The ISO Commercial General Liability Coverage Form can seem like a map that starts you out on a main road, takes you smack into a dead end, but offers you a right turn that you can take if you meet certain conditions. It begins with a broad promise and a hint that the promise isn’t quite that broad, then continues with a list of items that narrow that promise. However, some of those items contain a few words that actually make the promise a bit broader again. Somewhere in that twisting road lies the answer to whether the insurance will cover your business’s legal liability for an accident.
The form actually has three coverages, but the one most business owners are concerned with is Coverage A, Bodily Injury and Property Damage. The first part of Coverage A is the Insuring Agreement, which states that the insurance company will cover the insured person or organization’s legal liability for bodily injury or property damage to others. A key phrase, however, is that the company will pay amounts for occurrences “to which this insurance applies.” How do you know when the insurance applies? That’s where the list comes in.
Right after the Insuring Agreement comes a section labeled Exclusions. This section begins with the sentence, “This insurance does not apply to:…” and goes on to list 17 categories of occurrences. The insurance does not apply to any occurrences that fall within the meanings of those categories. The categories include things like pollution; injuries to the insured’s employees; ownership and use of motor vehicles, aircraft and watercraft; causing or contributing to a person’s intoxication; damage to property the insured owns or possesses; and loss of electronic data. While these items narrow the insurance coverage considerably, some of them contain clauses that add a little coverage back in. For example, while the insurance does not apply to property damage arising from a contractor’s completed work, the exclusion gives back coverage if the property damage arose from work a subcontractor performed on the contractor’s behalf.
In a claim situation, different burdens of proof apply to either the insurance company or the insured organization, depending on what each one is claiming. The insured has the burden of proving that an accident falls within the Insuring Agreement. To do this, the insured must show that an “occurrence” that took place during the policy term caused bodily injury or property damage to someone else. If the insured cannot prove any one of these elements, the policy will not cover the loss. The policy defines “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Therefore, the insured must prove that an accident (a piece of lumber falls and strikes another contractor’s employee on the back) occurred during the policy term and caused bodily injury or property damage.
Once the insured meets that burden, the insurance company now has the burden of proving that one of the exclusions applies. For example, it must prove that damage to an HVAC system the insured installed arose out of some defect in the system. If it cannot, then the insurance applies to the loss and the company must pay for the damage. If it can, then the burden shifts back to the insured to show that an exception to the exclusion applies. If the insured can show that a subcontractor installed the defective components that malfunctioned and damaged the HVAC system, then the exception to the exclusion applies and the insurance company must pay the claim.
Contractors should work with insurance agents who are knowledgeable about the CGL policy and can answer complex coverage questions. This policy can provide millions of dollars in protection for a business, so it is important for the business owner to understand it.
BGES Group’s office, located in Larchmont, NY is a full service insurance agency offering, Property, Liability, Umbrella Liability, Business Auto, Bid & Performance Bonds, Inland Marine, Worker’s Compensation, New York State Disability, Group Health, Life insurance, Personal lines and Identity Theft.
Special Contractor Insurance Programs (NY, NJ, CT) – We we have 60+ insurance companies to market your general liability, umbrella liability, business auto, workers compensation, bid & performance bonds and group health coverages. We help contractors set up proper risk transfer. If you’re a contractor we offer extensive information about insurance markets, coverages, risk transfer, subcontractor screening, ways to lower your insurance costs.
BGES Group are Worker’s Compensation Specialists for the States of New York, New Jersey and Connecticut – Issues we address: 1) Lowering pricing – we have specialty programs that can save you up to 40%; 2) Finding a new company; 3) Replacing policies that are being cancelled or non renewed; 4) Audit disputes; 5) Company creating fictitious payroll at audit time; 6) Lowering high experience modifications factors; 7) Misclassification of payrolls; 8) Lowering or eliminating renewal deposits; 9) Getting coverage when you’ve been without for a few months; 10) Covering multiple states under one policy; 11) Eliminating 10% service or policy fees; 12) Timely issuance of certificates; 13) Always being able to get someone on the phone or by email when you need to.
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