Includes copyrighted material of Insurance Services Office, Inc., with its permission.
June 20,2016 (Updated July 9, 2018)
Words and Terms Used Throughout the Policy
Summary: Words and terms that have a contractually defined meaning that applies throughout the commercial general liability (CGL) coverage forms are discussed in this article. The definition section of the CGL form is section V in the occurrence version and section VI in the claims-made version.
Topics covered:
Throughout this policy the words "you" and "your" refer to the Named Insured shown in the Declarations, and any other person or organization qualifying as a Named Insured under this policy.
Analysis
This definition is simple enough but it should be remembered for its special significance when used within the body of the CGL form. For example, when an exclusion applies to "you", that means that only the named insured is affected by the exclusion. This is true also when an insuring agreement or a condition refers to "you" or "your"; only the named insured is the affected party, and
The words "we", "us", and "our" refer to the company providing this insurance.
Analysis
These words refer, of course, to the insurer, the insurance company. These terms and the ones discussed in the previous paragraph appear at the beginning of the CGL form as opposed to the rest of the defined terms that appear in the definitions section of the form.
1."Advertisement" means a notice that is broadcast or published to the general public or specific market segments about your goods, products, or services for the purpose of attracting customers or supporters. For the purposes of this definition:a.Notices that are published include material placed on the Internet or on similar electronic means of communication; and
b.Regarding web-sites, only that part of a web-site that is about your goods, products or services for the purposes of attracting customers or supporters is considered an advertisement.
Analysis
A question has arisen over the scope of advertising activities and exactly what would be included in these activities so as to trigger coverage under the personal and advertising injury insuring agreement. An offense that would be covered as an advertising injury should be committed in the course of the insured's advertising; a connection between the injury and the advertising must exist. Withthis definition ,the insurerattempts to clarify what the y believe constitutes advertising. Note : this definition should be read in conjunction with the definition of "personal and advertising injury," discussed later.
The current CGL forms have added references to Internet communications and web-sites to reflect the fact that many companies today advertise via electronic media. Since notices on the Internet are open to the general public, it is only common sense to state that such notices are, in fact, published. And, in keeping with the thrust of this definition that advertising should be aimed toward attracting customers or supporters of the insured, only that part of a web-site that concerns itself with the named insureds goods, products, or services is considered an advertisement. This is a relatively new area that promises to be open to many judicial interpretations.
2."Auto" means:a.A land motor vehicle, trailer, or semitrailer designed for travel on public roads, including any attached machinery or equipment; or
b.Any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged.
However, "auto" does not include "mobile equipment".
Analysis
The definition of "auto" is quite broad, relating to any land motor vehicle, trailer, or semitrailer. So, mopeds and motorcycles, three-wheelers, motor homes, cars, trucks, and tractor-trailer combinations can all come under the term "auto."
And, this definition is extended under the current version of the CGL form to try to emphasize the difference between an auto and mobile equipment. The definition already stated that an auto is not to be considered mobile equipment, clearly making the point that auto liability should be covered under an auto policy, while mobile equipment liability is covered under the CGL form. But now, the current form notes that any land motor vehicle subject to a financial responsibility law or other motor vehicle insurance law is an auto for purposes of the CGL form. Some courts had been requiring the CGL form to pay auto uninsured motorists liability coverage or no-fault coverage for accidents that happened on public roads and that involved mobile equipment. So, in order to make clear that uninsured motorists coverage (and auto coverage in general) is to be handled by an auto policy and not a general liability policy, the CGL form included the clause about vehicles subject to financial responsibility laws. (Note that the 2013 edition of the CGL forms delete reference to "in the state" pertaining to where the vehicle is licensed or principally garaged. This change was implemented because ISO program is now available in jurisdictions that are not states, such as Puerto Rico, Guam, and the U.S. Virgin Islands.)
The phrase "including any attached machinery or equipment" in part a. of the definition is also meant to reinforce the difference between an auto and mobile equipment, as noted in the definition of mobile equipment (which is discussed later in this article).
4."Coverage territory" means:
a.The United States of America (including its territories and possessions), Puerto Rico, and Canada ;b.International waters or airspace, but only if the injury or damage occurs in the course of travel or transportation between any places included in a. above; or
c.All other parts of the world if the injury or damage arises out of:
(1)Goods or products made or sold by you in the territory described in a. above;
(2)The activities of a person whose home is in the territory described in a. above, but is away for a short time on your business; or
(3)"Personal and advertising injury" offenses that take place through the Internet or similar electronic means of communication
provided the insured's responsibility to pay damages is determined in a "suit" on the merits, in the territory described in a. above or in a settlement we agreed to.
Analysis
Importantly, the definition of covered territory includes all parts of the world for injury or damages arising out of products made or sold by the named insured in the territory described in paragraph a. of the definition. For example, a product made by the named insured in the United States but sold abroad would be covered for liability purposes, as long as the insured's liability was determined in a suit on the merits brought in the territory described in paragraph a. If an insured did not make the product, but sold it in the United States and later it was taken abroad and caused injury, the resulting liability would likewise be covered under the CGL form. There would not be coverage if the named insured neither made nor sold the product in the United States, Canada, or Puerto Rico.
The worldwide products coverage extension does not apply as well to completed operations. Say, for example, that the insured's business is aircraft repair. If faulty repair of an aircraft results in injury or damage to others while the aircraft is outside the coverage territory, coverage is likely to be denied unless the insured has had the coverage territory amended to include worldwide application for any completed operations.
Worldwide coverage is also available under the CGL forms for Internet and other electronic means of communication, reflecting the global nature of the Internet. Of course, the insured's liability still has to be determined in a lawsuit brought in the U.S., Puerto Rico, or Canada.
5."Employee" includes a "leased worker". "Employee" does not include a "temporary worker".
Analysis
This term includes a leased worker to show that leased employees are to be considered the same as regular employees when it comes to the CGL form. Due to the increased use of leased workers by many employers throughout the country, the point of just who is to be considered an employee under the terms of the CGL coverage forms is important. This definition, as well as the definitions of leased worker and temporary worker that are found below, clarifies the issue: leased workers are employees of the named insured when it comes to the coverages, exclusions, and conditions of the CGL form.
6."Executive officer" means a person holding any of the officer positions created by your charter, constitution, by-laws, or any other similar governing document.
Analysis
There has been a question in the minds of many insureds as to whether an executive officer should be considered an employee of the named insured company; this is particularly relevant when one is trying to interpret the "who is an insured" clause for possible coverage or denial of coverage.
The "who is an insured" clause makes an employee an insured under certain circumstances and then states that "no employee is an insured" under other certain circumstances. If employee and executive officer were not defined terms, some insureds (or insurers) might think that the "no employee is an insured" phrase included executive officers. By making executive officer a defined term, the CGL form makes it clear that it does not consider executive officers as employees; employees and executive officers are different entities under the CGL form and the terms are not to be commingled.
7."Hostile fire" means one which becomes uncontrollable or breaks out from where it was intended to be.
Analysis
This definition use d to be in the body of the pollution exclusion under coverage A. In the current CGL forms, hostile fire is now defined in the definitions section, even though it still must be read in connection with the pollution exclusion. The meaning of the word has not changed. A hostile fire is not one contained inside a fireplace or a boiler, but one that breaks out from that containment.
8."Impaired property" means tangible property, other than "your product" or "your work", that can not be used or is less useful because:a.It incorporates "your product" or "your work" that is known or thought to be defective, deficient, inadequate, or dangerous; or
b.You have failed to fulfill the terms of a contract or agreement;
if such property can be restored to use by:
c.The repair, replacement, adjustment or removal of "your product" or "your work"; or
d.Your fulfilling the terms of the contract or agreement.
If such property can be restored to use by the repair, replacement, adjustment or removal of"your product" or "your work" or your fulfilling the terms of the contract or agreement.
Analysis
Impaired property, by definition, is restricted to tangible property that, on the one hand, cannot be used or is less useful, but, on the other hand, can be restored to use. For example, assume that a product made by the named insured is incorporated into another product made by another manufacturer. If the named insured's product is defective or deficient and this results in the other product's being made less useful or totally unusable, the first part of the definition of impaired property is met. Then, if that other product can be restored to use by repairing or replacing the named insured's product, the definition is satisfied. Both parts of the definition have to be present. If the property has been damaged to the extent that it is not only unusable but also cannot be repaired or replaced, the impaired property definition has not been met.
9."Insured contract" means:
a.A contract for a lease of premises. However, that portion of the contract for a lease of premises that indemnifies any person or organization for damage by fire to premises while rented to you or temporarily occupied by you with permission of the owner is not an "insured contract";b.A sidetrack agreement;
c.Any easement or license agreement, except in connection with construction or demolition operations on or within 50 feet of a railroad;
d.An obligation, as required by ordinance, to indemnify a municipality, except in connection with work for a municipality;
e.An elevator maintenance agreement;
f.That part of any other contract or agreement pertaining to your business (including an indemnification of a municipality in connection with work performed for a municipality) under which you assume the tort liability of another party to pay for "bodily injury" or "property damage" to a third person or organization. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement.
Paragraph f. does not include that part of any contract or agreement:
(1)That indemnifies a railroad for "bodily injury" or "property damage" arising out of construction or demolition operations, within 50 feet of any railroad property and affecting any railroad bridge or trestle, tracks, road beds, tunnel, underpass or crossing
(2)That indemnifies an architect, engineer, or surveyor for injury or damage arising out of:
(a)Preparing, approving, or failing to prepare or approve, maps, shop drawings, opinions, reports, survey, field orders, change orders, or drawings and specifications; or
(b)Giving directions or instructions, or failing to give them, if that is the primary cause of the injury or damage; or
(3)Under which the insured, if an architect, engineer, or surveyor, assumes liability for an injury or damage arising out of the insured's rendering or failure to render professional services, including those listed in (2) above and supervisory or engineering activities.
Analysis
The first part of this definition reflects the fire legal liability coverage offered under the CGL form. If the named insured rents premises or temporarily occupies premises with the permission of the owner, and damage by fire occurs, the legal liability of the named insured is covered by the CGL form outside the scope of an insured contract.
The exception under paragraph c. excluding agreements pertaining to construction or demolition operations on or within fifty feet of a railroad exists because railroads often require contractors who are to perform work within fifty feet of a railroad to agree to hold the railroads harmless for any claims or suits that may arise in connection with the work. This exception, amounting to a railroad protective exclusion, expresses the insurer's intent not to cover liability arising out of such hold harmless agreements. Such coverage should more properly be secured through railroad protective liability coverage under form CG 00 35 04 13.
An example of clause d. is an agreement to protect a city from legal jeopardy in exchange for licensing to perform a particular function. Say the insured's permit to operate a hardware store in the city limits obliges the insured to protect the city from legal liability arising out of the store's operation; clause d. extends coverage called for in this agreement. An example of no coverage under clause d. (but, see clause f.) can be found in the same hardware store's contract with the city to maintain all of its riding mowers with the terms of the contract calling on the insured to protect the city from legal liability for bodily injury or property damage caused by a malfunctioning mower.
Paragraph f. of the insured contract definition pertains to coverage (of a type not described in paragraphs a. through e.) of tort liability assumed for another person or organization. Paragraph f. limits its scope to the assumption of another entity's tort liability (a liability that would be imposed by law in the absence of any contract or agreement). The fact that the assumption of liability under the agreements enumerated in paragraphs a. through e. is set off from that under paragraph f. implies that coverage of the former group not only applies to liability stemming from tort, but also from warranties, which are contractual in nature (it is uncertain to what extent warranties play a role with sidetrack and easement agreements, but they are important with respect to leases, particularly warranties of habitability concerning real estate).
The definition of insured contract also makes clear what exposures are not intended to be within the scope of the definition and limits the excluded contracts to those that fall within the sway of paragraph f. (except for the lease of premises exception that is found in paragraph a.).
Paragraph f. does not include that part of any contract or agreement that indemnifies a railroad for injuries or damages arising out of construction operations within 50 feet of any railroad property. This wording strengthens the exception to the definition of insured contract that is noted in paragraph c. of the definition. As noted previously, the purpose here is to emphasize that the CGL coverage form is not meant to apply to liability arising out of the named insured's assuming the liability of a railroad through some hold harmless agreement; the proper vehicle for that is CG 00 35. Note that this discussion of what does not equal an insured contract specifically mentions "railroad." Previous CGL forms had used the phrase "any person or organization" and this could be used to apply regardless of whether that person or organization was a railroad. Now, since the focus was supposed to be on railroads, the specific reference to railroads clarifies the point.
Another exposure not included within the definition of insured contract relates to the liability of architects, engineers, and surveyors in two cases. The first case is when the insured agrees to indemnify an architect, engineer, or surveyor for injuries or damages arising out of preparing or approving maps, shop drawings, etc., etc. or giving directions or instructions if that is the primary cause of the injuries or damages. The coverage form does not define primary cause, and presumably if faulty directions are involved in, but are not the primary cause of the damage, this provision would not apply. The second case is when the insured is an architect, engineer, or surveyor and assumes liability for injury or damage arising out of its rendering or failure to render professional services for others; this is an exposure that should be insured under a professional liability policy and not the CGL form.
10."Leased worker" means a person leased to you by a labor leasing firm under an agreement between you and the labor leasing firm, to perform duties related to the conduct of your business. "Leased worker" does not include a "temporary worker".
Analysis
This definition complements the definition of "employee" discussed previously. The bottom line is that leased workers are to be considered the same as regular employees when it comes to the CGL form, its coverages, exclusions, and conditions.
11."Loading or unloading" means the handling of property;a.After it is moved from the place where it is accepted for movement into or onto an aircraft, watercraft, or "auto";
b.While it is in or on an aircraft, watercraft, or "auto"; or
c.While it is being moved from an aircraft, watercraft, or "auto" to the place where it is finally delivered;
but "loading or unloading" does not include the movement of property by means of a mechanical device, other than a hand truck, that is not attached to the aircraft, watercraft, or "auto".
Analysis
The main point of the definition of "loading or unloading" in its use with the auto exclusion under coverage A of the CGL forms is that there is no coverage under the forms for injury or damage arising out of the transporting of property. And, in order to correspond with the wording on the business auto form and the truckers form, and to attempt to clarify just which form would apply to a loss, the definition goes on to include the handling of property for movement into or from an auto, unless the movement is by means of a mechanical device, such as a forklift. As an example: the insured is loading property by means of a forklift onto a truck; the property falls off the forklift and injures a passerby; the CGL form would handle a resulting claim. On the other hand, if the insured is loading the property into a business auto with the aid of a hand truck and the property falls off the hand truck and injures a passerby, the business auto form will apply to the resulting claim. For more information on the subject of loading or unloading, see Business Auto Form—Liability Coverage.
12."Mobile equipment" means any of the following types of land vehicles, including any attached machinery or equipment;
a.Bulldozers, farm machinery, forklifts, and other vehicles designed for use principally off public roads;b.Vehicles maintained for use solely on or next to premises you own or rent;
c.Vehicles that travel on crawler treads;
d.Vehicles, whether self-propelled or not, maintained primarily to provide mobility to permanently mounted:
(1)Power cranes, shovels, loaders, diggers, or drills; or
(2)Road construction or resurfacing equipment such as graders, scrapers, or rollers;
e.Vehicles not described in a., b., c., or d. above that are not self-propelled and are maintained primarily to provide mobility to permanently attached equipment of the following types:
(1)Air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well servicing equipment; or
(2)Cherry pickers and similar devices used to raise or lower workers;
f.Vehicles not described in a., b., c., or d. above maintained primarily for purposes other than the transportation of persons or cargo.
However, self-propelled vehicles with the following types of permanently attached equipment are not "mobile equipment" but will be considered "autos":
(1)Equipment designed primarily for:
(a)Snow removal;
(b)Road maintenance, but not construction or resurfacing; or
(c)Street cleaning;
(2)Cherry pickers and similar devices mounted on automobile or truck chassis and used to raise or lower workers; and
(3)Air compressors, pumps, and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well servicing equipment.
However, "mobile equipment" does not include any land vehicles that are subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged. Land vehicles subject to a compulsory or financial responsibility law or other motor vehicle insurance law are considered "autos".
Analysis
The significance of this detailed definition is that the insurer wants to clearly delineate between an auto and mobile equipment. The CGL form is meant to apply to mobile equipment and not to auto exposures and this particular definition goes into great detail in order to help the insured and the insurer know just what mobile equipment is.
Note that this mobile equipment definition tries to clarify the difference between autos and mobile equipment by also describing what type vehicles are considered as autos. This current mobile equipment definition also complements the definition of "auto", as previously discussed, when it comes to vehicles that are subject to auto financial responsibility laws. Such vehicles are autos and liability questions should be addressed by an auto policy, not the CGL form.
Analysis
Even though the phrase is not mentioned here, this definition makes the point that coverage under a CGL form is meant for bodily injury or property damage that is "neither expected nor intended" by the insured; accidental (that is, unforeseen and unplanned) events or circumstances are the key to coverage for bodily injury or property damage for which the insured is legally liable.
Although bodily injury and property damage usually results immediately upon contact with someone or something, the phrase "continuous or repeated exposure" eliminates the necessity of proving the exact moment at which the damage is sustained (although the prior knowledge provisions in coverage A do seek to limit the occurrence to events happening during the policy period).
The definition of occurrence cannot be interpreted as limiting coverage to a single event. For example, a single accident where a few drops of paint might splatter on an unintended object could result in barely perceptible damage, but repetition of the same accident on the same object could result in considerable damage over time. Another example is where an insured repeatedly (but unintentionally) strikes a neighbor's fence abutting the driveway with a lawnmower. Each time the fence is lightly hit, it weakens until finally it falls without an apparent single occurrence. Such damage is included within the scope of the "continuous or repeated exposure" wording.
14."Personal and advertising injury" means injury, including consequential "bodily injury", arising out of one or more of the following offenses:a.False arrest, detention, or imprisonment;
b.Malicious prosecution;
c.The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord, or lessor;
d.Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products, or services;
e.Oral or written publication, in any manner, of material that violates a person's right of privacy;
f.The use of another's advertising idea in your "advertisement"; or
g.Infringing upon another's copyright, trade dress or slogan in your "advertisement".
Analysis
This definition reflects the current CGL form's view of the personal and advertising injury liability coverage. Previous forms had referred to the coverage as "personal injury or advertising injury", with separate definitions and exclusions applying. Now the forms have combined the terms, so that the reference is to "personal and advertising injury."
Note also that the injury defined here includes consequential bodily injury. What the insurer is saying is that if, for example, the insured causes bodily injury to someone while detaining him or subjecting him to false arrest, and the injured party files a claim or a lawsuit, the coverage for the claim will come under coverage B, personal and advertising injury liability, as opposed to coverage A, bodily injury and property damage liability. It is conceivable that someone could suffer bodily injury as a consequence of false arrest or the wrongful eviction or invasion of the right of private occupancy by the insured. Rather than argue or discuss the issue of how such a bodily injury claim is to be covered under the insured's CGL form, the definition of "personal and advertising injury" settles the question.
The offense of invasion of the right of private occupancy deserves some comments. The broad form liability endorsement used with the 1973 general liability policy defined personal injury to include the phrase "invasion of the right of private occupancy" while the 1986 CGL coverage forms deleted the phrase from the definition. By returning "invasion of the right of private occupancy" to the meaning of personal injury, the current CGL forms have not just included another category in the definition but also have created a potential problem area for insurers. As usual, the problem area has to do with judicial interpretations of a phrase found in an insurance coverage form.
In Fortier v. Flambeau Plastics Co. 476 N.W.2d 593 (Wisc. App. 1991) a Wisconsin court of appeals held that "chemicals seeping or percolating through groundwater can constitute an invasion of another's interest in the private use and enjoyment of land; a negligent invasion may be the basis of liability …." Also, in Titan Holdings Syndicate, Inc. v. City of Keene, 898 F.2d 265 (1990) the U.S. court of appeals for New Hampshire decided that allegations of noxious odors, noise, and light emanating from the city's sewage plant interfered with the plaintiffs' use of their homestead and "stated a claim for liability coverage arising from another invasion of the right of private occupancy."
The current version of the CGL form does, of course, contain a pollution exclusion applicable to the personal injury and advertising injury liability insuring agreement, but these two legal decisions do show what courts can do, even with a term that is defined on the policy.
There is another point to make about the "invasion of the right of private occupancy" phrase. Unlike the phrase that was used in the broad form liability endorsement, the phrase as it appears in the current CGL forms in reality restricts coverage to situations wherein a claimant has a legal right to occupancy already possessed and the alleged tortfeasor who invades that right, who commits the offense, is the property's owner, landlord, or lessor. Consider that the current CGL forms take "invasion of the right of private occupancy" (the phrase as it appears in the broad form endorsement) and add "of a room, dwelling, or premises that a person occupies by or on behalf of its owner, landlord, or lessor". Clearly, the phrase deals with dwellings or premises already occupied by a person as opposed to some generalized theory of a right to seek and obtain a right to occupancy.
A legal example may help clarify this point. In Gardner v. Romano, 688 F. Supp. 489 (1988), a federal court required an insurer to defend its insured in a federal civil rights action wherein prospective tenants claimed they were refused occupancy to an apartment by the owner-insured because of racial discrimination. The court rejected the argument advanced by the insurer that "invasion of the right of private occupancy" applied only to tenants who already had a possessory interest; the court deemed the phrase to be ambiguous in that it could encompass situations in which someone does not have actual legal possession of property, but seeks to obtain such possession. The wording found in the current CGL forms with its limitation to premises "that a person occupies" would have helped the court reassess its position and understand that actual occupancy, and not just some wish to occupy, is the basis of coverage under this part of the definition of personal injury. (Note, in fact, that the Gardner decision was basically superceded by the ruling of the United States Court of Appeals, Seventh Circuit, in United States of America v. Security Management Company, 96 F.3d 260 [1996].)
As for the advertising injury part of the definition, injury arising out of the use of another's advertising idea in the named insured's advertisement is listed as an offense. This makes the point that the injury has to be connected with the advertising activity of the named insured. The old definition of advertising injury included the offense of misappropriation of advertising ideas or style of doing business. This wording could leave an impression that the offense did not have to be related necessarily to the insured's advertising activities to be covered as an advertising injury; such an impression would be contrary to the intent of the coverage.
The definition also includes "infringing upon another's copyright, trade dress or slogan in your advertisement". This part of the definition has replaced "title" from the old definition of advertising injury, with the words "trade dress". This means the total appearance and image of a product, including size, shape, graphics, and even particular advertising and marketing techniques used to promote its sale. The use of "trade dress" in place of "title" better emphasizes the advertising connection between the injury and the coverage under the CGL forms.
There is sometimes a question about whether advertising injury liability applies to patent infringement. The definition of personal and advertising injury shows that the current CGL form is not meant to apply to a claim for damages based on patent infringement. Patent infringement is, after all, not included in the definition's list of offenses and this has to be seen as a deliberate decision to exclude that particular offense. Besides, the availability of patent infringement coverage through the specialty market is evidence that common industry practice is to treat patent infringement coverage separately from general liability coverage. Additionally, patent infringement involves the making, using, or selling of a patented invention or device and the infringement does not occur in the course of any advertising activity; any injury to the patentee occurs not because of advertising, but because an infringer uses or sells the patented object without permission, thereby depriving the patentee of the full benefits of his or her property.
15."Pollutants" mean any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.
Analysis
This definition has been moved from the pollution exclusion under coverage A to the definitions section of the CGL forms. The meaning has not been altered. It continues to be very broad in its scope, allowing an insurer to include just about anything under the terms of the definition. However, some courts are now limiting its application to environmental hazards.
16."Products-completed operations hazard":
a.Includes all "bodily injury" and "property damage" occurring away from premises you own or rent and arising out of "your product" or "your work" except:(1)Products that are still in your physical possession; or
(2)Work that has not yet been completed or abandoned. However, "your work" will be deemed completed at the earliest of the following times:
(a)When all of the work called for in your contract has been completed.
(b)When all of the work to be done at the job site has been completed if your contract calls for work at more than one job site.
(c)When that part of the work done at a job site has been put to its intended use by any person or organization other than another contractor or subcontractor working on the same project.
Work that may need service, maintenance, correction, repair, or replacement, but which is otherwise complete, will be treated as completed.
b.Does not include "bodily injury" or "property damage" arising out of:
(1)The transportation of property, unless the injury or damage arises out of a condition in or on a vehicle not owned or operated by you, and that condition was created by the "loading or unloading" of that vehicle by any insured;
(2)The existence of tools, uninstalled equipment or abandoned or unused materials; or
(3)Products or operations for which the classification, listed in the Declarations or in a policy schedule, states that products-completed operations are subject to the General Aggregate Limit.
Analysis
This definition is to be noted for the fact that it tells the reader what it includes and what it does not include. This information, in turn, is used to clarify the extent of certain exclusions and an aggregate limit paid for damages.
Products-completed operations hazard is prominent in exclusions j. and l. of coverage A, bodily injury and property damage liability. Exclusion j. states that paragraph 6 of the exclusion does not apply to property damage included in the products-completed operations hazard; so if the circumstances of the loss fit the definition, exclusion j.(6) will not apply. On the other hand, exclusion l. does apply to the named insured's work that is included in the definition of products-completed operations hazard; here, if the definition is met, the exclusion applies and there is no coverage under the CGL form. The bottom line is that whenever exclusions j. or l. are used to deny coverage for a claim, the definition of products-completed operations hazard must be checked to see if the exclusions are relevant.
Products-completed operations has its own aggregate limit under the CGL form that is separate from the general aggregate limit. The aggregate limit is the most that the insurer will pay for damages because of injury or damage included in the products-completed operations hazard, so the definition has to be consulted to see if the amount to be paid goes toward the products-completed operations aggregate or the general aggregate limit. This may appear to be a rather mundane subject, but the matter grows in importance if an insured's losses are coming close to maxing out a particular aggregate.
It should be noted that the definition of products-completed operations hazard does not include injury or damage arising out of the transportation of property since that is the proper domain of an auto policy. There is an exception, however, dealing with the loading or unloading of a vehicle (as long as the vehicle is not owned or operated by the named insured). As an example, if the insured negligently loads a pile of steel on a nonowned truck and the load then falls off during the transportation of the steel causing damage, the definition on the CGL form makes it clear that this is a products-completed operations hazard. Any claim against the insured would be handled under the CGL form and not the insured's auto form. This definition, in effect, gives the insured something akin to nonowned auto liability coverage, under certain conditions.
17."Property damage" means:a.Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or
b.Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the "occurrence" that caused it.
For the purposes of this insurance, electronic data is not tangible property.
As used in this definition, electronic data means information, facts or programs stored as or on, created or used on, or transmitted to or from computer software, including systems and applications software, hard or floppy disks, CD-ROMS, tapes, drives, cells, data processing devices or any other media which are used with electronically controlled equipment.
Analysis
This definition states when loss of use occurs (whether the property is physically injured or not) so as to clear up any questions pertaining to the coverage requirement that the damage occur during the policy period. And note, property damage occurs at the time the damage is discovered or when it has manifested itself.
This definition also emphasizes the point that electronic data is not considered tangible property. This is an attempt to clear up the issue of whether computer software data is tangible property that could be covered for property damage under a CGL form. Whether this definition will satisfy courts as the information age progresses remains to be seen. Of course, the current CGL form now has an electronic data exclusion under coverage A, so this definition can be seen as a helpful tool in interpreting that exclusion.
Note that there is an endorsement available for insureds who wish to have some coverage for electronic data liability. CG 04 37 provides a set limit (the amount listed on the endorsement) for property damage because of all loss of electronic data arising from any one occurrence; electronic data is defined on CG 04 37 as it is on the CGL form, and the definition of property damage is modified to include loss of electronic data. Note also that ISO has developed a coverage form, CG 00 65 (electronic data liability coverage form), to provide the insured with insurance for damages because of loss of electronic data.
18."Suit" means a civil proceeding in which damages because of "bodily injury", "property damage", or "personal and advertising injury" to which this insurance applies are alleged. "Suit" includes:a.An arbitration proceeding in which such damages are claimed and to which the insured must submit or does submit with our consent; or
b.Any other alternative dispute resolution proceeding in which such damages are claimed and to which the insured submits with our consent.
Analysis
This definition includes alternative dispute resolution proceedings, such as arbitration and pretrial mediation. And the point is made that the insured will be defended in arbitration proceedings even though such proceedings are not viewed officially as a lawsuit.
19."Temporary worker" means a person who is furnished to you to substitute for a permanent "employee" on leave or to meet seasonal or short-term workload conditions.
Analysis
The CGL form makes it clear that there is a distinct difference between an employee and a leased worker and a temporary worker; this has an effect as to when the CGL form will provide coverage against a claim. For example, the employer's liability exclusion applies to employees and leased workers, but not to temporary workers. So, if a temporary worker brought in to the insured's plant to substitute for a permanent employee on leave is injured due to the negligence of the named insured, the CGL form will respond to a claim against the named insured since the temporary worker is not considered an employee.
20."Volunteer worker" means a person who is not your "employee", and who donates his or her work and acts at the direction of and within the scope of duties determined by you, and is not paid a fee, salary or other compensation by you or anyone else for their work performed for you.
Analysis
This definition is necessary because the CGL forms include volunteers as insureds. Volunteers are insureds while performing duties related to the conduct of the named insured's business. And, since med pay coverage is now available to volunteers, this definition distinguish volunteers from employees and other insureds.
21."Your product":
a.Means:(1)Any goods or products, other than real property, manufactured, sold, handled, distributed, or disposed of by:
(a)You;
(b)Others trading under your name; or
(c)A person or organization whose business or assets you have acquired; and
(2)Containers (other than vehicles), materials, parts or equipment furnished in connection with such goods or products.
b.Includes:
(1)Warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of "your product"; and
(2)The providing of or failure to provide warnings or instructions.
c.Does not include vending machines or other property rented to or located for the use of others but not sold.
Analysis
The first point to make is that this definition does not apply to real property. The definition under the 1973 comprehensive general liability policy did not address this point and as a result, some insurers used the injury-to-products exclusion to deny coverage for losses to real property that would have otherwise been covered by the broad form property damage endorsement for completed operations. The current definition should help to avoid that problem.
The second point is that "your product" is stated to include goods or products manufactured, sold, handled, distributed, or disposed of by a "person or organization whose business or assets you have acquired". While such coverage might have been inferred from the broad form general liability endorsement's automatic coverage for newly acquired organizations, it is perfectly clear under this current definition.
It should also be noted that the definition of "your product" includes the providing of or failure to provide warnings or instructions. This is to make clear that coverage for claims arising out of the failure to provide adequate warnings or instructions concerning a product should be handled under the products-completed operations hazard.
Finally, note that the meaning of goods or products "handled" by the named insured can sometimes cause confusion. What does "handled" entail? Some courts have decided that "handled" means to trade in or deal, and not simply touching the product. For more information on this , see Your Product and Your Work Exclusions.
22. "Your work":a.Means:
(1)Work or operations performed by you or on your behalf; and
(2)Materials, parts or equipment furnished in connection with such work or operations.
b.Includes:
(1)Warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of "your work"; and
(2)The providing of or failure to provide warnings or instructions.
Analysis
Note that this definition includes the phrase about "the providing of or the failure to provide warnings or instructions," just like the "your products" definition. Also, the phrase "work or operations performed … on your behalf" complements the wording in exclusion l. concerning the fact that the exclusion does not apply to work performed on behalf of the named insured by a subcontractor; thus, the named insured does have coverage for property damage to work performed on his or her behalf by a subcontractor even though such work is considered as the work of the named insured.