are settlement amounts covered in cgl

As the CGL insuring agreement does obligate an insurer to pay "as damages" those sums an insured is legally obligated to pay because of bodily injury or property damage, the simple answer to the question is, "Yes, the ISO CGL does obligate the insurer to pay punitive damages."

Full Answer

Can an insurer recover the cost of defending a CGL claim?

An insurer will generally not be able to recover from an insured the cost of defending any claim that was potentially covered by the CGL policy but ultimately was determined not to be a covered claim. The cost of such defense is considered part of the insurer's independent duty to defend as contained in the CGL form.

What coverage does the CGL offer?

Coverage A - Liability for property damage and bodily injury Coverage B - Liability for advertising and personal injury The coverage that the CGL offers is largely referred to in the insuring agreement.

Can a CGL insurer withdraw from a case?

While the CGL insurer may wish to tender its limits and withdraw from the case, the majority rule is that the CGL insurer is bound to continue to defend the claim until its resolution, regardless of the cost of defense.

What is a CGL lawsuit?

A "suit," which is a term defined in the CGL policy beginning in 1986, means a civil proceeding, such as the filing of a complaint, more commonly known as a lawsuit. The definition of "suit" also includes arbitration proceedings if the insured is required to submit to such proceedings or if the insurer consents to the proceeding.

What is not covered under a CGL policy?

The CGL policy does not cover infringement of others' intellectual property; other than claims of violating someone else's copyright, trade dress, or slogan in advertising.

What are some common CGL exclusions?

CGL Exclusions: The Ultimate GuideBodily Injury. Bodily injury means any injury that happens to a person's body, including sickness, death, disease, or an actual physical injury. ... Property Damage. ... Insuring Agreement. ... Expected Or Intended Injury. ... Contractual Liability. ... Liquor Liability. ... Pollution. ... Aircraft, Auto, Or Watercraft.More items...•

What is excluded from a commercial general liability policy?

Aircraft, Auto, and Watercraft Any liability caused by the use of aircraft, automobiles, or watercraft, whether owned, leased, or borrowed, is excluded from the general liability policy.

Does CGL cover punitive damages?

Punitive Damages The language of the ISO CGL obligates an insurer to pay “as damages” those sums an insured is legally obligated to pay because of bodily injury or property damage. Because a damage award may include punitive damages, the CGL does obligate the insurer to pay punitive damages.

What expenses are excluded in a typical CGL policy?

The CGL excludes coverage for property damage to property occupied by the tenant, who is the named insured in this example. Important exceptions to this exclusion should be noted—the exclusion for property damage to premises occupied or rented to the insured does not apply to damage by fire.

Which of the following is not an exclusion in the CGL policy?

Which of the following is NOT excluded under Part A of the CGL form? The mobile equipment exclusion applies to the transportation of mobile equipment by the insured. However operation of mobile equipment is not excluded unless for racing or stunting.

What is covered under commercial general liability?

Commercial general liability insurance covers claims arising from injuries or damage that your business caused, such as: Damage to someone's property. Bodily injury. Personal injury, like libel and slander.

What is covered under general liability insurance?

What does general liability insurance cover? General liability insurance policies typically cover you and your company for claims involving bodily injuries and property damage resulting from your products, services or operations. It may also cover you if you are held liable for damages to your landlord's property.

Which of the following would not be excluded under Coverage A of a commercial general liability policy?

Which of the following is not a specific exclusion in Coverage A of the CGL? The correct answer is: C. Intentional acts – The CGL does not contain an “intentional acts” exclusion.

Does CGL cover consequential damages?

While many insureds are familiar with pursuing insurance coverage for bodily injury and property damage, a CGL policy can also cover certain consequential damages if they can be characterized as damages “because of” property damage or bodily injury.

Does CGL cover negligence?

A Commercial General Liability (CGL) policy protects your business from financial loss should you be liable for property damage or personal and advertising injury caused by your services, business operations or your employees. It covers non-professional negligent acts.

Why are punitive damages not covered by insurance?

Usually, punitive damages are awarded only if there has been proof of intentional bad acts, and most insurance policies also exclude coverage for damages caused by intentional acts of the insured.

Does CGL cover pollution?

Conclusion. The basic or unendorsed ISO CGL policy provides very little pollution coverage. And, for the pollution coverage that may be afforded, insurers may be tempted to apply the cleanup exclusion more broadly than warranted, despite the applicable property damage exception.

What is an exception to the aircraft auto watercraft exclusion on the commercial general liability form?

The watercraft exclusion contains exceptions that provide coverage for three types of claims. One exception applies to bodily injury or property damage that arises out of boats located on your premises. For example, suppose your firm owns a small motorboat it uses to take clients on occasional fishing trips.

What is a general exclusion?

General Exclusions — in workers compensation insurance, operations (e.g., aircraft operations) that are specifically excluded from the basic classifications and are always separately classified unless specifically included in the basic classification wording.

What does CGL cover?

In other words, the CGL covers legal claims or lawsuits that are made against your business by a third party that has experienced property damage or suffered a bodily injury because of the negligence of your company. What does commercial general liability insurance cover? Commercial general liability insurance offers reasonably expansive coverage.

What is a CGL policy?

A CGL policy covers four main categories of liability for which you could be found at fault: bodily injury; damage to others' property; personal injury, including slander and libel; and false or misleading advertising. It is very important that business owners have basic idea of what, where and who is covered (& what, where and who is excluded).

What does commercial general liability insurance cover?

What does commercial general liability insurance cover? A general liability policy protects your business from claims involving third party bodily injury or property damage and can help pay for settlements, legal fees, litigation and judgments awarded by courts.

What is coverage A?

Coverage A - Liability for property damage and bodily injury

What is a CGL?

What does commercial general liability insurance cover? The Commercial General Liability Coverage Form (CGL) is the foundation of an ISO liability policy. This specific form offers three coverages that are separate and distinct from one another. They include:

What is section 3 of CGL?

This section makes it clear that the limits shown in the declarations fix the most the insurer will pay regardless of the number of insureds, claims made, or suits brought or persons or organizations making claim or bringing suits. Read more on Limits Of Insurance - Section 3 for specific CGL coverage form language.

What is CG 00 01 04 13?

The Commercial General Liability Coverage Form (CG 00 01 04 13) - the form used by any insurance companies for their general liability policies - has 5 main sections including:

Why did the settlement claim not allege a covered occurrence?

The insurer further contended that the settled claims did not allege a covered “occurrence” because they were premised on alleged willful and intentional misconduct by the distributor. The insurer argued that the settled claims were all based on allegations that the distributor:

Why is the distributor's settlement not covered by the insurance company?

The court next rejected the insurer’s argument that the distributor’s settlement was not covered because the settled claims did not seek “damages because of bodily injury.” First, the court quoted the Seventh Circuit’s earlier opinion on the duty to defend, which reasoned that if an insured under an automobile policy caused an accident in which a claimant became paralyzed, and the claimant sued the insured only for the cost of making his house wheelchair accessible (not for his physical injuries), those damages might not be covered if the auto policy only covered damages “ for bodily injury.” However, if the auto policy covered damages “ because of bodily injury,” [as Smith’s policy did,] then the insurer would have a duty to defend and indemnify. (Emphasis added).

How much did the opioid war settlement cost in West Virginia?

A federal district judge in Illinois has issued an important ruling in the opioid insurance coverage wars, finding coverage for a $3.5 million settlement between an opioid distributor and the State of West Virginia.

What was the insurer's last argument for shaving its payment obligation?

The insurer’s last argument for shaving its payment obligation was that covered claims were not the primary focus of the litigation, and the settlement should be apportioned between covered claims and allegedly uncovered claims. The court entirely rejected this argument, and found that Smith:

Does Smith have to establish actual liability?

Smith did not have to establish actual liability in order to have insurance coverage. An insured does not have “to refute liability in the underlying lawsuit and then, after obtaining a settlement, turn around and prove its own liability in order to succeed in a subsequent insurance coverage action.” Such a requirement would chill settlements.

How to find out if a CGL is covered?

In order to find out if the incident is covered, you need to send a written request to the insurer for insurance disclosure information as required by Florida Statutes. The CGL insurer needs to send you a letter (sworn under oath) stating their coverage defenses, if any.

What does a CGL policy cover?

A CGL policy will pay damages when the business is legally responsible for bodily injury, property damage, or personal and advertising injury liability.

What are the types of liability covered by a CGL policy?

The most common types of liability that are covered under a CGL policy are: premises and operations liabilities, and products and completed operations exposure.

What are the things that are not covered by a CGL policy?

Incidents that might not be covered in a CGL policy: Expected or intended injury. Liquor liability. Workers’ compensation. Autos that the business owns. Non-Owned & Hired Autos. Watercraft over a certain length.

What is Part C insurance?

Part C pays medical expenses to people hurt on the premises of the business within a certain time period of the accident, regardless of whether the business was careless. The time period depends on the language of the policy.

What is a Part A claim?

Part A pays claims if the insured business’ negligence caused accidental bodily injury or property damage to someone.

Does Mike have to send a copy of his CGL insurance policy?

Mike should send a letter to the supermarket requesting their insurance disclosure information. In Florida, the supermarket’s general liability insurer is required to send Mike a copy of its CGL insurance policy.

Who should have a working knowledge of how the limits of liability of a CGL apply to the payment of claims?

Any person or organization that purchases commercial general liability (CGL) insurance or anyone who provides advice to those who purchase CGL policies should have a working knowledge of how the limits of liability of a CGL apply to the payment of claims. This is important not only in choosing reasonable CGL limits but also in complying with ...

How many limits does CGL have?

The CGL policy lists on the declarations six different limits. While the policy lists separately each of the six limits, it is important to recognize that the limits are all interrelated. That is, a reduction of one limit by the payment of damages will also reduce another limit. More on how this actually works later in this article. To see how the limits apply to specific claim scenarios, see the illustration of Nick's Casino, Inc., located at the end of the article.

Why does the aggregate limit not apply?

The only circumstances in which the general aggregate limit does not apply is to damages because of bodily injury or property damage arising out of the products-completed operations hazard. The definition of products-completed operations hazard is included in the CGL policy—a separate aggregate limit ...

How long does a CGL policy last?

In this situation, it is preferable to either write a 21-month policy period at policy inception or write the CGL policy to expire on its normal anniversary date and write a second short-term CGL policy for the 9-month additional period.

How does damage to premises rented to you limit tank work?

The damage to premises rented to you limit tank is refilled for each premises, but for the same occurrence, draws down the each occurrence limit tank via valve #4 as well as the general aggregate limit via valve #1.

When are damages paid on a policy?

Damages are paid on the policy until the aggregate tank is empty— in which case the aggregate is exhausted as nothing is left. Any further attempt to draw from that aggregate tank during the policy period will come up dry—the aggregate limit is exhausted.

Why do insurance limits not increase?

In other words, the limits do not increase simply because a claim or suit names multiple insureds, the incident involves multiple claims or suits, or numerous persons or organizations make a claim or file a suit.

When did the CGL form stop defending claims?

While prior CGL form editions required the insurer to defend an insured "even if the allegations of the suit are groundless, false or fraudulent," this wording was removed beginning in 1986. However, the obligation to defend an insured in the post-1986 edition CGL policy does apply to "any suit." The phrase "any suit" has been interpreted to include suits alleging false information or complaints filed without legal grounds.

What is a CGL policy?

The commercial general liability (CGL) policy obligates an insurer to defend an insured against any suit seeking damages because of bodily injury, property damage, or personal and advertising injury. The duty to defend is provided by an express grant of coverage contained in both the Coverage A—Bodily Injury and Property Damage Liability ...

What determines the insurer's obligation to defend?

The insurer's obligation to defend is determined by the allegations contained in the suit and not by facts that may later be established that ultimately show the claim is not covered by the CGL policy.

When is the duty to defend in a CGL policy triggered?

The insurance company's duty to defend in the CGL policy, and the resulting payment of legal expenses, is triggered when covered allegations are contained in a suit brought against an insured. The requirement in the CGL policy that the insurer pay actual damages on behalf of an insured is triggered when the claimant demonstrates an insured is ...

What does "suit" mean in CGL?

A "suit," which is a term defined in the CGL policy beginning in 1986, means a civil proceeding, such as the filing of a complaint, more commonly known as a lawsuit.

Why do insurance companies have to defend their cases?

The reasoning for this rather expansive obligation is that the insurance company must defend the entire case in order for it to provide a timely defense. Attempting to sort out potentially covered and potentially uncovered allegations, which may ultimately be a futile attempt, would delay the defense. Failure to provide an immediate defense is considered a failure to provide a meaningful defense.

Which case states that the duty to defend all allegations in a suit in which only one allegation is possibly covered?

The duty to defend all allegations in a suit in which only one allegation is possibly covered is articulated in Aetna Casualty & Surety Co. v Continental Casualty Co. , 413 Mass. 730 (1992):

Background of the Case

In 2012, West Virginia sued H.D. Smith, a distributor of controlled substances to pharmacies in West Virginia, on various theories arising from Smith's alleged failure to put effective controls and procedures in place to guard against the theft and diversion of opioids. Smith's insurer, Cincinnati Insurance, denied coverage of the claims.

1. The Settlement was in Reasonable Anticipation of Liability

The court held that an insured may have a reasonable anticipation of liability when it faces a jury trial against a sympathetic plaintiff with significant damages even if the facts against the insured are weak. Smith did not have to establish actual liability in order to have insurance coverage.

2. The Settlement Resolved Covered Claims Alleging an "Occurrence"

The insurer further contended that the settled claims did not allege a covered "occurrence" because they were premised on alleged willful and intentional misconduct by the distributor. The insurer argued that the settled claims were all based on allegations that the distributor:

3. The Settlement Resolved Claims Seeking Damages "Because of Bodily Injury"

The court next rejected the insurer's argument that the distributor's settlement was not covered because the settled claims did not seek "damages because of bodily injury." First, the court quoted the Seventh Circuit's earlier opinion on the duty to defend, which reasoned that if an insured under an automobile policy caused an accident in which a claimant became paralyzed, and the claimant sued the insured only for the cost of making his house wheelchair accessible (not for his physical injuries), those damages might not be covered if the auto policy only covered damages " for bodily injury." However, if the auto policy covered damages " because of bodily injury," [as Smith's policy did,] then the insurer would have a duty to defend and indemnify.

4. The Settlement Was for A Reasonable Amount

Next, the court rejected the insurer's challenge to the reasonableness of the settlement amount.

5. The Covered Settlement Amount Would Not Be Chiseled Lower Because of "Allegedly Uncovered Claims"

The insurer's last argument for shaving its payment obligation was that covered claims were not the primary focus of the litigation, and the settlement should be apportioned between covered claims and allegedly uncovered claims. The court entirely rejected this argument, and found that Smith:

Background of The Case

The Settlement Was in Reasonable Anticipation of Liability

The Settlement Resolved Covered Claims Alleging An “Occurrence”

• The insurer further contended that the settled claims did not allege a covered “occurrence” because they were premised on alleged willful and intentional misconduct by the distributor. The insurer argued that the settled claims were all based on allegations that the distributor: “knew what was happening, but continued to intentionally and willfully...

See more on millerfriel.com

The Settlement Resolved Claims Seeking Damages “Because of Bodily Injury”

The Settlement Was For A Reasonable Amount