Summary: ISO is introducing numerous new and revised optional endorsements available to the Commercial Liability Umbrella and Excess programs, with a proposed effective date of December 1, 2019. Some of the optional endorsements will address emerging issues, others will provide customers with some long-awaited enhancements to the program, or others will simply provide additional options for underwriting risks. Many of the endorsements have the same or very similar changes that were needed to be consistent with new and revised underlying CGL endorsements that are concurrently being introduced.
Several new exclusion endorsements will address the emerging risks of marijuana, e-cigarettes, unmanned aircraft and genetically modified organisms, as well as the addition of earth movement exclusion endorsements. In addition, a number of new exclusion endorsements are being made available with respect to existing programs or coverages, including wrap-up programs, liquor liability BYO (bring your own alcohol), cross suits liability, hired auto liability, owners and contractors protective liability, and endorsements addressing specific risks such as pharmacists, optical goods and hearing aid stores.
Topics Covered:
New Excess Endorsement Excluding Aircraft Or Watercraft
Revised Employee Benefits Liability Coverage
CU 04 03 Employee Benefits Liability Coverage (EBL)
Analysis:
This endorsement adds claims-made coverage for a designated employee benefits program shown in the Schedule of the endorsement. The endorsement covers the insured for liability arising out of acts, errors or omissions negligently committed in the administration of an employee benefit program, which results in loss of any or all of an employee's benefits.
The revised endorsement establishes a reinforcement of policy language. The definition of "employee benefit program" is amended to include 'any similar benefit program specified in any underlying insurance'. With this change, if there was not already an underlying insurance benefit plan either designated in the Schedule of the endorsement, or otherwise added by endorsement, this could be a broadening of coverage. In addition, the definition of "retained limit" in the endorsement (for purpose of the endorsement) means the available limits of "underlying insurance" shown in the Schedule of the endorsement as Retained Limit.
Revised Condominiums, Co-ops, Associations – Directors and Officers Liability Coverage
CU 04 12 Condominiums, Co-ops, Associations – Directors and Officers Liability Coverage
Analysis:
Otherwise known as the Condo D&O endorsement, this endorsement provides D&O coverage for community associations scheduled and described in the endorsement of a claims-made basis. Similar to the changes in the EBL endorsement CU 04 03, the above endorsement amends the definition of "retained limit" (for purpose of the endorsement" to mean the available limits of "underlying insurance" shown in the schedule of the endorsement as retained limit.
CU 04 55 Electronic Data Liability Coverage (Coverage A) With Access Or Disclosure Of Confidential Or Personal Information Exclusion (Coverage B)
Analysis:
ISO is introducing the above new endorsements for consistency with the newly introduced underlying CGL endorsements CG 04 71 (follows CG 04 71) and CG 04 72 (follows CG 04 72). The endorsements are designed to be used in place of CU 04 02, although CU 04 54 does not contain the exception for bodily injury that is contained within CU 04 02 and therefore would be a reduction of coverage. The coverage under CU 04 54 more closely aligns with the broader exclusion for electronic data that is found in CU 21 87 but this new endorsement provides broader coverage for data-related liability under Coverage A than endorsement CU 21 87.
Endorsement CU 04 55 more closely aligns with the provisions of endorsement CU 21 88, but the new endorsement contains an exception for bodily injury under Coverage A not found in endorsement CU 21 88. This endorsement also does not exclude the access or disclosure of confidential or personal information under Coverage A, but does exclude it under Coverage B.
New and Revised Athletic Or Sports Participants Exclusion and Colleges Or Schools Endorsements
CU 21 01 Exclusion – Athletic Or Sports Participants
CU 22 21 Colleges Or Schools
CU 34 10 Exclusion – Athletic Or Sports Participants – All Contests Or Exhibitions
Analysis:
CU 21 01 is already a mandatory endorsement for certain classifications, and whenever the underlying exclusion endorsement CG 21 01 is on the policy. The current CU 21 01 Exclusion – Athletic Or Sports Participants excludes coverage under Coverage A with respect to operations described in the endorsement Schedule, for bodily injury to anyone practicing for or participating in any insured-sponsored sports or athletic contest or exhibition. Because of the increase in concussion-related liability lawsuits and the long-term effects of repeated concussions resulting from participation in amateur and professional sports and activities, ISO is revamping this exclusion. The revised endorsement will address liability with respect to certain requirements in Return to Play laws, and add in the negligent supervision language contained in other liability exclusion endorsements, to apply to the participation or practicing of any sports or athletic contests or exhibitions. To address latent injuries, the language "while practicing for or participating in" is revised to "arising out of practicing for or participating in".
A new endorsement, CU 34 10 Exclusion – Athletic Or Sports Participants – All Contests Or Exhibitions, is similar to CU 21 01 but applies to any operation listed in the endorsement Schedule, whether or not the named insured sponsors the event. This endorsement follows form with the new CGL underlying endorsement of the same title, CG 21 01.
Further, endorsement CU 22 21 Colleges Or Schools is revised so that the negligent supervision language will also apply to the participation or practicing of any sports or athletic contests or exhibitions, and this will apply to both Coverages A and B. This endorsement follows form with the underlying CGL endorsement CG 22 72. Allowing injured athletes to continue playing after receiving an injury has become an issue, as there are cases where further injury was caused by allowing the athlete to continue. In addition, an added exclusion applies with respect to the operation of any college or school by the Named Insured or on their behalf, as follows:
This insurance does not apply to "bodily injury" to any person while practicing for or participating in any sports or athletic contest or exhibition if there is no direct management, organization or supervision of such sports or athletic contest or exhibition by any insured.
With the exception of the newly introduced CU 34 10 exclusion, which may result in a coverage restriction with respect to events not sponsored by the insured, the revised endorsements simply reinforce the original coverage intent and therefore do not affect coverage.
New and Revised Controlled (Wrap-Up) Insurance Program Endorsements
Following the same changes made to the underlying CGL endorsements, ISO is making editorial changes to two existing umbrella endorsements and adding two new optional endorsements for use with wrap-up programs, projects, or locations. A major editorial change adds a definition of "controlled (wrap-up) insurance program" that among other changes replaces the word "consolidated" with "controlled", and the existing endorsements are retitled accordingly to reflect this change. The revised endorsements can be used on risks enrolled in construction wrap-up programs, or non-construction projects, and include multiple wrap-ups, projects or locations. The definition of a controlled (wrap-up) insurance program contemplates programs involving either insurance or self-insurance covering all contractors or subcontractors working on one or more projects.
Revised Endorsements:
CU 21 17 Limited Exclusion – Designated Operations Covered By A Controlled (Wrap-Up) Insurance Program (formerly titled Limited Exclusion – Designated Operations Covered By A Consolidated (Wrap-Up) Insurance Program)
CU 21 84 Exclusion – Designated Operations Covered By A Controlled (Wrap-Up) Insurance Program (formerly titled Exclusion – Designated Operations Covered By A Consolidated (Wrap-Up) Insurance Program)
CX 04 01 Excess Liability Coverage For Designated Operations Covered By A Controlled (Wrap-Up) Insurance Program (formerly titled Excess Liability Coverage For Designated Operations Covered By A Consolidated (Wrap-Up) Insurance Program)
In addition to adding the definition of "controlled (wrap-up) insurance program" to these endorsements, Paragraph A. is changed to the effect that:
- The first paragraph will emphasize that the exclusion to bodily injury and property damage applies to ongoing operations as well as those included within the products-completed operations hazard at location(s) described in the endorsement Schedule; and
- The exclusion will apply only if the Named Insured is enrolled in the controlled (wrap-up) insurance program.
These changes also apply to the Excess endorsement CX 04 01, but have no impact on coverage. In addition, a loss payable condition is added to Paragraph G. of that endorsement to be compatible with a new optional endorsement, CX 24 04 Exhaustion of Retained Limit Endorsement, whenever CG 24 04 is attached to the underlying CGL policy.
Other editorial changes are made to provide consistency in wording with other Commercial Liability Umbrella endorsements, as well as to conform to ISO uniformity standards.
If either of the newly revised endorsements replaces the existing endorsement on a policy, this will result in broadened coverage.
The newly added definition of "controlled (wrap-up) insurance program" reads as follows:
"Controlled (wrap-up) insurance program" means a centralized insurance program under which one party has secured either insurance or self-insurance covering some or all of the contractors or subcontractors performing work on one or more specific project(s).
This same definition appears in the newly created endorsements for use with this program.
New Endorsements
CU 34 11 Exclusion – Designated Operations Covered By A Controlled (Wrap-Up) Insurance Program – Limited Exception for Additional Insureds
CU 34 12 Limited Exclusion – Designated Operations Covered By A Controlled (Wrap-Up) Insurance Program – Limited Exception for Additional Insureds
The above endorsements are similar to CU 21 17 and CU 21 84, respectively, however they provide a limited exception for any person or organization as an additional insured who is not enrolled in a wrap-up program with respect to the location shown in the endorsement Schedule. Therefore, if either endorsement is a replacement of CU 21 17 or CU 21 84, coverage will be broadened; however as newly attached endorsements they are exclusions, thereby reducing coverage.
Revised Optical and Hearing Aid Establishments Endorsement
CU 22 18 Optical And Hearing Aid Establishments
Analysis:
Endorsement CU 22 18 is revised to maintain consistency with the underlying CGL endorsement of the same title, CG 22 65, to contemplate additional products sold in hearing aid and optical goods that do not relate to hearing aid devices; or ophthalmic professional services not generally related to optometric services. As such and to reinforce coverage intent, the form is revised as follows:
- The insuring agreement of the endorsement, by replacing "including" with "the following" will maintain coverage consistency by designating the professional health care services to be those specifically listed rather than those 'included';
- Paragraph B. of the endorsement has been revised to delete the paragraph in the Professional Services exclusion pertaining to "optometry or optical or hearing aid services" (thus eliminating the need to revise the entire professional services exclusion);
- A reference to "volunteer workers" has been added for consistency with the wording of the Who Is An Insured section in the Commercial Liability Umbrella Coverage Form.
Revised Pharmacists Endorsements
CU 22 20 Pharmacists (formerly titled Druggists)
CU 22 63 Pharmacists – Broadened Coverage (formerly titled Druggists – Broadened Coverage)
Analysis:
The above endorsements are being revised to maintain consistency on the Umbrella with the CGL revisions of endorsements CG 22 69 and CG 22 97.
As with the CGL, these endorsements now address state or federal laws that permit pharmacists to provide additional services beyond professional health care services, and also address expanded pharmacy operations, such as retail sales and non-urgent care medical clinics. The newly titled endorsements replace the term "druggists" with "pharmacists".
In addition to the title change, the revisions to endorsement CU 22 20 include the following:
- A provision is added addressing state or federal laws affecting professional services provided by pharmacists;
- The exclusion for willful violation of a penal statute or ordinance is expanded to apply to the willful violation of applicable state or federal laws governing pharmacists, not just sales of pharmaceuticals;
- The exclusion for specific services performed by a pharmacist will apply to all tests, not just blood tests;
- The exclusion for specific services performed by a pharmacist will no longer list managing drug therapy from the list of excluded services.
- By removing the managing drug therapy from the list of excluded services, this revision will broaden coverage; however, the other listed changes may result in reduced coverage.
The revised endorsement CU 22 63 with its new title, Pharmacists – Broadened Coverage, includes the first two changes listed above for CU 22 20, and in addition the negligent supervision language is added for consistency with the underlying CGL endorsement CG 22 69.
This revision has no impact on coverage; however in states where courts have ruled professional services exclusions to be not applicable to negligent supervision and similar claims, this could result in a reduction of coverage in those states.
New Limited Bodily Injury Definition
CU 24 79 Limited Bodily Injury Definition
Analysis:
This new optional endorsement amends the definition of "bodily injury" to use the same definition as is found in the CGL form, which is more restrictive than the current definition in the Commercial Liability Umbrella Coverage Form. With this endorsement, bodily injury will not include mental anguish or mental injury resulting from bodily injury in the definition of "bodily injury". The definition of "bodily injury" in endorsement CU 24 79 reads as follows (the same in the CGL form):
"Bodily injury" means bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.
Insured Status For Newly Acquired or Formed Limited Liability Companies (LLCs)
CU 24 81 Automatic Insured Status For Newly Acquired Or Formed Limited Liability Companies
Analysis:
In the past, a newly acquired or formed limited liability company (LLC) could not be granted named insured status, even if the named insured maintained ownership or majority interest, thus leaving many LLCs without coverage. This new form will follow the newly introduced underlying liability endorsements that grant coverage for any organization the named insured newly acquires or forms, other than a limited liability company, and over which the named insured maintains ownership or majority interest, if there is no other similar insurance available. The same limitations that currently apply to newly acquired or formed organizations will apply to these LLCs, including affording coverage for the earliest of either the 90th day after the LLC is newly acquired or formed, or the end of the policy period. Further, no coverage will apply to prior occurrences before the LLC was acquired or formed.
New Liquor Liability Exclusion With Limited Exception for BYO Endorsement
CU 34 13 Amendment of Liquor Liability Exclusion – Limited Exception For Bring Your Own Alcohol
Analysis:
The above new optional endorsement will further address BYO (Bring Your Own) establishments permitting any person to bring alcoholic beverages on the named insured's premises, for consumption on those premises.This endorsement follows form with CGL endorsement CG 40 09 of the same title. The endorsement is similar to CU 21 13 Amendment of Liquor Liability Exclusion, except that it does not exclude BYO and it also provides an exception that addresses BYO similar to that found in the Commercial Liability Umbrella Coverage Form.
The exception states that allowing people to bring alcohol onto the premises, whether or not a fee is charged or a license is required, is not considered an act of selling, serving, or furnishing alcoholic beverages.
CX 21 69 Exclusion – Pollution – Exception For Scheduled Controlling Underlying Insurance
Analysis:
The above new optional umbrella endorsement CU 34 14 will address situations where coverage is desired for pollution liability that follows form with that provided on the underlying commercial auto, but will not follow form with any potential pollution liability provided on the underlying CGL. For example, the endorsement will not provide coverage for exceptions to the Aircraft, Autos or Watercraft exclusion in the CGL.The endorsement will replace the pollution exclusion in the Commercial Liability Umbrella Coverage Form and generally provide an exclusion for pollution-related bodily injury or property damage and pollution-related costs and expenses. However, the endorsement provides an exception to the exclusion arising out of the ownership, maintenance or use of a covered auto if valid underlying insurance for the referenced pollution liability risks exists or would have existed but for the exhaustion of underlying bodily injury and property damage limits. To the extent the exclusion does not apply, the insurance will follow the same provisions, exclusion and limitations in the underlying insurance, unless otherwise directed by the Commercial Liability Umbrella Coverage Form.
Form CX 21 69 is available for use with the Excess coverage form and it likewise replaces the pollution exclusion in that form to provide an option to designate in the endorsement Schedule any controlling underlying insurance to which the exclusion will not apply. Unlike the umbrella endorsement, this endorsement is not limited to commercial auto exceptions.
New Genetically Modified Organism Exclusion Endorsements
CU 34 15 Genetically Modified Organism Exclusion (CX 21 72)
CU 34 16 Genetically Modified Organism Exclusion For Designated Operations Or Products (CX 21 73)
Analysis:
Consistent with new CGL endorsements made available to exclude genetically modified organisms (GMOs), the above endorsements are added. Generally, a genetically modified organism is described as a virus, bacterium, or more complex life form in which the genetic material (DNA) has been altered for some purpose, e.g., to change the traits and functions of the recipient organism. These endorsements will exclude liability arising out of genetic modification, either by design or by accident. Genetic modification is defined as the insertion of a modified gene or a gene from another variety or species into an organism by "genetic engineering", with an exception for plant breeding (by methods other than "genetic engineering") or plant grafting. "Genetic engineering" is defined to mean the use of technology in order to change the genetic makeup of cells or to move genes across species boundaries.
CU 34 18 Exclusion – Earth Movement – Completed Operations (CX 21 75)
CU 34 19 Earth Movement – Exclusion For Designated Operation(s) Or Project(s) (CX 21 76)
Analysis:
Consistent with new CGL endorsements made available to address risks with operations that increase exposures related to earth movement and unnatural seismic activity, the above new umbrella endorsements are added. As with the CGL, these endorsements are available for risks with contractor operations. The purpose of these endorsement options are to exclude coverage in varying degrees for bodily injury and property damage arising out of earth movement that is either caused by or allegedly caused by, in whole or in part, or aggravated by or allegedly aggravated by, contractor operations. To the extent such exposure exists, attachment of any of these endorsements may restrict coverage.
The endorsement provide a definition of "earth movement", as follows:
"Earth movement" means:
- Earthquake, including tremors and aftershocks and any earth sinking, rising or shifting related to such event;
- Landslide, including any earth sinking, rising or shifting related to such event;
- Mine subsidence, meaning subsidence of a man-made mine whether or not mining activityhas ceased; or
- Earth sinking, rising or shifting including soil conditions which cause settling, cracking orother disarrangement of foundations or other parts of realty. Soil conditions include contraction, expansion, freezing, thawing, erosion, improperly compacted soil and the action of water under the ground surface.
As with the CGL, these endorsements are available for risks with contractor operations. The purpose of these endorsement options are to exclude coverage in varying degrees for bodily injury and property damage arising out of earth movement that is either caused by or allegedly caused by, in whole or in part, or aggravated by or allegedly aggravated by, contractor operations. To the extent such exposure exists, attachment of any of the endorsements may restrict coverage.
New and Revised Endorsements – Policy Conditions
Consistent with changes in the corresponding underlying CGL endorsements, a number of new and revised endorsements will address such concerns as subrogation waivers, noncompliance with premium audits, and access or disclosure of confidential or personal information with respect to electronic data liability.
Waiver Of Transfer Of Rights Of Recovery Against Others To Us (Waiver of Subrogation)
Revised endorsement:
CU 24 03 Waiver Of Transfer Of Rights Of Recovery Against Others To Us (Waiver of Subrogation) (formerly Waiver Of Transfer Of Rights Of Recovery Against Others To Us)
Analysis:
The word 'waiver' is incorporated into the endorsement and title, which clarifies the purpose of the endorsement. As with the underlying CGL endorsement CG 24 04, endorsement CU 24 03 is revised to allow for various situations where the insured has agreed to waive its right of recovery by removing provisions that expressly address the named insured's ongoing operations or work done under a contract with the person(s) or organization(s) shown in the endorsement schedule. Further, a provision will now state that the waiver of the insurer applies only to the extent the insured has waived its right of recovery prior to loss, thereby reinforcing the first paragraph of the Transfer of Rights of Recovery Against Others To Us Condition.
New endorsement:
CU 24 80 Waiver Of Transfer Of Rights Of Recovery Against Others To Us (Waiver of Subrogation)–Automatic
Analysis:
Adding the word Automatic to the title of the above endorsements waives the insurer's right of recovery on a blanket basis to the extent the insured has waived its right of recovery in a written contract or agreement.
Premium Audit Noncompliance Charge Endorsements
CU 99 01 Premium Audit Noncompliance Charge (CX 99 01)
Analysis:
The above new endorsement, consistent with the underlying CGL endorsement CG 99 09, acts to implement certain provisions for noncompliance with the Premium Audit condition.
The endorsement adds a provision for a noncompliance charge to apply if the insured fails to comply with the request for information needed for premium computation, determined by multiplying an audit noncompliance charge factor by the Total Advance Premium shown in the Declarations or endorsement Schedule. The endorsement includes an example illustrating how the noncompliance charge is assessed, which we have expanded upon below.
The endorsement also requires that the insurer make a specified number of written attempts (the number shown in the Schedule of the endorsement) to obtain audit information from the first insured to apply only to audits at the end of the policy period, for no less than an annual basis.
Further, the endorsement adds a provision allowing for reassessment of the premium audit after the insured receives the bill for the audit noncompliance charge, if indicated in the endorsement Schedule. The added provision requires the insured to notify the insurer in writing that they will comply with the audit before the due date shown on the bill, and the insured will then have 30 days upon the insurer's receipt of that written notification to comply with the premium audit. If the insured then complies with the audit, the audit noncompliance charge will no longer apply; however, any reassessment charge will still apply. If the insured still fails to comply after the 30 days has passed, both the audit noncompliance charge and the reassessment charge will be billed as final.
To illustrate, let's say the insured has not kept adequate records and the insurer is not able to compute the audit premium based on the information provided. The endorsement Schedule shows that the insurer must make three written attempts to the first named insured to obtain the information needed to calculate the audit premium. The insurer sends requests giving the insured until 9/30 to submit the documentation. In this illustration, the insured has to provide the insurer with three documents to be in compliance. He sends the first two documents right away, but neglects to provide the third document as requested. At this point, the insured is in noncompliance with the Premium Audit condition and is subject to the audit noncompliance charge.
In this example, the total advance premium is $25,000 and the audit noncompliance charge factor is 1; therefore, the insured will receive a bill for the audit noncompliance charge of $25,000, with a due date shown on the bill of 9/30. On 9/10, the insured sends a written notification to the insurer advising they will provide the requested documentation by 9/30. The insurer receives the notification on 9/12, giving the insured until 10/2 to provide the documentation. If the insurer does not receive the documentation by 10/2, the insured will be sent a final bill requiring payment of the original audit noncompliance charge of $25,000, plus the reassessment charge as indicated on the endorsement Schedule (the final due), with full payment due by the due date shown on the bill.
New Products/Completed Operations Aggregate Limit of Insurance Endorsements
With the introduction of new CGL endorsements allowing the General Aggregate Limit to apply to a scheduled designated project or designated location, to maintain consistency under the Umbrella when any of these endorsements are on the underlying CGL, there must be a corresponding endorsement to maintain consistency on the Umbrella. Therefore, the following new endorsements, which are adaptations of endorsements CG 25 03 and CG 25 04, will apply the Commercial Liability Umbrella Products-Completed Operations Aggregate Limit separately to designated projects or locations:
CU 25 01 Designated Project(s) Products-Completed Operations Aggregate Limit
CU 25 02 Designated Location(s) Products-Completed Operations Aggregate Limit
CU 25 03 Businessowners Liability Changes Including Products-Completed Operations Aggregate Limit of Insurance
Analysis:
The first two new endorsements, CU 25 01 and CU 25 02, are adaptations of CGL endorsements that replace the General Aggregate Limit with either a Designated Construction Project(s) Aggregate Limit (CG 25 03), or a Designated Location(s) Aggregate Limit (CG 25 04).
Endorsement CG 25 03 allows the General Aggregate to apply to each designated construction project described in the Schedule of the endorsement; and CG 25 04 allows the General Aggregate to apply to each designated location described in the endorsement Schedule. Neither endorsement changes the amount of the General Aggregate shown on the policy.
In the new Umbrella endorsements, CU 25 01 and CU 25 02, the Designated Project(s) or Location(s) Aggregate Limit applies only to "ultimate net loss" under Coverage A, but does not apply to "bodily injury" or "property damage" arising out of the ownership, maintenance or use of a "covered auto"; or included in the "products-completed operations hazard".
Endorsement CU 25 03 provides a separate aggregate limit of insurance that applies to all ultimate net loss under Coverage A for damages because of bodily injury and property damage included in the products-completed operations hazard; and includes the provisions of CU 24 29 Businessowners Liability Changes, and thus may be used in lieu of CU 24 29.
The endorsements further describe how the aggregate limits in the endorsements apply with respect to the products-completed operations aggregate limit whenever any of the following endorsements are attached to the policy:
CU 24 34 Auto Dealers Products And Work Aggregate Limit Of Insurance
CU 24 36 Products-Completed Operations Aggregate Limit Of Insurance
CU 25 03 Businessowners Liability Changes Including Products-Completed Operations Aggregate Limit Of Insurance
In addition, the designated project endorsement CU 25 01 does not contain the word 'construction', allowing for more flexible use of the endorsement.
Endorsements CU 25 01 and CU 25 02, when attached, provide a separate aggregate limit applying to each project or location described in the endorsement Schedule. Since the effect of these endorsements are designed to avoid a situation where the policy aggregate or other project or location aggregates could be eroded by losses at the designated project or location, these endorsements broaden coverage.
Electronic Cigarette Exclusion Endorsements
ISO has created two endorsements to exclude hazards in connection with e-cigarettes, including their component parts and accessories; and health hazards of electronic smoking or vaping devices. With the current issues with vaping related lung illnesses, these exclusions could become significant. Both endorsements are optional for use applying to the underlying CGL and the Products/Completed Operations Liability Coverage Parts:
CU 34 20 Exclusion – All Hazards In Connection With An Electronic Smoking Device, Its Vapor, Component Parts, Equipment And Accessories (CX 21 77)
CU 34 21 Exclusion – Health Hazards, Electronic Smoking Device Vapor (CX 21 78)
As with the underlying CGL endorsements, both endorsements add a definition for "electronic smoking device" described as a battery-powered device that delivers a vaporized inhalable substance through a mouthpiece. The definition provides a number of examples of such devices, but makes it clear that warm steam or mist inhalers are not "electronic smoking devices". The exclusion is geared towards vaping devices for recreational smoking, not therapeutic medical devices to provide medication or treatments.
Exclusion CU 34 20 (CX 21 77) addresses the design, manufacture, distribution, sale, maintenance, use or repair of an electronic smoking device or any component parts, accessories, or equipment designed to be used with such device. The endorsement also excludes exposures related to inhaling the device's vapor.
The exclusion reads as follows:
A. This insurance does not apply to:
Electronic Smoking Device
"Bodily injury", "property damage" or "personal and advertising injury" arising out of the following:
1. The design, manufacture, distribution, sale, maintenance, use or repair of:
a. An "electronic smoking device"; or b. Any component part of, or equipment or accessory designed for use with an "electronic smoking device", including, but not limited to, a mouthpiece, tube, tank, connector, atomizer, cartomizer, clearomizer, coil, battery, charger, cartridge, liquid, flavoring, solutions of any kind, or ingredients therein;
2. The actual, alleged, threatened or suspected inhalation of, contact with, exposure to, existence of, or presence of, vapor delivered from an "electronic smoking device"; or
3. Any component part of, or equipment or accessory designed for use with an "electronic smoking device", including, but not limited to those items listed in Paragraph A.1.b. of this endorsement, and in connection with the actual, alleged, threatened or suspected inhalation of, contact with, exposure to, existence of, or presence of, vapor delivered from an "electronic smoking device".
B. The following definition is added: "Electronic smoking device" means a battery-powered device that delivers a vaporized inhalable substance through a mouthpiece. "Electronic smoking devices" include, but are not limited to, battery-powered:
- Cigarettes
- Pipes;
- Cigars;
- Hookahs; and
- Vaporizers, other than steam or mist inhalers.
Exclusion CU 34 21 (CX 21 78) uses the same definition for "electronic smoking device" as in CU 34 20 (CX 21 77), but the endorsement exclusion applies only to "bodily injury". A coverage exception applies to bodily injury arising out of the explosion, bursting, or rupturing of an electronic smoking device or component parts, equipment or accessories for use with such devices, for any reason. An explosion is strictly related to the equipment used to vape the product, and not the product itself. Along with the equipment itself, the exclusion addresses the vapor as well, which could have unknown long term effects.
A. The following exclusion is added: This insurance does not apply to:
Electronic Smoking Device Vapor
"Bodily injury" arising out of the following:
- The actual, alleged, threatened or suspected inhalation of, contact with, exposure to, existence of, or presence of, vapor delivered from an "electronic smoking device"; or
- Any component part of, or equipment or accessory designed for use with, an "electronic smoking device", including, but not limited to, a mouthpiece, tube, tank, connector, atomizer, cartomizer, clearomizer, coil, battery, charger, cartridge, liquid, flavoring, solutions of any kind, or ingredients therein, in connection with the actual, alleged, threatened or suspected inhalation of, contact with, exposure to, existence of, or presence of, vapor delivered from an "electronic smoking device".
However, this exclusion does not apply to "bodily injury" arising out of the explosion, bursting, or rupturing, of an "electronic smoking device" or any component part, equipment or accessory, designed for use with an "electronic smoking device", for any reason.
Cannabis Exclusion Endorsements
CU 34 22 Cannabis Exclusion (CX 21 79)
CU 34 23 Cannabis Exclusion With Hemp Exception (CX 21 80)
CU 34 24 Cannabis Exclusion With Hemp and Lessors Risk Exceptions (CX 21 81)
Broad exclusion endorsements for the umbrella program are introduced to follow form with new CGL endorsements that exclude cannabis and cannabis-related exposures from the ISO CGL and its counterparts. The broad exclusion endorsements exclude liability for cannabis goods or products, including resins, oils, wax, hash, hemp, infused liquids or edible cannabis, and exclude all types of cannabis and cannabis-related activity or events. The endorsements contain the same exclusionary language that excludes claims against any insured that allege negligence or other wrongdoing in the supervision, hiring, employment, training or monitoring of others by that insured.
As with the CGL, the exclusion endorsements do contain an exception generally related to the actual, alleged, threatened or suspected inhalation, ingestion, absorption or consumption of, or contact with cannabis by an insured or any other person for whom the Named Insured is legally responsible. However, this exception only applies if the bodily injury or property damage does not arise out of the Named Insured's selling, serving or furnishing of cannabis to any person described in the exception. An exception is also made for personal and advertising injury offenses addressing, in part, false arrest, detention or imprisonment; and wrongful eviction.
In addition to the Cannabis Exclusion endorsement CU 34 22 (CX 21 79), a separate cannabis exclusion endorsement mirrors the broad exclusion endorsements, but makes an exception for industrial hemp, where permitted by law. This endorsement is CU 34 23 (CX 21 80), Cannabis Exclusion With Hemp Exception, described below.
Each of these new endorsements add the same definition of "cannabis", as follows:
C. The following definition is added to the Definitions section: "Cannabis":
- Means:
Any good or product that consists of or contains any amount of Tetrahydrocannabinol (THC) or any other cannabinoid, regardless of whether any such THC or cannabinoid is natural or synthetic.
2. Paragraph C.1. above includes, but is not limited to, any of the following containing such THC or cannabinoid:
- Any plant of the genus Cannabis L., or any part thereof, such as seeds, stems, flowers, stalks and roots; or
- Any compound, byproduct, extract, derivative, mixture or combination, such as:
(1) Resin, oil or wax;
(2) Hash or hemp; or
(3) Infused liquid or edible cannabis
whether or not derived from any plant or part of any plant set forth in Paragraph C.2.a.
The endorsement providing the hemp exception, CU 34 23 (CX 21 80) adds a separate paragraph excepting liability arising out of goods or products containing or derived from hemp, including but not limited to seeds, food, clothing, lotions, oils or extracts, building materials, or paper. The exceptions do not apply to the extent they are in prohibition or violation of any applicable state statute, regulation or ordinance.
The endorsement providing the hemp exception, CU 34 23 (CX 21 80) adds a separate paragraph excepting liability arising out of goods or products containing or derived from hemp, including but not limited to seeds, food, clothing, lotions, oils or extracts, building materials, or paper. The exceptions do not apply to the extent they are in prohibition or violation of any applicable state statute, regulation or ordinance.
The hemp exception reads as follows:
B. The exclusion in Paragraph A. does not apply to:
- "Bodily injury", "property damage" or "personal and advertising injury" arising out of goods or products containing or derived from hemp, including, but not limited to:
a. Seeds; b. Food; c. Clothing; d. Lotions, oils or extracts; e. Building materials; or f. Paper.
2. "Property damage" to goods or products described in Paragraph B.1. above. However, Paragraphs B.1. and B.2. above do not apply to the extent any such goods or products are prohibited under an applicable state or local statute, regulation or ordinance in the state wherein:
(1) The "bodily injury" or "property damage" occurs; (2) The "occurrence" which caused the "bodily injury" or "property damage" takes place; or (3) The offense which caused the "personal and advertising injury" was committed;
3. "Personal and advertising injury" arising out of the following offenses:
- False arrest, detention or imprisonment; or
- The wrongful eviction from, wrongful entry into, or invasion of the right or private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor.
Another endorsement option CU 34 24 (CX 21 81) is a Cannabis Exclusion With Hemp and Lessors Risk Exceptions. This endorsement provides in addition to the above hemp exception, an additional paragraph that provides a lessors risk exception, stated as follows:
CU 24 29 Businessowners Liability Changes
CU 24 36 Products-Completed Operations Aggregate Limit Of Insurance
Analysis:
Endorsement CU 04 23 is revised to incorporate several editorial revisions, to include updating the Schedule references to match the format of the corresponding provisions. All of the revisions are editorial in nature and as such do not affect coverage.
Endorsements CU 24 29 and CU 24 36 are each revised to include a non-concurrency provision when the underlying insurance is written on a claims-made basis, to maintain consistency with the Commercial Liability Umbrella Coverage Form. The endorsements reinforce coverage intent with respect to limits, and thus do not impact coverage.
Miscellaneous Revised Excess Endorsements
CX 24 01 Products-Completed Operations Aggregate Limit Of Insurance
CX 24 02 Auto Dealers Products and Work Aggregate Limit Of Insurance
CX 27 00 Underlying Claims-Made Coverage
Analysis:
The above endorsements CX 24 01 and CX 24 02, are revised to include a provision for defense within limits when the underlying insurance is written on that basis, for consistency with the Commercial Excess Liability Coverage Form CX 00 01. The endorsements reinforce coverage intent with respect to limits, and thus do not impact coverage.
The Underlying Claims-Made Coverage endorsement CX 27 00 is being revised and Paragraph B. is reformatted, with no change in coverage. The changes are made to reinforce that the retained limit will only be reduced or exhausted for claims made during the policy period or any applicable extended reporting period; or by defense expenses to the extent that payment of defense expenses reduces the controlling underlying insurance limits.
New Excess Retained Limit Endorsement
CX 24 04 Exhaustion of Retained Limit
Analysis:
In recent years, a number of court cases have addressed whether excess liability insurers are obligated to provide coverage when an insured enters into settlement with the underlying insurer for less than the policy's underling insurance limits, and the insured pays the difference between the settlement amount up to the attachment point of the excess policy. Several courts have generally ruled that an excess insurance policy provision may preclude an insured from exercising the functional exhaustion of underlying policy limits to satisfy the policy's attachment point, provided such is clearly stated in the policy.
To clarify intent that liability does not apply unless and until the controlling underlying insurer has actually paid the full amount of the retained limit, ISO is introducing the optional Exhaustion of Retained Limit endorsement, CX 24 04. This endorsement revises the Loss Payable Condition to generally provide that coverage under the Commercial Excess Liability Coverage Part is not triggered until the full amount of the retained limit has been exhausted as a result of actual payment by a controlling underlying insurer, or as a result of actual payment by the insured but only if self-insurance is listed in the Declarations as controlling underlying insurance.
New Excess Endorsement Excluding Aircraft Or Watercraft
CX 21 68 Exclusion – Aircraft or Watercraft
Analysis:
There is currently an endorsement available for use with the Commercial Excess Liability Coverage Part to exclude injury or damage arising out of the ownership, maintenance, use or entrustment to others of any unmanned aircraft, CX 21 71 Exclusion – Unmanned Aircraft Endorsement. However, there was no Excess endorsement available to expressly exclude injury or damage arising out of the ownership, maintenance, use or entrustment to others of aircraft (whether manned or unmanned) or watercraft. The endorsement CX 21 68 is now available to accomplish that purpose. To the extent such exposures are excluded on the controlling underlying insurance, attachment of the endorsement will not impact coverage. However, if there is no exclusion on the controlling underlying coverage, this endorsement may reduce coverage.
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