ISO’s Commercial General Liability Coverage Form Changes

Insurance Services Office’s (ISO’s) four major filings in Commercial Property, Business Auto, Businessowners Coverage, and Commercial General Liability (CGL) make 2013 a big year for insurance professionals. The next two articles focus on the changes that begin taking effect this year in the commercial general liability forms and endorsements.

Coverage Form Changes

ISO filed 11 coverage form changes that begin to take effect in 2013. Each change is discussed below.

Revision to the Liquor Liability Exclusion. As a result of several court cases, ISO is making two changes to the liquor liability exclusion (exclusion “c.” in the CGL). One is a potential broadening of protection and the second a clarification/tightening of the endorsement’s application.

“Bring Your Own” (BYO) operations have never been specifically addressed within the context of the exclusion’s requirement that the insured be in the business of manufacturing, selling, serving or furnishing of alcoholic beverages for the exclusion to apply. New policy language shall specify that BYOs are NOT in the business of…. This can be viewed as a broadening of coverage or simply a better clarification of original intent.

ISO is revising the exclusion to specifically state that the exclusion applies even when a claim alleges negligence or any other wrongdoing in the: 1) supervision, hiring, training or mentoring of employees or any other party; and/or 2) providing or failing to provide transportation when any person is or is suspected of being under the influence of alcohol. This additional wording can be viewed as either a lessening of coverage, but it appears to be more appropriately viewed as a tightening up of coverage to comply with the apparent original intent.

Aircraft, Auto or Watercraft Exclusion (exclusion “g.” in the CGL). The change to this exclusion is simply editorial. The phrase, “in the state” is removed from the exception wording related to the operation of machinery or equipment attached to or a part of a land motor vehicle that would qualify as “mobile equipment” if the vehicle was not subject to a financial responsibility law or some other vehicle insurance law. As stated, this does not alter coverage; the change is made merely to recognize the use of the form in jurisdictions that are not “states” (DC, Puerto Rico, Guam, and the US Virgin Islands).

Electronic Data Exclusion (exclusion “p.” in the CGL). ISO is broadening coverage by introduction of an exception to the electronic data exclusion if bodily injury occurs.

Recording and Distribution of Material of Information in Violation of Law (exclusion “q.” in Coverage A and “p.” in Coverage B of the new version of the CGL). The exclusion in the form is revised to incorporate the wording from the mandatory CG 00 68 endorsement placed in use in 2008/09. There is no change in coverage since the endorsement was mandatory. With the incorporation of this wording into the base form, the CG 00 68 is withdrawn.

Material Published with Knowledge of Falsity Exclusion & Material Published Prior to Policy Period Exclusion (exclusions “b.” and “c.” in Coverage B of the CGL). Both exclusions have been endorsed to add the phrase, “in any manner” to address Internet and electronic publication of material. This change does not alter coverage according to ISO.

Other Insurance. ISO’s change to the Other Insurance Condition emanates from requests to remove the requirement in the condition that the named insured be added as an additional insured on another policy “by endorsement.” The “by endorsement” requirement is removed in recognition that some insurance carriers extend additional insured status within its policy language and no endorsement is required. The new wording states that the named insured’s coverage will be excess over any other primary insurance that names the insured as an additional insured whether such addition is by endorsement or any other means. Both Supplemental Extended Reporting Period endorsements (CG 27 10 and CG 27 11) are altered to apply this change.

Auto and Mobile Equipment Definitions. Changes to these two definitions in the various liability forms are editorial only. Reference to “in the state” is deleted to recognize that the form is available in jurisdictions that are not states (DC, Puerto Rico, Guam, and US Virgin Islands).

Revision to Liquor Liability Coverage Forms – CG 00 33 and CG 00 34. Trusts are added to the list of Insureds within Section II of these coverage forms.

Railroad Protective Liability Coverage Form – CG 00 35. ISO is revising the pollution exclusion in the Railroad Protective Liability Coverage Form to broaden coverage. Previously, to garner the coverage granted in the new policy language, attachment of the Pollution Exclusion Amendment endorsement (CG 28 31) to the CG 00 35 was required. The new pollution exclusion wording incorporates the intent of the CG 28 31 into the form by granting an exception to the exclusion (creating coverage) for bodily injury or property damage arising out of fuels of lubricants for equipment used at the job site. Previously, such fuels or lubricants had to escape FROM the equipment to be covered. The form will now cover a loss such as the escape of lubricant from a storage drum on the premises if the lubricant is used FOR the equipment at the job site. Along with the revision of the form wording, the CG 28 31 is withdrawn.

Pollution Liability Coverage Forms – CG 00 39 and CG 00 40. ISO is revising exclusion “k. Aircraft, Auto, Rolling Stock or Watercraft” found in both Pollution Liability Coverage Forms by addition of a new paragraph. The new wording specifies that the exclusion applies to “pollution incidents” causing “bodily injury,” “property damage” or “environmental damage” even if such injury or damage is caused by negligent supervision, hiring, employment, training or monitoring of others. ISO contends that this is a clarification of intent producing no change in coverage, unless the insured is in a state that has previously ruled that such claims are covered by the policy (then it’s a reduction in coverage).

A second change, found only in the CG 00 39 version of this exclusion, is made to the mobile equipment exception to the exclusion. The revised wording mirrors the wording found in the CGL form specifying that any land vehicle subject to financial responsibility or other motor vehicle insurance laws is not covered for its over-the-road exposures under the pollution liability coverage forms. Coverage is still extended to the operation of machinery or equipment attached to such vehicles. According to ISO, there is no change in coverage unless the insured is in a state where the courts ruled otherwise.

Electronic Data Liability Coverage Form – CG 00 65. ISO has removed the last sentence of exclusion “g. Infringement of Intellectual Property Rights” stating that the wording is not applicable to the coverage provided by the Electronic Data Liability Coverage Form. This sentence related to the use of another entity’s advertising idea in the insured’s “advertisement.” Since this wording had no effect on the coverage provided by the form, this change has no impact on coverage.

This article is one of a series on ISO’s 2013 policy form changes.

Christopher J. Boggs, CPCU, ARM, ALCM, LPCS, AAI, APA, CWCA, CRIS, AINS is the director of education for Insurance Journal’s Academy of Insurance. He can be reached at cboggs@ijacademy.com.