Coverage Corner

FIVE CGL ENDORSEMENTS YOUR CONTRACTOR CLIENTS WILL BE THANKFUL FOR

By Cathy Trischan

A Commercial General Liability (CGL) policy is a key part of a contractor’s insurance program. There are a few endorsements, though, that can significantly improve a contractor’s CGL coverage. Look into adding these to the CGL policies you write. Your contractor clients will be thankful that you did!

AUTOMATIC ADDITIONAL INSURED COVERAGE FOR COMPLETED OPERATIONS

It is common in construction contracts for a contractor to agree to provide completed operations coverage for an additional insured for a period of time after the project is complete. The length of time coverage is required varies with each contract but is often as long as the applicable statute of repose. How do you know, though, that your insured has agreed to provide this coverage? Typically, an agent only becomes aware of the need for additional insured coverage when the contractor requests a certificate of insurance, and most stop requesting certificates of insurance when the job is complete. Automatic additional insured endorsements for completed operations can help. One such endorsement is Insurance Services Office’s (ISO’s) CG 20 40 12 19 –Additional Insured – Owners, Lessees or Contractors – Automatic Status For Other Parties When Required In Written Construction Agreement

coverage is required varies with each contract but is often as long as the applicable statute of repose. How do you know, though, that your insured has agreed to provide this coverage? Typically, an agent only becomes aware of the need for additional insured coverage when the contractor requests a certificate of insurance, and most stop requesting certificates of insurance when the job is complete. Automatic additional insured endorsements for completed operations can help. One such endorsement is Insurance Services Office’s (ISO’s) CG 20 40 12 19 –Additional Insured – Owners, Lessees or Contractors – Automatic Status For Other Parties When Required In Written Construction Agreement (Completed Operations). When this endorsement is added to a policy, the named insured has automatic coverage for completed operations for any party it has promised coverage to in a written contract. An endorsement such as this can ensure that the insured has the coverage it has contractually agreed to provide.

ELECTRONIC DATA LIABILITY COVERAGE

An electrician, while working on wiring in a building, damages several computers and the data in those computers. Although damage to the computers is covered by the CGL, loss arising out of damage to data is excluded. Electronic Data Liability Coverage, though, can be added to cover this exposure. One such endorsement is ISO’s CG 04 37 12 23 - Loss of Electronic Data Resulting From Physical Injury to Tangible Property Liability Coverage – Subject to Cyber Incident Exclusion. With this endorsement, a sublimit of coverage now applies to claims involving loss to electronic data as long as there is first physical injury to tangible property.

PER PROJECT PRODUCTSCOMPLETED OPERATIONS AGGREGATE LIMIT

A CGL policy typically has two aggregate limits – one that applies to products-completed operations claims and one that applies to all other claims. The aggregate limit is the most that will be paid during the policy term. CGL policies for contractors are often endorsed to provide a separate general aggregate for each project, a common contract requirement. Adding an endorsement to have the products-completed operations aggregate apply separately to each project, though, is less commonly done. Even if this coverage feature is not a contract requirement, it can reduce the likelihood that the products-completed operations aggregate limit will be exhausted. One such endorsement is ISO’s CG 25 45 12 19 Designated Project(s) Products-Completed Operations Aggregate Limit. The endorsement is designed to describe a designated project to which this separate aggregate applies, but some carriers will allow the coverage to apply to all projects.

EXCEPTIONS TO THE DAMAGE TO PROPERTY EXCLUSION

Among other things, the CGL’s damage to property exclusion removes coverage for property damage to personal property in the insured’s care, custody, or control and to the particular part of real property upon which the insured is performing operations. Although there are no standard endorsements to broaden coverage, many insurers are willing to provide a sublimit of coverage for some of these exposures. These endorsements are sometimes titled “Limited Care, Custody and Control” or “Voluntary Property Damage.”

Although coverage under these endorsements varies, they often cover claims such as the following:

▲ An electrician causes damage to the electrical panel he is hired to work on.

▲ A painting contractor damages a piece of furniture while moving it out of the way at a job site.

PERSONAL INJURY CONTRACTUAL

The CGL provides some coverage for the insured who has assumed the tort liability of another in a contract. Coverage only applies, though, to Coverage A - Bodily Injury and Property Damage Liability. Adding coverage for the insured’s assumption of liability under Coverage B – Personal and Advertising Injury Liability greatly improves coverage. One such endorsement is ISO’s CG 22 74 10 01 Limited Contractual Liability Coverage for Personal and Advertising Injury. Although this endorsement requires that a contract be scheduled and only applies to false arrest, detention, and imprisonment, some insurers may offer broader personal injury contractual liability coverage.

These are just some of the ways agents can help contractors improve their CGL coverage – something your insureds will be thankful for! Til next time!

Cathy Trischan, CPCU, CRM, CIC, ARM, AU, AAI, CRIS, MLIS, TRIP is IA&B’s commercial lines education consultant. She works with our CIC and CISR programs, as well as our live CE webinars. Catch her at one of our upcoming courses: IABforME.com/education