For a further discussion of the CGL provisions, see Commercial General Liability Definitions, CGL Coverage Form—Coverage A, CGL Coverage Form—Coverage B, CGL Medical Payments, and General Provision of CGL.

Liability And Medical Expenses Definitions

The definitions follow those in the comparable commercial general liability coverage form. For more detailed analysis of the definitions, see Commercial General Liability Definitions.

F. Liability And Medical Expenses Definitions

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 websites, 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:

Due to the coverage in the Businessowners form for personal and advertising injury, and to the use of the Internet for advertising, the definition was added to clarify coverage intent. For example, many websites carry several advertisements for site sponsors. The only advertisement to be considered as far as the policy goes, though, is the one referencing the insured business.

2.  "Auto" means:

1. A land motor vehicle, trailer, or semitrailer designed for travel on public roads, including any attached machinery or equipment. But "auto" does not include "mobile equipment"; or
2. b.Any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance or motor vehicle registration law where it is licensed or principally garaged.

However, "auto" does not include "mobile equipment".

3.   "Bodily injury" means bodily injury, sickness, or disease sustained by a person, including death resulting from any of these at any time.

Analysis:

This definition is necessary to identify the types of auto exposures not contemplated for coverage under the businessowners liability form, and to delineate the difference between mobile equipment and autos. The definition of "auto" includes trailers or semitrailers, as long as these vehicles are designed for travel on public roads. The 2006 form added "any other land vehicle" to the definition, if the vehicle is subject to compulsory or financial responsibility laws or other motor vehicle insurance or motor vehicle registration laws where it is principally garaged or licensed.

4. "Coverage territory" means:

1. The United States of America (including its territories and possessions), Puerto Rico, and Canada;
2. International waters or airspace, but only if the injury or damage occurs in the course of travel or transportation between any places included in Paragraph a. above; or
3. 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 Paragraph a. above;

(2)  The activities of a person whose home is in the territory described in Paragraph 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 Paragraph a. above or in a settlement we agreed to.

Analysis:

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 to completed operations. Say, for example, that the insured's business is engine repair. If faulty repair of an engine results in injury or damage to others while the engine 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.

Section 4.c.(3) recognizes that the use of the Internet to conduct business is a major factor in modern business, reflecting the global nature of the Internet for communication. 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:

"Employee" includes a leased worker to show that leased employees are to be considered the same as regular employees when it comes to the BOP form. Due to the increased use of leased workers by many employers throughout the country, the point of who to consider an employee under the terms of the coverage is important. This definition, as well as the definitions of "leased worker" and "temporary worker" that are found later in this section, clarifies the issue: leased workers are employees of the named insured when it comes to the coverages, exclusions, and conditions of the 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:

This definition clarifies the distinction between an executive officer and an employee.

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 form makes it clear that it does not consider executive officers as employees; consistent with the CGL form.

7. "Hostile fire" means one which becomes uncontrollable or breaks out from where it was intended to be.

Analysis:

This definition formerly appeared within the pollution exclusion (f.); with the 07 13 edition of the form, it has been moved to 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 one not 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 cannot be used or is less useful because:

1. It incorporates "your product" or "your work" that is known or thought to be defective, deficient, inadequate, or dangerous; or
2. You have failed to fulfill the terms of a contract or agreement;

if such property can be restored to use by:

(1) The repair, replacement, adjustment or removal of "your product" or "your work"; or

(2) Your fulfilling the terms of the contract or agreement.

Analysis:

This definition is necessary to understand the exclusion for impaired property, exclusion n. 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. See Businessowners Liability Exclusions for a discussion.

9. "Insured contract" means:

1. 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";
2. A sidetrack agreement;
3. Any easement or license agreement, except in connection with construction or demolition operations on or within 50 feet of a railroad;
4. An obligation, as required by ordinance, to indemnify a municipality, except in connection with work for a municipality;
5. An elevator maintenance agreement;
6. 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 fifty 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, drawings, opinions, reports, surveys, change orders, designs or 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 Paragraph (2) above and supervisory or engineering activities.

Analysis:

Policy intent has been clarified by stating that an insured contract does not include a contract or agreement for indemnification for damage by fire to premises the insured rents or temporarily occupies with permission of the owner. Fire legal liability is not included within the definition because there is a separate limit applicable to that coverage. Because work near a railroad involves considerable risk, an insured contract does not encompass any construction or demolition within fifty feet of a railroad.

If an ordinance requires a business to indemnify the municipality in connection with some condition of the business, that is considered an insured contract. For example, a hardware store may place a signboard on the sidewalk. If someone trips and sues the municipality for allowing this, the business assumes the municipality's liability.

Similarly, if the insured business assumes the tort liability of another (including assumption of a municipality's liability in connection with work performed for the municipality), that is an insured contract. For example, if a carpet sales and installation business negligently leaves a rolled up carpet intended for installation in the mayor's office where a passer-by trips and falls over it, a claim against the municipality arising from this will be covered by the insured Businessowners policy (provided limits are adequate and no other exclusion applies).

Finally, the exceptions to paragraph f. are those that should be covered through professional errors and omissions coverage forms.

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:

Because of the common practice of leasing workers for long-term projects, and since the employer rather than the leasing company controls" the work, leased workers are considered employees.The bottom line is that leased workers are to be considered the same as regular employees under the form.

11."Loading or unloading" means the handling of property;

1. After it is moved from the place where it is accepted for movement into or onto an aircraft, watercraft, or "auto";
2. While it is in or on an aircraft, watercraft, or "auto"; or
3. 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:

Similar to the CGL form, the Businessowners form does not apply to loading or unloading property; this is properly covered under a business auto policy. However, if an insured is loading property onto a truck by means of a forklift, and the property falls off and injures someone, the exception provides coverage. For more information on the subject of loading or unloading, see Business Auto Coverage 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 Paragraphs 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 land vehicles that are subject to compulsory or financial responsibility law or other motor vehicle insurance or motor vehicle registration law where they are licensed or principally garaged. Land vehicles subject to a compulsory or financial responsibility law or other vehicle insurance law or motor vehicle registration law are considered "autos".

Analysis:

This definition details what will/will not be considered mobile equipment for coverage purposes. Some items may fall into either being covered or not—for example, cherry pickers. A cherry picker that is not self-propelled—mounted on a trailer, perhaps—is mobile equipment and thus covered, but if the cherry picker is permanently mounted on a truck, then that properly falls under a business auto policy.

The 2006 form excluded land vehicles that are subject to compulsory or financial responsibility laws or other motor vehicle insurance or motor vehicle registration laws where they are principally garaged or licensed from the definition or mobile equipment. These vehicles fall under the definition of autos.

13. "Occurrence" means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.

Analysis:

Even though the phrase is not mentioned here, this definition makes the point that coverage 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 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 forklift hitting an adjoining building's wall once might not do much damage, but if the forklift repeatedly hits the wall in the same spot for a period of time, considerable damage might result. Such damage is included within the scope of the "continuous or repeated exposure" wording.

For more detailed information see What is an Occurrence?

14. "Personal and advertising injury" means injury, including consequential "bodily injury", arising out of one or more of the following offenses:

1. False arrest, detention, or imprisonment;

2. Malicious prosecution;

3. 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;

4. 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;

5. Oral or written publication, in any manner, of material that violates a person's right of privacy;

6. The use of another's advertising idea in your "advertisement"; or

7. Infringing upon another's copyright, trade dress or slogan in your "advertisement".

Analysis:

This definition has been changed from the earlier BOP form. The previous definitions distinguished "personal injury" and "advertising injury"; in the current form the two are combined. In the current edition, consequential bodily injury arising from personal and advertising injury is encompassed in the definition. For example, an insured businessowner may forcibly grab the arm of someone he believes is shoplifting. If a suit results alleging bodily injury, this is where coverage is found.

15. "Pollutants" means 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 was moved from its previous location within the pollution exclusion, but remains unchanged from previous editions.

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.

The "bodily injury" or "property damage" must occur away from premises you own or rent, unless your business includes the selling, handling or distribution of "your product" for consumption on premises you own or rent.

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; or

(2) The existence of tools, uninstalled equipment or abandoned or unused materials.

Analysis:

The definition describes the conditions under which there is coverage for bodily injury or property damage occurring away from the premises and arising out of the insured's product or work.

Of importance to note is that unlike the CGL form, the BOP excepts injury or property damage occurring on the premises of the insured business if the business includes selling, handling, or distribution of the insured's product for consumption. The BOP may be used for convenience stores and other eating establishments; this exception allows coverage without the necessity of adding coverage by endorsement.

17. "Property damage" means:

1. 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
2. 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, 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 is in keeping with the personal and advertising injury exclusions and is a means to eliminate coverage for damage to this type of property.

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:

1. An arbitration proceeding in which such damages are claimed and to which the insured must submit or does submit with our consent; or

2. Any other alternative dispute resolution proceeding in which such damages are claimed and to which the insured submits with our consent.

Analysis:

The definition makes it clear that alternative dispute resolution proceedings or arbitrations will be treated the same 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:

Temporary workers do not have insured status as do employees and leased workers; therefore, if a temporary worker is injured due to the named insured's negligence and brings suit, the BOP will provide coverage for the named insured.

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:

Volunteers are insureds while carrying out the insured's business. Volunteer workers are distinct from employees, however, in that they may receive medical expenses coverage.

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 definition does not apply to real property.

Your product includes goods or products manufactured, sold, handled, distributed, or disposed of by a "person or organization whose business or assets you have acquired." The definition of "your product" includes the providing of or failure to provide warnings or instructions. This wording clarifies 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 Faulty Work and Products Claims "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:

This definition includes the phrase, "…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 m. 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 behalf by a subcontractor even though such work is considered as the work of the named insured.

Liability and Medical Expenses Conditions

E. Liability And Medical Expenses General Conditions

1. Bankruptcy

Bankruptcy or insolvency of the insured or of the insured's estate will not relieve us of our obligations under this policy.

   2. Duties In The Event Of Occurrence, Offense, Claim Or Suit

a. You must see to it that we are notified as soon as practicable of an "occurrence" or an offense which may result in a claim. To the extent possible, notice should include:

(1) How, when and where the "occurrence" or offense took place;

(2) The names and addresses of any injured persons and witnesses; and

(3) The nature and location of any injury or damage arising out of the "occurrence" or offense.

b. If a claim is made or "suit" is brought against any insured, you must:

(1) Immediately record the specifics of the claim or "suit" and the date received; and

(2) Notify us as soon as practicable.

You must see to it that we receive written notice of the claim or "suit" as soon as practicable.

c. You and any other involved insured must:

(1) Immediately send us copies of any demands, notices, summonses or legal papers received in connection with the claim or "suit";

(2) Authorize us to obtain records and other information;

(3) Cooperate with us in the investigation, or settlement of the claim or defense against the "suit"; and

(4) Assist us, upon our request, in the enforcement of any right against any person or organization that may be liable to the insured because of injury or damage to which this insurance may also apply.

d. No insured will, except at that insured's own cost, voluntarily make a payment, assume any obligation, or incur any expense, other than for first aid, without our consent.

Analysis:

These conditions are similar to those found in other liability forms such as the CGL.

The bankruptcy condition ensures that the terms of the policy will remain in effect even if the insured files bankruptcy.

The duties condition specifies what the insured's obligations are as conditions precedent to the insurer's duty to settle, defend, or pay damages because of a claim or suit. The insured is reminded that information must be obtained and forwarded to the insurer as soon as practicable so that the insurer can investigate and mount a defense. Delay can result in insufficient or loss of information—a key witness moves, for example, and leaves no forwarding address. The insured can give an oral notice to the insurer of an occurrence or offense that might result in a claim but must give a written notice in event a suit or claim actually occurs.

Another important part of this condition states that no insureds will, except at their own cost, voluntarily make a payment, assume any obligation, or incur any expense, other than for first aid, without the consent of the insurer. Insureds should be made aware of this condition since a violation of the provisions could prejudice the ability of the insurer to investigate the claim and mount a proper defense; this prejudice could lead the insurer to claim a breach of contract and then, try to make the insurance contract voidable. It makes sense for the insured to not voluntarily make any payments or assume any obligations in the event of an occurrence. After all, the insurer has agreed with the insured to "pay those sums that the insured becomes legally obligated to pay" and to "defend any suit seeking damages". The insured has paid a premium for these contractual agreements and to ignore them is simply not good risk management.

3. Legal Action Against Us

No person or organization has a right under this policy:

1. To join us as a party or otherwise bring us into a "suit" asking for damages from an insured; or
2. To sue us on this policy unless all of its terms have been fully complied with.

A person or organization may sue us to recover on an agreed settlement or on a final judgment against an insured; but we will not be liable for damages that are not payable under the terms of this policy or that are in excess of the applicable limit of insurance. An agreed settlement means a settlement and release of liability signed by us, the insured and the claimant or the claimant's legal representative.

4. Separation Of Insureds

Except with respect to the Limits of Insurance of Section II – Liability, and any rights or duties specifically assigned in this policy to the first Named Insured, this insurance applies:

1. As if each Named Insured were the only Named Insured; and
2. Separately to each insured against whom claim is made or "suit" is brought.

Analysis:

Condition 3. states that the insurer cannot be drawn into a suit against its own insured and adds that no legal action against the insurer can be taken unless all policy terms have been complied with.It also prohibits any person or organization from suing the insurance company under the policy unless all of its terms have been fully complied with. The insured, for example, can sue the insurer for coverage under the policy only after notifying the insurer of the occurrence, forwarding suit papers, authorizing the insurer to obtain records, and performing any duties required of the insured.

Condition 4. states that the insurance applies separately to each named insured and to each insured against whom suit is brought, except with regard to the limits of insurance and the duties specifically assigned to the first named insured. This condition should be read with an eye toward the "who is an insured" clause since it is that section of the form that defines just who is the insured to whom the insurance applies separately.

Includes copyrighted material of Insurance Services Office, Inc., with its permission.