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 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.

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

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.

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

Analysis

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.

The definition of "bodily injury" follows that of the CGL coverages.

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 Paragraph 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 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 agree to.

Analysis

Section 4.c.(3) recognizes that the use of the Internet to conduct business is a major factor in modern business.

5. "Employee" includes a "leased worker"."Employee" does not include a "temporary worker".

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.

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

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

This definition formerly appeared within the pollution exclusion(f.); now, it has been moved to the definitions section.

8. "Impaired property" means tangible property, other than "your product" or "your work", that cannot 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:

(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. See Business Liability Exclusions for a discussion.

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. However, such part of a contract or agreement shall only be considered an "insured contract" to the extent your assumption of the tort liability is permitted by law. 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, roadbeds, 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, surveys, 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.

Analysis 

The past several editions of the form have revised this definition of "insured contract" to provide clarification. The 2010 edition of the form clarified the language 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).

The exceptions to paragraph f. are those that should be covered through professional errors and omissions coverage forms.Several states over the past few years have enacted laws ("anti-indemnification laws") that, with varying exceptions, prohibit provisions in construction contracts which require a party to indemnify another party against liability for such other party's own negligence or fault. In the 2012 Businessowners form, ISO revised paragraph f. of the "insured contract" definition in Amendment Of Insured Contract Definition Endorsement BP 05 98 to provide that such part of a contract or agreement shall only be considered an "insured contract" to the extent the named insured's assumption of the tort liability is permitted by law. With the 08 24 edition of the form, paragraph f. is further revised to be consistent with revisions made to endorsement BP 05 98 in response to states with "anti-indemnification laws." The effect of this change is that an insured will not be provided tort liability coverage such insured assumes of another party to the extent that assumption of liability is prohibited in a particular jurisdiction. As an example, let's say an insured signs a contract accepting tort liability, but the state has a law that impacts to the extent that such tort liability can actually be assumed legally. The part of the tort liability that is prohibited by the state law will not be covered, even if the insured has signed a contract assuming that liability.

In addition, revisions are made to subparagraph f. (2) (a) of the "insured contract" definition to align with the wording for such definition in the Businessowners endorsement Amendment of Insured Contract Definition BP 05 98 and Commercial General Liability Coverage Form CG 00 01. These revisions serve to maintain consistency and reinforce coverage intent.

Form BP 00 03 includes a Professional Services exclusion under paragraph B.1.j. of Section II – Liability, which applies to bodily injury, property damage and personal and advertising injury caused by the rendering or failure to render professional services. CG 00 01 does not include a similar exclusion. Therefore,given the presence of the Professional Services exclusion in BP 00 03 08 24, ISO has removed subparagraph f.(3) of the "insured contract" definition. This change has no impact on coverage.

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".

Because of the common practice of leasing workers for long-term projects, and because the employer rather than the leasing company controls" the work, leased workers are considered employees.

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

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.

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, on which are 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 Paragraph 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 Paragraph 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 a compulsory or financial responsibility law or other motor vehicle insurance law where they are licensed or principally garaged. Land vehicles subject to a compulsory or financial responsibility law or other motor vehicle insurance law are considered "autos".

Analysis

This definition details what will be and what 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.

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.

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 the job site has been put to its intended use by any other 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.

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":

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.

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:

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, 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:

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.

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.

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. 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 avoid that problem. Due to the similarity between the CGL form and the Businessowners liability coverage, the definition has made its way into the BOP.

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.

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.

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