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. These articles focus on the changes that begin taking effect this year in the commercial general liability forms and endorsements. (View Part One and Part Two)
Newly Introduced Endorsements
Primary and Noncontributory – Other Insurance Condition (CG 20 01). This is a new optional endorsement introduced in response to contractual wording found in many construction contracts requiring coverage extended to the additional insured be provided on a “primary and noncontributory” basis. This endorsement alters the Other Insurance Condition to specifically state that coverage provided to an additional insured is, in fact, provided on a “primary and noncontributory” basis. This endorsement applies when:
- The additional insured is a named insured on another policy; AND
- A written contract or agreement requires the named insured’s policy to be primary and to not seek contribution from other insurance available to the additional insured.
The endorsement applies to the CGL only, not any umbrella that may be attached. Whether and how much of an additional premium applies is subject to the insurance carrier.
Editorial comment: ISO states that this does not impact coverage. I disagree. There will be a later article exploring the primary and noncontributory requirement.
Additional Insured – Owners, Lessees or Contractors – Automatic Status for Other Parties When Required in Written Construction Agreement (CG 20 38). For use with the CGL, this endorsement allows additional insured status to be extended to an upper tier party as required by a contract, but who may not be a direct party to the contract. For instance, the contract between the general contractor and a lower-tier subcontractor may require the sub to extend additional insured-level coverage to the property owner (who is not a party to the contract between the GC and the sub). This endorsement would allow the extension of additional insured status to the owner without the need for a specific listing. An additional premium applies to this endorsement and varies by company.
Total Pollution Exclusion for Designated Products or Work – CG 21 99. Used with either of the Products/Completed Operations Coverage Parts (CG 00 37 or CG 00 38), ISO classifies this endorsement as an “additional underwriting tool” for insurance carriers. The endorsement does not replace the optional Total Pollution Exclusion – CG 21 98, it can be used in place of the CG 21 98. The key difference between the CG 21 98 and the new CG 21 99 is that the CG 21 99 applies to a pollution event (as defined in the form) from a specific product or work making this exclusion narrower than the CG 21 98 which applies to any and all pollution event (in effect giving broader coverage).
Liquor Liability – Bring Your Own Alcohol Establishments – CG 24 06. In the first section of this article the revised CG 21 50 and CG 21 51 were introduced and discussed. ISO intends this new endorsement, CG 24 06, to be used as an attachment to the either of the Liquor Liability Coverage Forms (CG 00 33 or CG 00 34) to specifically extend coverage to Bring Your Own (BYO) establishments. Remember, coverage for these types of establishments is now included in the base CGL wording.
Amendment of Personal and Advertising Injury Definition – CG 24 13. This endorsement removes coverage for “oral or written publication, in any manner, of material that violates a person’s right of privacy,” from the list of covered offenses in Coverage B – Personal and Advertising Injury (it does not affect Coverage A). ISO couches this as an additional underwriting tool. Violation of a person’s right of privacy may include, for example, the use of a picture or likeness without permission. This is a reduction in coverage when used by the underwriter.
Designated Location(s) Aggregate Limit – CG 25 14. This endorsement is intended for use with the Liquor Liability Coverage Part (CG 00 33 or CG 00 34). The current Designated Location(s) General Aggregate Limit endorsement (CG 25 04) is used for and applicable to the CGL only. The purpose of this endorsement (just like the CG 25 04) is to allow the aggregate limit to apply separately to each location where liquor is served. However, losses that cannot be attributed to a specific location are subject to the general aggregate.
As stated, a later article will address the “primary and noncontributory” requirement commonly found in construction contracts. Following that, we return to highlighting the various form and endorsement changes ISO has made to the commercial auto coverage and the BOP.
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 email@example.com.