Liability) with the usual CP (Commercial Property), HO (Homeowners), CG (Commercial General Liability) scattered in between.
Just in case you commercial folk want to know there are 2,115 forms and endorsements for Commercial General Liability alone! Probably more now ---that count was made in January 2014.
Commercial Property coverages have under gone several editions in the past 25 years. The simplified forms were introduced in 1986, and revised in 1988, 1990, 1992, 1995, 2000, 2002, 2008 and now in 2013. It should be noted the Edition Date on the forms will be October 2012 (10 12). So will it be called the 2012 or 2013 revision????
For Commercial General Liability the changes to the Occurrence Form are the same in the Claims Made form except some paragraph numbers may be different. The ISO Edition Dates are - 1986, 1990 (dated Nov. 88), 1993, 1996, 1998, 2001, 2004 and 2007. The most recent changes are effective, in most states, April 2013 and the forms will have an Edition Date of 04 13. Hallelujah the effective date and the Edition date are the same!!!
I’ll leave the review of the Edition Dates of the other 21 ISO lines of insurance for a later article.
You ask – why all the forms?
To make the answer as simple as possible. We again are only going to speak to the forms issued by the Insurance Services Office. But insurance is a complex topic, and many organizations have valuable data and interesting points of view.
But again why are there so many form changes?
1. Forms are changed by ISO to:
Broaden or reduce coverage.
This is the main reason why the Edition Date is so very important. Unless you know which edition is being used it is impossible to know what coverage is available. For example, the ISO 2004, 2007 and 2013 editions of the Commercial General Liability forms define “auto” differently from all the prior forms. This can cause a MAJOR difference in coverage.
To reflect a court case interpretation of the courts analysis of the form.
This can be done by a MANDATORY endorsement. This is an endorsement that is made mandatory by ISO, and according to the ISO rules must be used under certain situations. This wording will later be incorporated into a revision of the coverage form. For example, an appeals court decision was made in California that has had a far-reaching impact on the Commercial General Liability Policy (CGL). The case is Montrose Chemical Corporation of California, vs. Admiral Insurance Company, July 3, 1995.
As a result, the Insurance Services Office developed a mandatory endorsement, CG 00 57 Amendment Of Insuring Agreement—Known Injury Or Damage, to address the issue. This endorsement revised the Insuring Agreements so that commercial liability policies will not respond to any injury or damage known by the insured (or an "employee" of the insured who was authorized to give or receive notice of injury, damage or claim), before the policy inception.
The new Known Injury or Damage endorsements may be attached to the 1988, 1993, 1996 and 1998 editions of the CGL. When the CGL was revised in 2001 the language was incorporated in the form and the endorsement was no longer needed for that form, or the 2004, 2007 or the new 2013 editions. So some Edition Dates must have the endorsement, and others do not.
(1) To clarify previous language;
Many years ago ISO revised CG 20 10 11 85, but even today some contractors are required to have this exact edition date on their CGL
For a detailed discussion of this change please see the IIABA’s Virtual University. Search for CG 20 10
(2) To reflect changes in society, such as technology (computer viruses and property damage to electronic data), and gizmos (Segway, hovercraft, Blackberry, etc.)
There are state specific endorsements that may address such things as cancellation. These are called the Category 01 endorsements and are recognizable by the ISO numbering system.
OK you say, I understand that Coverage and Exclusions may be different in the various Edition Dates but that should be clear if I read the form.
But there is another problem. Not all ISO forms and endorsements are used verbatim. The insured may change the language if they so desire. How do you tell if the form you are reviewing is an “unedited” edition? Well look at the very bottom of a form page and if it says © ISO Properties, Inc., or Insurance Services Office, Inc.© or for some of the older editions it might say Copyright, Insurance Services, Inc. However, if it says Used With Permission Of Insurance Services Office, Inc. then something has been changed and you need to look very closely to determine what has been altered.
Are there any “hidden” things to look for?
Yes there are, and they are very subtle. I call these the Seven Deadly Words. When they are found in a policy (insurance contract) you must pay careful attention to how they are used. Once again without knowing the specific form edition then it can be impossible to know what the form says---but more importantly---may mean!
THOSE "SEVEN DEADLY" LITTLE WORDS
All insurance policies are contracts of adhesion. The hallmark rule for these types of contracts is that any doubt or ambiguity is construed against the party who wrote the contract language.
We are now going to look at what we have called the "Seven Deadly" little words.
They are "And, An, But, If, However, Or & The”
This is just to make you aware of these words, and the problems they may create. These seven words are used 1,502 times in the 16 pages of the 9,826 total word 2013 Commercial General Liability form (that is 15.8%). The most used word is or, which comprises 676 of the 1,502; ‘the’ is used 476 times, with the others ranging from 184 to 19 ‘howevers’.
The author gives sincere apologies to my early English teachers for not paying more attention during the discussions of adjectives, adverbs, pronouns and all those other exciting things. I was too busy watching the "cute red headed girl" in the second row.
The following is what we should have been studying in high school. This is from the “The American Heritage Dictionary”. Now I remember why I looked at the little red headed girl instead.
Before we get started, I found this in the Introduction to the Dictionary. Every court of law has its big dictionary; the law settles cases, awards millions, rates crimes and misdemeanors, by quoting the definitions of some poor attic lexicographer, “a harmless drudge”, as defined by lexicographer Samuel Johnson.
AN - The indefinite article, a form of “a” used before words beginning with a vowel or with an unpronounced “h” -- an elephant
AND - Together with or along with; also; in addition; as well as. Used to connect words, phrases, or clauses that have the same grammatical function in a construction: trials and tribulations.
BUT - This simple (?) word takes up almost a half page of “The American Heritage Dictionary”. A synonym of but is however. Each word introduces a statement in opposition to what precedes it.
If – One use is to introduce a negative conditional clause.
However – By whatever manner or means; to whatever degree. Redundant in combination with but.
Or – Used to indicate an alternative. Remember used 676 times in the 2013 CGL.
The – The definite article, functioning as an adjective. It’s meaning is different depending on whither it is used before a noun or an adjective.
Here are a few examples of how these little word are used in insurance forms. This discussion will not be in alphabetical order.
The use of a definitive article (adjective) can impact coverage.
The following is from the "intentional acts" exclusion from the Homeowners HO - 3, 2000/2011 version.
E. Coverage E – Personal Liability And Coverage F – Medical Payments To Others
Coverages E and F do not apply to the following:
1. Expected Or Intended Injury
"Bodily injury" or "property damage" which is expected or intended by an "insured" even if the resulting "bodily injury" or "property damage":
a. Is of a different kind, quality or degree than initially expected or intended; or
b. Is sustained by a different person, entity, real or personal property, than initially expected or intended.
However, this Exclusion E.1. does not apply to "bodily injury" resulting from the use of reasonable force by an "insured" to protect persons or property;
The 1991 Homeowners form said:
1. Coverage E - Personal Liability and Coverage F - Medical Payments to Others do not apply to "bodily injury" or "property damage":
a. Which is expected or intended by the "insured"…
The 1991 form said "the insured" and several courts have ruled that the exclusion applied only to injury committed by the Named Insured on the declarations page. For example if the Named Insured was John Doe, then the exclusion would not apply to Mr. Doe's wife, assuming she was a resident of the household. Therefore, the insurer would have to defend the wife in a suit by the daughter claiming the wife had failed to prevent sexual abuse of daughter.
The 2000 Homeowners form changed the word the to an, thus this edition tries to make it clear the exclusion applies to any insured, whither they are the named insured or any other person qualifying as such under the form.
For your information, the Intentional Acts Exclusion in the Commercial General Liability and the Commercial Auto form also says "…from the standpoint of the insured."
In CG 28 05, Personal Injury Liability Endorsement and in the CGL Personal and Advertising Exclusion for "Criminal Acts", ISO in 2001 changed an exclusion for "a criminal act committed by or at the direction of any insured" to read "a criminal act committed by or at the direction of the insured". In their Explanatory Memorandum ISO stated this was a broadening in coverage, as there will now be coverage for the vicarious liability of other insureds who have no knowledge of a criminal act. In this memo ISO acknowledges that the word any will encompass all insureds under the policy, while the is only a specific insured.
Thus the use or changing of one of the seven words can have a major impact on coverage. We could go over many examples of how changing these words can alter the coverage, but we will leave that for another article. Again, if you don’t know which edition date (in our example the 1991 vs. 2000 Homeowners) is being used there is a great possibility of misinterpretation of the form language.
The numbering of ISO forms and endorsements have a very specific meaning. A 10-digit format is used.
- The first two places are letters indicating the line of insurance, such as CP for commercial property.
- The next two places indicate the category of insurance, further detailed below.
- The next two are the item of form number within the category.
- The next two are the month of that form’s edition date.
- The final two are the year of that form’s edition date.
Forms and Endorsements are grouped in categories according to their purpose as follows:
The First Two letters will designate the Line of Insurance. In this seminar we will be dealing with CP (Commercial Property) and CG (Commercial General Liability).
Coverage Forms - CP 00
State Amendatory Endorsements - CP 01 (State specific endorsements.)
State Cancellation and Suspension Endorsements - CP 02 (State specific endorsements.)
Deductible Endorsements - CP 03
Additional Coverage Endorsements - CP 04
Causes of Loss - CP 10
Builders Risk Endorsements - CP 11
General Endorsements - CP 12
Value Reporting Form and Related Endorsements - CP 13
Additional Property/Property Not Covered - CP 14
Time Element Endorsements - CP 15
Applications, Worksheets and Rating Information Forms - CP 16
Condominium Endorsements - CP 17
Supplemental Schedules - CP 19
Leasehold Interest Factor Tables - CP 60
Miscellaneous Endorsements - CP 99
Commercial General Liability Endorsements are again grouped in categories according to their purpose as follows. Note there are some CP categories not used in the CG, and visa versa.
CG 00 – Primary Coverage Forms
CG 01- State Amendatory Endorsements
CG 02 - Termination and Suspension Endorsements
CG 03 - Deductibles
CG 20 - Additional Insured Endorsements
CG 21 - Exclusion Endorsements
CG 22 - Special Provisions for Certain Types of Risks Endorsements
CG 24 - Additional Coverage Endorsements
CG 25 - Amendment of Limits Endorsements
CG 27 - CGL Claims-Made Only Endorsements
CG 28 and CG 29 - Miscellaneous Coverage Forms and Endorsements
CG 99 - Miscellaneous Endorsements
IL - Interline Endorsements
Copyright 2014 by Professional Insurance Education, Inc. Reprinted with permission.
Last Updated: January 2014