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Page 1 Recording of this session via any media type is strictly prohibited. Page 1 Have the 2013 Changes to the ISO CGL Policy Put Your Company at Risk?

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Presentation on theme: "Page 1 Recording of this session via any media type is strictly prohibited. Page 1 Have the 2013 Changes to the ISO CGL Policy Put Your Company at Risk?"— Presentation transcript:

1 Page 1 Recording of this session via any media type is strictly prohibited. Page 1 Have the 2013 Changes to the ISO CGL Policy Put Your Company at Risk? Session ICM 012 Tabitha Prestler Joann M. Lytle Information which is copyrighted by and proprietary to Insurance Services Office, Inc. ("ISO Material") is included in this publication. Use of the ISO Material is limited to ISO Participating Insurers and their Authorized Representatives. Use by ISO Participating Insurers is limited to use in those jurisdictions for which the insurer has an appropriate participation with ISO. Use of the ISO Material by Authorized Representatives is limited to use solely on behalf of one or more ISO Participating Insurers.

2 Page 2 Recording of this session via any media type is strictly prohibited. Key Responsibilities Responsible for the leadership, vision, strategy and execution of the risk transfer programs. Responsible for claims management oversight, ensuring contractual obligations and performance is to standard or better. Provide proper financial protection measures through risk identification, risk avoidance and risk transfer/retention programs. Responsible for the selection, submission, negotiation of risk finance and insurance vendor services. Develop objective measurements of performance for risk management providers. Lead ERM due diligence process for all M&A and greenfield projects. confidential EXPERIENCE: over 20 yrs. in Risk Finance and Insurance PRIOR COMPANIES  ARAMARK Corporation, Philadelphia PA  Campbell Soup Company, Camden NJ  Marsh Inc., Philadelphia PA  Saint-Gobain Corporation, Valley Forge PA EDUCATION  MBA, Finance, Temple University, Philadelphia, PA  B.A., Villanova University, Villanova, PA Present & Past Associations/Technical Committees & Affiliations  Risk & Insurance Mgmt.. Society (RIMS)  Manufacturers’ Alliance Insurance Group (MAPI)  Watermark  ACE Insurance Advisory Council  Risk Sciences Group Advisory Counsel  Women’s Food Service Forum Tabitha Prestler Director, Risk Finance & Insurance Wilbur-Ellis Company

3 Page 3 Recording of this session via any media type is strictly prohibited. Joann M. Lytle Partner, Insurance Coverage Group McCarter & English LLP Joann Lytle represents corporate policyholders in insurance coverage disputes. She has recovered millions of dollars in insurance assets for a wide range of companies, including those in the manufacturing, food services, banking and natural resources industries. She has handled disputes involving commercial general liability, umbrella/excess liability, errors and omissions liability, directors and officers liability, and employment practices liability policies. Ms. Lytle represents policyholders in litigation, arbitration and mediation and provides insurance coverage advice and counseling to her clients on an ongoing basis. In 2013 and 2014, Ms. Lytle was selected as the exclusive Pennsylvania winner of the Lexology Client Choice Award in the field of Insurance/Reinsurance. She has also been recognized as a Best Lawyer in America since 2008 and has been selected as a Pennsylvania Super Lawyer. Chambers has also recognized Ms. Lytle as one of the “Leaders in Their Field” in the 2014 Chambers USA Guide. PRACTICE GROUP Insurance Coverage CONTACT Mellon Bank Center 1735 Market Street Suite 700 Philadelphia, PA EDUCATION Harvard Law School, J.D., cum laude, 1990 La Salle University, B.A., maxima cum laude, 1987 BAR ADMISSIONS Pennsylvania New York U.S. Court of Appeals, Third Circuit U.S. District Court, Eastern District of Pennsylvania U.S. District Court, Middle District of Pennsylvania U.S. District Court, Southern District of New York 3

4 Page 4 Recording of this session via any media type is strictly prohibited. What to Expect Review & discussion of 2013 ISO GL policy form revisions specifically:  liquor liability exclusion  additional insured endorsements Goal: understand changes and determine could they impact you; if so, suggestions will be offered for maximizing coverage.

5 Page 5 Recording of this session via any media type is strictly prohibited. Roadmap to the CGL Policy Coverage Parts A – Property Damage and Bodily Injury B – Personal and Advertising Injury Liability C – Medical Payments Exclusions Expected or Intended; Contractual Liability; Liquor Liability, etc. Conditions Duties of insured in event of occurrence Other Insurance Definitions

6 Page 6 Recording of this session via any media type is strictly prohibited – What Changed? Coverage A Exclusion C (Liquor Liability) Exclusion G (Aircraft, auto, or watercraft) Exclusion P (Electronic Data) Exclusion Q (Recording and distribution of material in violation of law) Coverage B Exclusion B and C (Both relate to Material published) Conditions Condition 4 (Other insurance) Definitions Definition 2 (“Auto”) Definition 12 (“Mobile Equipment”)

7 Page 7 Recording of this session via any media type is strictly prohibited. 7 GL Policy Form Liquor Liability Changes c. Liquor Liability "Bodily injury" or "property damage" for which any insured may be held liable by reason of: (1) Causing or contributing to the intoxication of any person; (2) The furnishing of alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or (3) Any statute, ordinance or regulation relating to the sale, gift, distribution or use of alcoholic beverages. However, this exclusion applies only if you are in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages. Coverage A, Exclusion 2C. Liquor Liability, 2007 Version Includes copyrighted material of Insurance Services Office, Inc., with its permission.

8 Page 8 Recording of this session via any media type is strictly prohibited. 8 GL Policy Form Liquor Liability Changes c. Liquor Liability "Bodily injury" or "property damage" for which any insured may be held liable by reason of: (1) Causing or contributing to the intoxication of any person; (2) The furnishing of alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or (3) Any statute, ordinance or regulation relating to the sale, gift, distribution or use of alcoholic beverages. This exclusion applies even if the claims against any insured allege negligence or other wrongdoing in: (a) The supervision, hiring, employment, training or monitoring of others by that insured; or (b) Providing or failing to provide transportation with respect to any person that may be under the influence of alcohol; if the "occurrence" which caused the "bodily injury" or "property damage", involved that which is described in Paragraph (1), (2) or (3) above. However, this exclusion applies only if you are in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages. For the purposes of this exclusion, permitting a person to bring alcoholic beverages on your premises, for consumption on your premises, whether or not a fee is charged or a license is required for such activity, is not by itself considered the business of selling, serving or furnishing alcoholic beverages. Coverage A, Exclusion 2C. Liquor Liability, 2013 Change Includes copyrighted material of Insurance Services Office, Inc., with its permission.

9 Page 9 Recording of this session via any media type is strictly prohibited. 9 GL Policy Form Liquor Liability Changes  What Changed? –The provisions of the liquor liability exclusion will now apply even if the claims against an insured alleges negligence in the supervision, employment, training…or providing or failing to provide transportation with respect to any intoxicated person.

10 Page 10 Recording of this session via any media type is strictly prohibited. 10 GL Policy Form Liquor Liability Changes  Considerations / Options: –Secure a separate Liquor Liability Policy covering bodily injury or property damage arising from allegations of negligent supervision and failure to provide transportation to an intoxicated patron. – Evaluate use of one of these endorsements to expand or clarify coverage: – CG – Bring Your Own Alcohol Establishment Endorsement – CG – Amendment of Liquor Liability Exclusion (excluding BYO coverage within CGL coverage part) – CG – Amendment of Liquor Liability Exclusion – Exception for Scheduled Premises or Activities (excluding BYO coverage within CGL coverage part) – CG – Amendment of Liquor Liability Exclusion (excluding BYO coverage within Products/Completed Ops coverage part) – CG – Amendment of Liquor Liability Exclusion – Exception for Scheduled Premises or Activities (excluding BYO coverage within Products/Completed Ops coverage part)

11 Page 11 Recording of this session via any media type is strictly prohibited. 11 GL Policy Form “Other Insurance” Changes (b) Any other primary insurance available to you covering liability for damages arising out of the premises or operations, or the products and completed operations, for which you have been added as an additional insured by attachment of an endorsement. Condition 4, Other Insurance, part b., Excess Insurance, section 1.b., 2007 Version Includes copyrighted material of Insurance Services Office, Inc., with its permission.

12 Page 12 Recording of this session via any media type is strictly prohibited. 12 (b) Any other primary insurance available to you covering liability for damages arising out of the premises or operations, or the products and completed operations, for which you have been added as an additional insured by attachment of an endorsement. Condition 4, Other Insurance, part b., Excess Insurance, section 1.b., 2013 Version GL Policy Form “Other Insurance” Changes Includes copyrighted material of Insurance Services Office, Inc., with its permission.

13 Page 13 Recording of this session via any media type is strictly prohibited. 13  What changed: –Clarification that the CGL coverage will be in excess of any other insurance that provides coverage for the insured as an additional insured whether by endorsement or any other means.  Option: – Use of Primary and Non-contributory–Other Insurance Endorsement (form number CG 20 01)  designed simply to align the policy with underlying contractual requirements GL Policy Form “Other Insurance” Changes

14 Page 14 Recording of this session via any media type is strictly prohibited. Optional Endorsement: CG Primary and Noncontributory – Other Insurance Includes copyrighted material of Insurance Services Office, Inc., with its permission. This insurance is primary to, and will not seek contribution from, any other insurance available to an additional insured under your policy provided that: 1.The additional insured is a named insured under such other insurance. 2.You have agreed in writing in a contract or agreement that this insurance would be primary and would not seek contribution from any other insurance available to the additional insured.

15 Page 15 Recording of this session via any media type is strictly prohibited. Comparison Of 2004 and 2013 Versions Of ISO CG CG A. Section II. Who Is An Insured is amended to include as an additional insured the person(s) or organization(s) shown in the Schedule, but only with respect to liability for “bodily injury”, “property damage” or “personal and advertising injury” caused, in whole or in part, by: 1. Your acts or omissions; or 2. The acts or omissions of those acting on your behalf; in the performance of your ongoing operations for the additional insured(s) at the location(s) designated above CG A. Section II – Who is An Insured is amended to include as an additional insured the person(s) or organization(s) shown in the Schedule, but only with respect to liability for “bodily injury”, “property damage” or “personal and advertising injury” caused, in whole or in part, by: 1. Your acts or omissions; or 2. The acts or omissions of those acting on your behalf; In the performance of your ongoing operations for the additional insured(s) at the location(s) designated above. However: 1. The insurance afforded to such additional insured only applies to the extent permitted by law; and 2. If coverage provided to the additional insured is required by a contract or agreement, the insurance afforded to such additional insured will not be broader than that which you are required by the contract or agreement to provide such additional insured. Includes copyrighted material of Insurance Services Office, Inc., with its permission. 15

16 Page 16 Recording of this session via any media type is strictly prohibited. 16 Changes to Additional Insured Endorsements  Three key changes –Coverage afforded to the additional insured will apply only to the extent permitted by law –Coverage afforded to the additional insured will be limited in scope to the coverage required in the underlying contract –The limit of insurance afforded to the additional insured will be the lesser of the applicable policy limit or the amount specified in the underlying contract

17 Page 17 Recording of this session via any media type is strictly prohibited. 17 Changes to Additional Insured Endorsements  Implications –We need to be aware of the presence of anti-indemnity states – We need to be aware that additional insured status will not be broader than the underlying contractual requirements. – When granting additional insured status to others, we need to pay greater attention to the limits and scope of coverage requested. – When requesting additional insured status from others, we need to focus carefully on the limits and coverage requested because we will no longer be able to fall back on the breadth of coverage provided by many insurance programs.

18 Page 18 Recording of this session via any media type is strictly prohibited. Amended Insured Contract Definition However, such part of a contract or agreement shall only be considered an "insured contract" to the extent your assumption of the tort liability is permitted by law. Includes copyrighted material of Insurance Services Office, Inc., with its permission.

19 Page 19 Recording of this session via any media type is strictly prohibited. Hypothetical Tenant bar names property owner as additional insured Negligently hired bartender over-serves; car crash follows Coverage Issues: As to tenant bar? As to property owner? Whose policy responds? What if punitive damages are imposed? What if the lease (underlying contract) is poorly drafted? What if the lease provides for low limits?

20 Page 20 Recording of this session via any media type is strictly prohibited. Questions, Final Comments and Contact Information Joann Lytle Tabitha Prestler

21 Page 21 Recording of this session via any media type is strictly prohibited. KEEP THIS SLIDE FOR EVALUATION INFORMATION/MOBILE APP ETC. Please complete the session survey on the RIMS14 mobile application.


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