Actuarial Notes

Specialty General Liability Forms

Study guide: Exam DISC-IA

Specialty general liability forms are the coverage forms ISO publishes in its commercial general liability program beside the CGL coverage form, each insuring one exposure the CGL excludes or is not built for: the protective liability of a project owner or a railroad for a contractor's work, liquor liability, products and completed operations written on their own, and pollution liability at designated sites. Each is written as a separate coverage part with its own declarations, limits and premium.

  • The ISO coverage forms: Alongside the occurrence CGL (CG 00 01) and the claims-made CGL (CG 00 02), the general liability coverage forms include the Owners and Contractors Protective Liability Coverage Form (CG 00 09); the Liquor Liability Coverage Forms, occurrence (CG 00 33) and claims-made (CG 00 34); the Railroad Protective Liability Coverage Form (CG 00 35); and the Products/Completed Operations Liability Coverage Forms, occurrence (CG 00 37) and claims-made (CG 00 38). ISO also publishes Pollution Liability Coverage Forms for designated sites (CG 00 39, and a limited version, CG 00 40). All were issued in 04 13 editions in ISO's 2013 revision.
  • Protective liability: Protective liability insurance is bought by an indemnitor, such as a contractor, for its indemnitee, such as a project owner, to protect the indemnitee against bodily injury or property damage liability arising out of the indemnitor's operations. The owners and contractors protective and railroad protective forms are the two ISO forms of this kind.
  • Owners and contractors protective (OCP), CG 00 09: A stand-alone policy covering the named insured's liability for bodily injury and property damage caused, in whole or in part, by the work an independent contractor does for it. The contractor buys it to cover the vicarious liability the project owner incurs from the contractor's acts or omissions on the project, and it also responds to the owner's own acts or omissions in its general supervision of the contractor's work. The "designated contractor" named in the policy buys it for the party it works for but is not itself an insured under it, so the contractor still needs its own CGL.
  • Railroad protective, CG 00 35: Insurance protecting a railroad from liability it incurs because of the work of contractors on or near the railroad right-of-way. The railroad is the named insured; the contractor is named on the declarations but is not an insured. The declarations describe the work and the job location, and public-agency contracts require the policy to cover bodily injury and property damage liability and physical damage to property attributed to acts or omissions at the job site. It fills a gap the CGL leaves on purpose: an agreement indemnifying a railroad for construction or demolition within 50 feet of railroad property and affecting any railroad bridge or trestle, tracks, road-beds, tunnel, underpass or crossing is carved out of the CGL's definition of an "insured contract", and so is an easement or license agreement for construction or demolition within 50 feet of a railroad (CGL Coverage A Exclusions).
  • Liquor liability, CG 00 33 and CG 00 34: The CGL's liquor liability exclusion removes injury an insured is liable for by causing intoxication, furnishing alcohol to a minor or an intoxicated person, or violating a liquor law, but only if the named insured is in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages. The liquor liability forms insure that business exposure for bars, restaurants, liquor stores, distributors and the like. In the 2013 revision trusts were added as named insureds in Who Is an Insured; endorsement CG 24 06 extends the liquor form's insuring agreement to an insured that lets guests bring their own alcohol, and CG 25 14 applies a separate aggregate to each designated location.
  • Products/completed operations, CG 00 37 and CG 00 38: These forms insure the products-completed operations hazard (bodily injury and property damage away from the insured's premises from its products or completed work) on its own. They are used when that exposure is placed separately from premises and operations coverage, typically with an exclusion of the hazard attached to the CGL, and they carry their own aggregate. ISO endorsements such as the completed operations additional insured endorsement (CG 20 37) and the waiver of subrogation (CG 24 04) are written to attach to either the CGL coverage part or the products/completed operations coverage part (CGL Endorsements).
  • Pollution liability, CG 00 39 and CG 00 40: The CGL's pollution exclusion removes most bodily injury and property damage from pollutants and all cleanup costs. ISO's pollution liability coverage forms for designated sites are separate coverage forms for that exposure; pollution insurance more broadly is covered under Environmental Insurance.

Which Form Fits? Choose the ISO general liability form for each need. (a) A city hires a paving contractor and wants a policy, in the city's name, for its liability arising from the contractor's work and from the city's general supervision of it. (b) A bridge contractor will work within 30 feet of a freight railroad's tracks, and the railroad requires protection in its own name. (c) A nightclub needs coverage for claims by people injured by its intoxicated patrons. (d) A ladder manufacturer's general liability insurer will write its premises and operations but not its products exposure.

Answer

  • (a) Owners and contractors protective (CG 00 09): The city is the named insured, the paving contractor is the designated contractor and buys the policy, and it covers the city's vicarious liability and its general supervision.
  • (b) Railroad protective (CG 00 35): The railroad is the named insured and the contractor buys it. The contractor's CGL would not cover its promise to indemnify the railroad, because indemnity of a railroad for construction within 50 feet of railroad property and affecting its tracks, bridges or crossings is excluded from the CGL's definition of an insured contract.
  • (c) Liquor liability (CG 00 33 or CG 00 34): The nightclub is in the business of serving alcohol, so its CGL's liquor exclusion applies.
  • (d) Products/completed operations (CG 00 37 or CG 00 38): It insures the products-completed operations hazard on its own, with its own aggregate.

Who Is Protected Under a Protective Policy? A contractor working on a railroad's right-of-way has bought a railroad protective policy naming the railroad and also has its own CGL. Its crane swings into a parked railcar and strikes a passing motorist, who sues both the railroad and the contractor. Which policy protects whom?

Answer The railroad protective policy protects only the railroad: it responds to the railroad's liability to the motorist arising from the contractor's work at the job location, and public-agency specifications require it to cover physical damage to property, such as the railcar, attributed to acts or omissions at the job site. The contractor is named on the declarations but is not an insured under it, so its own liability to the motorist falls under its own CGL. If the contractor had also promised to indemnify the railroad, its CGL would not cover that promise for construction within 50 feet of railroad property and affecting its tracks, bridges or crossings, because such an agreement is carved out of the definition of an insured contract.

How it appears on the exam

  • DISC-IA: Section 11's "Other General Liability Coverage Forms" objective asks candidates to identify the form that fits a need: owners and contractors protective, railroad protective, liquor liability, products/completed operations or pollution.
  • Who is insured: Questions test that the contractor who buys a protective policy is not an insured under it.
  • Linked exclusions: Questions pair a form with the CGL exclusion or definition it answers: the liquor exclusion, the products-completed operations hazard, the pollution exclusion, the railroad carve-out from insured contract.

Exam traps

  • The buyer is not the insured: Under an OCP or railroad protective policy the contractor pays the premium, but the owner or the railroad is the named insured. The contractor's own liability stays on its CGL.
  • OCP is not additional insured status: An OCP policy is a separate policy with the owner as named insured and its own limits; an additional insured endorsement adds the owner to the contractor's CGL, sharing its limits (CGL Endorsements).
  • Liquor forms are for liquor businesses: A business that serves drinks only incidentally, such as at a company party, is not excluded under the CGL and does not need the liquor form for that exposure.