2013 CGL CHANGES - PART 1Liability imposed on BYOB club for negligent conduct independent of the...

S P O N S O R E D B Y

2013 CGL CHANGES - PART 1

10/28/2013

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2013 ISO CGL ...friend or foeOverall changes

with

Irene Morrill, CPCU, CIC, ARM, CRM, LIA, CRIS, CPIWVice President of Technical Affairs

Massachusetts Association of Insurance Agents

This program is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought.

With special thanks to the Insurance Services Office, Inc. for advance information, continued support, and permission to use their forms and information.

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Liquor liability and the CGLchanges to policyMA mandatory endorsement – old and newBYOB endorsement

Some broadening changesElectronic data exclusionOther insurance condition

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contents

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New endorsementsCG 21 99 Total Pollution Exclusion for designated products v. Total pollution exclusion

CG 24 13 Amendment to AI/PI definition

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Pollution Liability Coverage Form changesExpanded exclusion including negligent supervision/hiring

Primary and non-contributory endorsementHow it appliesPotential problems

Miscellaneous

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Liquor and the CGL policy

2007/2004 CGL language

Only exclude in the BUSINESS

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Still have host liquor

Could have open house and serve liquor

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Even though exclude in the business …was still Tested in court

Penn-America Ins. CO v. Peccadillos (PA 2011)

Sell alcohol …served intoxicated patron who got in fight …insured asks them to leave but does NOT call taxi or police. Intoxicated patron drove away –caused auto accident where driver of other vehicle died

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Penn-America Ins. CO v. Peccadillos (PA 2011)

Insured wants CGL to respond as incident not part of liquor exclusion!

Claim for “negligence of ejecting patrons rather than summoning the policy when insured KNEW patrons would drive” (the old negligent supervision issue).

So …company HAD to defend!

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McGuire v. Curry S.D. 2009

Employer provided underage employee with unsupervised and unrestricted access to alcohol storage facility. Employee drank …then drove after shift ended causing accident with motorcycle.

Employer sued for “negligent hiring and negligent supervision of the employee”.

Court found employer had duty to supervise

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Essex Ins. Co v. Cafe’ Dupont LLC, D.D.C 2009

Nightclub (whose liquor liability coverage had been canceled) sued for

“failing to prevent a patron from becoming intoxicated and for failing to detain the patron or arranging alternative transportation”

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Just as a few editions ago …the auto exclusion was expanded to include

Negligent supervision

Negligent hiring …

So too …is NEW language needed to add to the liquor exclusion…to make sure that those IN the BUSINESS of alcohol do not find ANY coverage regardless of what happened to liquor liability policy

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2013 language added to CGL liquor exclusion

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Add language:Exclusion APPLIES for Allegations of insured’s negligence in

hiringtrainingsupervising

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Add language:Exclusion APPLIES for Allegations of insured’s negligence in

Providing or Failure to provide transportation to intoxicated people

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Liquor and the CGL policy2013 language added to CGL liquor exclusion

Can’t count on negligent supervision or failure to do something if PROXIMATE CAUSE was the BUSINESS of ALCOHOL

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Liquor and the CGL policy2013 language added to CGL liquor exclusion

As always …exclusion only applies if in the business …said again

This statement was in previous language … but without new language …didn’t have the “bite” necessary

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Liquor and the CGL policy and BYOB

Going back to previous exclusion … what about BYOB places???

Various court cases with CGL and BYOB establishments

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Liquor and the CGL policy and BYOB

Simmons v. Homatas, Ill 2010An establishment that allows patrons to bring their own can be liability for alcohol-related injuries

Liability imposed on BYOB club for negligent conduct independent of the alcohol the patrons brought with them and drank on premises.Court found business liability for “giving substantial assistance or encouragement to another’s tortious conduct”

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2013 language states BYOB is not IN ITSELF ..considered the “business of selling, servicing or furnishing alcoholic beverages”.


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This does NOT say …BYOB is NOT a liquor business …it says …BY ITSELF …won’t be considered … I wish this were a LITTLE stronger


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21


Old and new language …I worry about “corking fees” …and “pouring” … and even mixers …if they let guests – let them buy and do everything FOR the drinking of it


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Liquor and the CGL policy and MA mandatory endorsement

CG 21 51Per VFW Post 54

“in the business” of CGL allowed VFW to have liquor liability under CGL –this endorsement removes coverage

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CG 21 51 language modifies CGL exclusion

Not “in the business” -It applies IF youManufacture, sell, distribute

Serve or furnish for charge whether or not a license is required

Serve w/o charge if license needed

Can schedule activities so not have to worry

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CG 21 51 language modifies CGL exclusion

Can BYOB be covered?

1) If not serve/distribut2) If no license required3) If no “corking” or

“serving fee”

Can schedule activities so not have to worry

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2013 revised endorsement is dangerous for BYOB

New anti-BYOB language added

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2013 revised endorsement is dangerous for BYOB

As previously –rewrites exclusion but ADDS ….

INCLUDING causing orContributing to intoxication by LETTING them BRING alcohol on premises

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2013 revised endorsement

Adds the same language as in 2013 CGL – language re:Supervision and failureto provide transportation

If incident really arises out of serving, selling, etc., of alcohol

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Adds language to previous exclusion –

Re: BYOB …permittingalcoholic beverages onpremises

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Still allows scheduling incidents …whether BYOB or serving/charging/etc. If not scheduled …problem with exclusion

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Liquor Coverage form and BYOB

Should a liquor coverage form be sold to a BYOB establishment …

Does coverage actually work for them??

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Liquor Coverage form and BYOB

IF BYOB …should one buy liquor liability coverage form?? Is one in the business … with this endorsement it won’t matter

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Some 2013 filing broadenings – electronic data exclusion

Electronic Data exclusion … changed – only applies to PD …NOT BI

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Some 2013 filing broadenings – electronic data exclusion

Still VERY dangerous …any damage one does to intellectual property is excluded – virus to email, software - and even contractor’s causing power

Outages or power surges … and resulting damage to intellectual information

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Some 2013 filing broadenings – Other Insurance condition

Other insurance provision …stating policy own policy is EXCESS when added to another entity’s policy as additional insured

Removes words …when gain AI status by “attachment of an endorsement”

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Graphic Arts Mutual Ins. Co v. Essex Insurance Co.GA 2006

Some companies “write their own” and add additional insured status or insured status within the policy …

This was the case above.Crossroads Apartment complex insured by Essex Ins. Co. contracted with Woodriff Property Management Company. Crossroads to add Woodriffas additional insured. Woodriff had own policy through Graphics Arts Mutual

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Injury at apartment complex. Both Crossroads and Woodriff sued.

Graphics defended Woodriff and Essex defended Crossroads. There was a mediated settlement assigning fault and participation in award. Graphics wanted reimbursement by Essex as it states it was “excess” by virtue of AI status by endorsement attached to Crossroads policy through Essex.

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Essex cited Who is insured section of CGL where property manager is automatically an insured under policy language ….NOT attachment by endorsement.

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Therefore …court agreed with Essex … if Woodriff NOT an insured under Crossroads policy by attachment of endorsement …

then Essex policy and Graphics policy are BOTH primary and Graphics does NOT get reimbursed as excess

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Interesting …how ALL the words are important …not just the ones we want to read.

What ASSUMPTIONS do WE make …

If agent had indicated AI status on the certificate could that be …. misrepresentation?

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We will have an issue with “assumption” regarding coverage …

and what actual endorsement states …

in CGL part 2 and the automatic additional insured endorsement

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Some 2013 endorsement restrictions – Amendment of Personal and Advertising injury definition endorsement CG 24 13

First …what IS the definition of Personal and advertising injury?

7 types ofCovered injuries

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Definition had 7 types of covered injuries …One is removed

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Remove oral/written publication violating privacy

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CGL pollution coverage …first

The CGL provides limited pollution coverage …Coverage A removes:No pollutants that emanate from premises …or Pollutants you bring to jobsiteClean up is separately excluded

Covers pollutants that disperse from mobile equipment (from operational parts of mobile equipment)

BI/PD arising out of products/completed operations hazard

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Total pollution exclusionary endorsement …first

This endorsement is NOT your client’s friend!!!

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Total pollution exclusionary endorsement …first

Eliminates virtually all coverage for pollution incidents, including those covered despite the basic policy's pollution exclusion.

Applies to Coverage A with respect to BI or PD that "would not have occurred in whole or part but for" an escape or release of "pollutants."

No exceptions to this exclusionary language.

Like policy cleanup costs excluded separately

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Total pollution exclusion designated work or product CG 21 99

New endorsement for products/completed operations policy

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Changes to ISO pollution coverage forms CG 00 39 and CG 00 40

Negligent supervision …and autos …added to CGL in 2004 … now added to pollution coverage forms (consistency is king!)

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Changes to ISO pollution coverage forms CG 00 39 and CG 00 40

Adding language to auto exclusion regarding mobile equipment which becomes auto per state financial responsibility law when on road – other CG forms did this in 2004

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Primary and non-contributory … final exists in ISOland

Contracts have required it …

certificate holders have wanted it …

Has ISO finally come through????

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Refresher….

CGL …provides either

PRIMARY coverage

or

Excess Coverage

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Primary coverage forthose who qualify as “insureds” under Section II. Who is Insured

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Indemnitees of valid “insured contract” also receive primary coverage

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Entities YOU add to your policy by additional insured endorsement receive primary coverage from your policy

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Your insurance is EXCESS for you whenYou buy certain other types of coverage

And

You have been added to ANOTHER policy as insured

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Unendorsed the ISO CGL …regardless of edition only talks about

PRIMARYEXCESS ….

YOU should make YOUR policy excess …

When I add YOU to my policy YOU are ALWAYS primary

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Historically …if YOU couldn’t fix YOUR policy … and YOUR policy stayed “primary”

Then YOUR policy has to share with MY policy … and you just don’t like to share

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Primary and non-contributory … final exists in ISOland CG 20 01

Instead of adding language TO the AI endorsements …or policy …ISO made it a SEPARATE endorsement

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It revises the Other insurance condition

Your policy won’t require … “sharing” … of an ADDITIONAL insured

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Remember that Graphics Ins Co v. Essex Ins. Co. And the property manager that is an insured under Section II …that is NOT an additional insured …but contract wanted primary and non-contributory .. .hmmmmm

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What about directors, officers, employees of the entity that is added as additional insured …but policy obviously doesn’t name these entities … hmmmmmmmmm

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And …you (the named insured under THIS policy) have a WRITTEN contract requiring primary status …and NO contribution.

The contract might require MORE entities receiving Primary/non-contributory status than are NAMED insureds on a policy….

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Exclusions – Recording /Distribution of Material Or Information in Violation of Law

Previously mandatory CG 00 68 Recording and distribution of Material or Information in Violation of Law exclusion - Added to 2013 CGL

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Exclusions – Material Published with Knowledge of Falsity and Material Published Prior to Policy

Certain Coverage B exclusions modified to identify ANY manner of publication – social media, Internet, email, etc

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Professional liability exclusionary endorsements modified for negligent supervision

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Language added to all the endorsements:

Negligent hiring, supervision, training, monitoring, etc …as added in Auto/liquor/pollution

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Amendment to insured contract definition endorsement

First …

We DON’T want to add this endorsement as it “messes” with “f” which we incorrectly call “broad form contractual”

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“normal” wording –you could assume BI/PD to others even if YOU are not negligent

Endorsement wording of 07/04 edition … - like AI you can only assume if you are IN WHOLE OR IN PART liable

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New endorsement ..

Makes changes like we’ll see in AI endorsements.. .

To extent allowed by law

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Thank you for attending…

2013 CGL…friend or foe

Overall changes

2013 CGL CHANGES - PART 1Liability imposed on BYOB club for negligent conduct independent of the...

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