Automatic Coverage for Newly Acquired Property

June 1, 2010

Our insured is a bank and the coverage is under a standard CGL form. During the term of the policy they acquire, through foreclosure, a property but do not notify the CGL carrier. Is there coverage automatically for bodily injury? I can find nothing that limits coverage to listed locations or to hazards disclosed on the policy. What is your opinion?

Connecticut Subscriber

The standard CGL form applies when the insured becomes legally obligated to pay damages for BI or PD unless there is some exclusion that prevents such coverage. So, the insured has the coverage for new locations and new operations unless there is some exclusion to prevent such coverage.

What you have to watch out for is the who is an insured clause pertaining to newly acquired or formed organizations if applicable. The coverage in that case is for only until the 90th day after the named insured acquires or forms the organization. Also, the premium audit clause states that the premium shown in the dec page is a deposit premium only. At the end of the audit period, the earned premium is calculated by the insurer and any new locations, operations, and risks are to be picked up then by the insurer with the insured then being required to pay any additional premium that is developed.