Liability Coverages include not only general liability coverage but also the common liability coverages that are related to the premises or operations of a business to include Directors & Officers liability, Professional liability (Errors & Omissions), Employee Benefits Liability, Employment Practices Liablity, Cyber Liability, and more.
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Liability Coverage—Commercial General Liability-Occurrence Basis
This coverage will pay for damages that the insured becomes legally obligated to pay due to bodily injury, property damage or personal and advertising injury arising from the insured’s premises, operations, completed operations and products. The occurrence basis means that only occurrences that happen during the policy period are covered. There is no reference as to when the claim must be presented.
Most will use the occurrence basis. They should never go without this coverage since slips and falls can happen so quickly. The severity can be low, but it can also be high since we cannot control how a person falls, what is damaged or how they will react to treatment.
(Refer to ACORD 126) (Refer to PF&M Section 270.4-2)
Liability Coverage—Commercial General Liability – Claims-Made Basis
This coverage will pay for damages that the insured becomes legally obligated to pay due to bodily injury, property damage or personal and advertising injury arising from the insured’s premises, operations, completed operations and products. The claims-made basis means that only claims that are presented during the policy period are covered without consideration for when the occurrence happened (unless there is a retrospective date).
The claims -made form is used only if the coverage cannot be purchased on an occurrence basis.
(Refer to ACORD 126) (Refer to PF&M Section 270.4-2 and 270.3-1)
Liability Coverage—Directors and Officers Liability
Insures corporate directors and officers against claims, usually by stockholders, alleging loss arising from mismanagement. Claims may also be made by other than stockholders against the corporation for mismanagement, which would also be covered. Outside Directorship Liability Policy Form is available, as supplementary protection, to assure sufficient limits for the exposure created when a company’s director, officer or employee serves in an outside director position at its request. The coverage is not standard and may vary significantly between carriers, as well as by type of business, i.e., for-profit, not-for-profit, closely-held or publicly-traded.
Any operation with outside directors will need this coverage or risk losing the outside directors.
(Refer to PF&M Section 384.1)
Liability Coverage—Employee Benefits Liability
Covers the cost to employees that results from incorrect information provided regarding their employee benefits. This DOES NOT INCLUDE fiduciary responsibilities or any discrimination or harassment situations. A simple example is not providing the employee with the appropriate COBRA information following termination that result in the ex-employee losing benefits. Coverage is provided by most carriers on their own filed forms. Coverage is provided either with a separate coverage part or as an endorsement to the CGL. ISO has developed a form but it is not yet in wide usage. Key comparisons are the types of benefits covered, claims-made vs. occurrence and the employer contribution.
Any automotive operation that provides employee benefits should purchase this coverage.
(Refer to ACORD 126)
Liability Coverage—Employment-Related Practices
Covers lawsuits brought by employees (past, present or prospects), or governmental entities against the insured employer, alleging wrongful discharge, discrimination or certain types of harassment. ISO has developed an employment practices liability policy that can now be used as a standard of comparison. Companies have developed their own forms and they vary tremendously. Using the ISO standard should help agents advice insureds on the best direction to take.
Automotive operations have experienced many claims of harassment. It is often difficult to draw the line between innocent fun and malicious abuse. This coverage is important along with regular procedures and processes to help everyone understand what can and cannot be allowed.
(Refer to ACORD 188) (Refer to PF&M Section 369.4-2)
Liability Coverage—Owners And Contractors Protective Liability (OCP)
This liability coverage is designed to protect either a property/business owner or a general contractor for the potential liability exposure that results from the negligent act of a subcontractor or an independent contractor hired to perform work on the insured’s behalf. The independent or subcontractor is the actual purchaser of the policy but the protection is for the insured who is either the property/business owner or a general contractor for whom the work is being done. Coverage is limited to a specific location and project. This coverage could be provided by attaching an additional insured endorsement to the contractor’s policy but not as completely. The separate policy allows the project owner/general contractor to better control the policy and make sure the limits are not diluted by other claims against the subcontractor.
Any automotive operation that is having extensive works done on their premises may want to consider requesting a contractor obtain an OCP policy in their name rather than just requiring a certificate of insurance. The cost may be slightly higher, but the added protection may prove invaluable.
(Refer to ACORD 126) (Refer to PF&M Section 271.4-2)
Liability Coverage—Railroad Protective
This liability coverage is designed to protect a railroad, a general contractor or the project owner for the potential liability exposure that results from the negligent act of a subcontractor or an independent contractor hired to perform work on the insured’s behalf while working on or around railroads. The independent or subcontractor is the actual purchaser of the policy but the protection is for the insured who is either the railroad, property/business owner or a general contractor for whom the work is being done. Coverage is limited to a specific location and project. The Commercial General Liability Policy Form excludes construction or demolition projects that are at or near railroad properties including railroad tracks, beds, trestles, tunnels and the like. This is a limited coverage liability policy to buy back coverage.
Automotive operations close to a railroad track MAY be required by the railroads to purchase this coverage.
(Refer to ACORD 126 and 801) (Refer to PF&M Section 272.4-2)
Liability Coverage—Special Events
Special events bring about many exposures not anticipated in a normal business. However, many businesses will participate in special events and may need special coverage during the event. In other cases, businesses may sponsor special events and therefore bring about unanticipated exposures that need to be addressed. Coverage for special events can be covered under a standard CGL policy. The insured may decide to purchase another policy to prevent dilution of their own limits in order to participate in the event. Coverage can be secured from the standard market or may need to be obtained from a specialty underwriter.
Automotive operations that sponsor special events should consider purchasing a special policy to protect the limits on their regular policy.
(Refer to ACORD 126)